The sun., 1919-08-02
Losses of Lines Total $780,
100000 a Year, Say U.
S. Prosecutors.
LAXITY MADE PLAN EASY
Brokers Juggled Returns on
Sale of Damaged Freight,
Is Charge.

rortinr business In a small way in Jer-
sew City In 1914 and progressed rapidly
until their company occupied the build
ing at 1913 Maiden lane. were defendants
Yesterday in the Federal District Court
In indictments charging conspiracy to
defraud the United States They are
accused of having used what appears to
have been lax methods on the part of
railroad systems in disposing of dam
AGED freight TO embezzle 100000 from
u, Government as the administrator of
the Central Railroad of New Jersey.
Tho Long Island Railroad Company and
the Central Vermont Railway Company
are alleged to have been defrauded Of
smaller sums.
Capt. Shuldinger and Dumont dealt
in goods damaged In transit through the
United States Brokerage and Trading
Company. a corporation named with
them In the indictment. All railroads
have thrown upon their hands valuable
stocks which consignees refused to accept
The railroads send these goods to bro
kers, who sell them on a 10 per cent.
commission basis.
The charge against the United States
brokerage Company and its owners is
that they made practice of reporting
the sale of goods at a lower figure than
they actually received. The roads are
alleged to have accepted their reports on
sRles without question.
Countrywide Thefts Suspected,
Benjamin P. De witt. Assistant United
CtaNn #
ments to be found, said that an investi-
cation covering the whole country had
been begun into suspected thefts on dam
aged freight He believed roads have
been mulcted of $50. 1000. 900 a year from
period long antedating their seizure
by the Government
Mr.. De Witt declared that the Erie
Railroad in 1918 had claims for $1,000
900 filed against ii by shippers. The
railroad realized only 100000 on sales
Of rejected freight in this period, he
said
Capt. Shuldinger and Dumont when
arraigned before Judge Rufus e. Foster
pleaded not guilty. Bail of SIS, 900 each
was fixed and given.
Mr.. De Witt explained that the case
would be moved for trial in October
He predicted more prosecutions He
said the Government hopes to stop such
practices before the roads are returned
to their owners.
The indictments were found June 30,
but held sealed because Capt. Shuld-
niger and Dumont have other important
business connections which would have
been harmed by unanticipated publicity.
Dumont is managing partner In an
importing and exporting company that
does business under the style of George
Mogensen at so Broad street Capt.
Shuldinger is interested in number of
companies. He received his army COM
mission in May, 1918, and was sta
toned mostly in Washington until the
srmstice.
The other defendants in one of the
three indictments were not arraigned.
They were Charles E. johnson and Rob-
ert Lowrie. clerks in the freight claim
agents office of the Jersey Central Rail-
road. They are alleged to have accepted
brides to approve. fraudulent reports on
sales Of damaged goods. 1t Is assumed
that they will become Government wit
nesses.
The indictments charge that the con-
piracy dates from January 1. 1918, ap-
proximately the time at which the Gov
eminent took over the railroads
The books OF the United States
Brokerage Company were seized in
March. The accusations are based on
figures obtained from these books.
In the case of the Central Railroad
Of New Jersey it is alleged that the
brokerage company-s books show thefts
Of 100000 between June, 1917. and
March, 1919. In the case of the YER
mont Central SLABS is alleged to have
been stolen between February is. 1918.
and May 10. 1919 The Long Island
Railroad Is said to have been mulcted
Of 1897 between January. 1918, and jan
uary. 1919.
The Jersey Central indictment charges
that when freight had been rejected by
consignees and had been held for sixty
days 1t was within the authority OF
Johnson and Lowrie to cause 1t to be
sent to the United States Brokerage
Company for sale. The freight sent to
the brokerage company varied in guam
uty from carload lots to single cases.
Specific Case Il Set Forth.
Among the allegations is one that on
May "a, 1918. the brokerage company
received a carload of miscellaneous
freight from the Jersey Central. 1t sold
the merchandise for $1,6S0.S3. or this
after deducting commission and carriage
charges, $1,463.03 belonged to the Gov
eminent 1t is charged that Shuldinger
and Dumont reported the sale to have
been at $470.21, and that Johnson and
Lowrie accepted the money and APP
proved the report.
Il Is charged that ten sacks of sugar
were sold for 500, of which IS was
returned the Government in full pay
msnt. It is charged that 12S sacks OF
coffee were sold to George Mogensen for
N.sO4s4. of which the Government got
only S1,227.3s.
Mr. De Witt said that II was the
NtWsAo T1Hw ND VII q
were TO receive one-half of all the illegal
profits He said they got a drawing &C
count of 500 a week with the brokerage
company. Their railroad salaries were
tl25 a month.
Arrangements with the Long Island
Railroad and the Vermont Central for
the sale of their damaged freight, &C
eo-ding to Mr. De Witt, were made &C
cording to the usual practices between
railroads and brokers. Schuldinger and
Dumont dealt with responsible officials
and had no friends in the offices. Never
theless, proof of fraudulent withhold
ing OF money from these roads is al
legged to have been found.
A. l.. Boyd, an investigator OF the
interstate Commerce Commission, Is
said to have noticed what appeared TO
be irregularities in the books of the
claim department Of the Jersey Gen.
tral and questioned Johnson and Low
RE. They are said to have broken down
and to have given the information that
resulted in the investigation.
Philip Doherty, of counsel for the
.haNroad Administration. was placed in
charge OF an inquiry that quickly de-