The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-07-03
Brokers Safes Contain Stock
of Little Value, While Gus
toners Clamor.
GRAND, LARCENY CHARGE
ytGeneral Alarm" Sent Out for
Arrest Of the Firms Two
IL Heads.

IN the companys books enough to fndi-
fcate that 1t owed its customers more
than $1,0o0,o0o. the District Attorney
asked the police last night to arrest on
sight the head Of the firm, J. Frank
Lilly, and his associate. F. Kent Schie-
sner, on a charge OF grand larceny. The
tpolice were requested to send out n
general alarm for the two men.
Schiener has not been seen at 81
sBroadway for two weeks. Lilly visited
shis office Saturday, and was observed
also leaving his home In Laureate Hail,
tan apartment house at 435 West 18th
Astreet They will be charged, according
Ito Assistant District Attorney Kilroe,
with accepting money from customers
when they knew the firm was insolvent
and with pledging their customers Sc
curities without authorization.
Had 10000 Customers.
4 In the account books of Lilly & Co..
NOW stacked in the District Attorneys
Office, are the names of $4,000 men and
women from all over the map who
traded with the brokers. Many OF them
deposited Liberty bonds as collateral
Towering marginal payments on stocks
lthas bought. Not Liberty bond has
Yen found in the Lilly Offices or in the
two safe deposit boxes which the firm
AIOUl SOluHuDld liuel SoiH-
ipany. None OF the Lilly employees Ia
Il able to tell what became of the bonds.
L The strong boxes are packed with Be-
\ curities, largely of zinc, copper, silver,
y quicksilver and oil companies and others
of whi0l the stocks are not actively
traded in at present.
One customer who had n marginal ac-
count with Lilly & Co. was ex-Gov.
William Sulzer. He was more fortunate
Y than most of the others, for on June 25.
4 three days before the company blew up,
q he received check for $1,000, which he
4 lost no time in cashing. He was more
= fortunate. for example. than MIS-. Z. A.
/, Kayser OF AIS East Eighty-ninth street,
: She told Assistant District Attorney
Kilroe yesterday that her son. Edward
y W. Kayser. n member of the Twenty
i seventh (New York; Division. u. s. A.
i who lost both legs in France, had sent
4 home savings which, with those Of his
!. mother amounted to $1,000. Feeling
u that this was. very little for cripple
!. she invested the whole $1,000 through
III. Frank Lilly Co. She asked Mr.
I. money back, and he said he could not
!! give hopeful answer.
u sulxer Figures Disagree.
i Ex-Gov. Sulzer, according to the
brokers books, opened an account On
:. December % with a deposit of $1,000.
!, In January he drew out s500 and de-
) posted as collateral 100 shares Of Big
4 -Four stock. then worth s42 share.
Thereafter he made several purchases
and sales. on June g. when the firm
4 sent him a check for $1,000, he owed II
= S3,842.16. as the figures were interpreted
4 by Mr.. Kilroe. This, Sulzer says. Is a
4 mistake The Lilly employees say Sulzer
visited the offices frequently in the last
year and a half and often talked with
Lilly.
sulzer said. in answer to Krroe's In
quiry, that Lilly Co. owed him about
$4,000.
BY telephone, telegraph. mail and per-
sonal interview creditors of Lilly Co.
are telling sorrowful stories to the Dis
trict Attorney. Three stenographers
were kept busy with Kilroe yesterday
listening TO the 500 who visited the
Criminal Courts Building. They claimed
balances due them ranging from $40 to
$15O,000. One of the largest creditors
said his wife was also a heavy loser I'M
( less the brokers made good. Testimony
was given that the FIRMS market letter,
mailed all over the country. was
lawfully seductive" and that Lilly him
self wrote one page of II headed "Stocks
10 Sell" Many of Lilly's employees
said they had been stung. They had
heard so much talk around the office OF
big profits that they FASTENED to get
aboard too. They said the office payroll
was $4,000 a week. and that employees
had not been paid for last week.
Assistant District Attorney Rorke.
who engineered Tuesdays raid. Is listing
the securities in the Columbia Trust
" Companys two boxes. He had been
told they might be worth 100000. but
no seemed to doubt 1t last night He
said he had not found any we'll known
companies represented.
Several of the employees of Lilly &.
Co said Lilly used TO be a professor In
the University Of Chicago. but that is
not so. The Suns Chicago correspond
,ent says the broker was never connected
with the university. Frank Rattray
Lille, who Is not related to j. Frank
.gLilly, is a professor at the University OF
Chicago and director of the department
OF embryology.
made to the District Attorney, Is about
~ years old. He was superintendent OF
schools at Tishomingo. Tex. before 1911
and then for two years superintendent
1of the normal school at Ada. He entered
the employ OF Jones & Baker, brokers. in
Chicago. and. transferred to the New
york office. was a statistician and pub
~licity man. Later he was with the Gen.
eral Service Corporation 60 Wall street
and with II. D. Wells & Co., brokers, OF
25 Broad street. going into business FOL
himself about two years ago. He wat
elected TO membership in the Consoli.
dated Stock Exchange last winter.
- Toole Pleads Not Guilty.
Charles b. Toole Of the bankrupt brok
srage firm of Toole, Henry Co. went
voluntarily into the Court of Genera
Sessions yesterday, pleaded not guilty Il
q charge OF grand larceny made in al
indictment returned Monday and wal
held in $4,000 bail. which was given
The indictment accuses him OF disposdni
of United States Steel common stock o.
81 100000 par value without being au
I, thorized TO do 80 by Frank c. Henderson
who had bought it through Toole, Henry
Il & Co. on margin.
Henderson says this transs ction, in
volving 100 certificates Of 100 shares
each, took place about March rs. fou
days before a petition in bankruptc!
ftwas fled against the brokers. Hender
- son is president of the Henderson Case
line Company. He lives at Roslyn. l.. I.
and has an office at 100 West Fifty
ninth street.
A. Toole appeared In court with his law
yers, Frank Aranow and Samuel s
Koenig. Moses Rytenberg. Assistan
District Attorney. asked Judge Wad
hams to NIX bail at $4,000, but tn
obi /,