The Washington herald., 1918-06-18
.INDICT FOURON
j. s. CONTRACT
GRAFTCHARGE
Offer to Raincoat Maker
Leads Men With "InAu-
ence" Into Trap.
NET OUT FOR OTHERS
Justice Department Aims to
Root Out Contingent
Fee System.
NET OUT FOR OTHERS


graft conspiracy in connection with
government contracts were made yes
terday by the Department of Justice
in announcing the indictment I'm Phil
adelphia of John Fleming, John T.
Cavanaugh, Eugene Sullivan and Jo-
seph Kohn.
They are charged with having Of
fered to obtain for the Quaker City
Raincoat Company OF Philadelphia q
contract for 10000 army raincoats.
provided the concern split profits and
granted them large commissions for
the use of their influence in getting
the order.
The department In announcing the
capture of the men, severely scored
the practices Of contingent fee con-
tractors" and promised to round up
numbers of men engaged in these
practices in Washington, New York,
and other cities.
Yesterday agents Of the department
and ofRers of the military and naval
intelligence spread a network over all
sections Of the country where the
system has prevailed, and the private
papers Of hundreds of corporations,
having contractual relations with the
government. were put under search
ing examination.
Lured to Hotel Here.
The four men arrested fell into a
cleverly laid trap set by the gov
ernment B. A Bittsn. president, Of
the raincoat company, having dis
closed to the government the Inn
pfoper proposals, the four men were
induced to come to Washington ana
at a local hotel drew up with Bit
tan formal contract under which a
commission was to be paid.
The sum Of $500 in cash was to
be exacted Of Bittan for the benefit
of an officer in the Quartermasters'
Corps, who. the four mon assured
the raincoat manufacturer, had to be
fixed" Referring to the fact that
the Department of Justice had on
April issued a warning against the
system Of contingent fee contracts,
! the department in a statement is
sued yesterday afternoon said:
Warming Not Needed.
Instead of taking notice Of this
warning the system has continued its
pracuAes. There are today a num-
Der oS brokerage and contingent fee
corporations who boldly circularize
the manufacturers of the country
stating that they have close relation
ship with some or all Of the depart
ments Of the government, and in some
instances influences with individuals
in these departments, sinister In
character, which give them power to
obtain favorable contracts for their
clients in consideration of commits
sions which run from 2 to 10 per cent
nf fha q ~ hA
number OF cases the contingent fee
man has informed the manufacturer
that the latter could not deal with
the government except through him,
and that unless the manufacturer
paid the contingent fee he could not
get the contract.
There are other instances where
the manufacturer has sought the con-
tract broker and requested him to
obtain a contract for the manufac-
turer, who willingly agreed to nav
the commission. As government con-
tracts run into hundreds of millions
II the proceeds of a large number of
these are shared with the contingent
fee man, the amount of these COM
missions can be imagined.
Volunteer Information.
In addition to the announcement
that search Is being made today of
the records Of all manufacturers
with contractual relations with the
government, the statement adds:
"A search also has been made Of
the papers Of certain firms and cor
porations who act in the capacity Of
contingent fee operators. The gov.
| eminent has been aided in its plan
! Of investigating the whole situation
through loyal and patriotic manufac-
turers who have volunteered infor-
nation.
There is no intention to interior,
with legitimate relationships between
manufacturers and the various ie-
partments Of the government over
contracts. but the manufacturer must
deal directly with the department and
not through a middleman or agents
employed on a contingent fee basis.
THE government, through all its
I agencies, Is determined that money
shall not be expended on contingent
! fees for brokerage contractors"
1t was also pointed out that the
| government recently obtained the
conviction Of q contractor who con-
nived with an army officer to get a
government contract. The contractor
was sentenced to five years in the
penitentiary. while the officer was
given twepty-year sentence by
court ma rtIal