New-York tribune., 1919-08-02
Freight Frauds
Of $50,000,0OO
Yearly Charged
De Witt Tells Government
Case Against Shuldiner
and Morgensen as They
Are Arraigned in Court
Calls Plot Nationwide
Cites One Instance Where
Erie Lost ST., 100000 ON
Single Astray Shipment

Through Irregularities in connection
with the sale Of stray and unclaimed
freight the railroads of the country
are losing $50,000,00 year. according
to statement made yesterday by AS
slstant United States Attorney De Witt
before Federal Judge Foster. He made
the statement when Captain Solomon
| Shuldiner, of the United States Bro
kleerage and Trading Company, Inc, of
mont managing partner in George
Morgcnsen e. Co., exporters Of 81
Broad Street, were arraigned for plead
ing on conspiracy Indictment Nor
gensen Co. are not involved in any
way in the prosecution.
The indictments charge conspiracy to
defraud the United States, as operator
of the railroads, of huge sums of
money by the making of false returns
to the Federal railroad director on the
sale. of undelivered goods. Two de-
PENDANTS named in the indictments
were not arraigned for pleading yester-
day. and it is understood they will be
used as witnesses for the prosecution.
They are Charles E. Johnson and Rob
ert Lowrie, employees of the Central
Railroad of New Jersey, one of the
three systems alleged to have been
swindled
Explains System
At the araraignment Mr.. De Witt
explained to Judge Foster that the
Irregularities with which the men are
accused concerned the Central Rail-
road Of New Jersey, the Central Yer
mont and the Long Island Railroad.
He said that by collusion of certain
railroad employees and several brokers'
the railroads of the country lost an
avert &c of S5O,OO0,OOO yearly,
Mr.. De Witt said indictments are
being sought in all parts of the coun-
try against persons concerned in the
alleged frauds. He said that one case
had been discovered where the Erie
Railroad had settled claims for freight
amounting to S2,O00,ooO. The goods in
this case were later recovered and
brought only S400,000 at public auc-
/ ton.
Former Assistant Attorney General
William c. Fits appeared before
Judge Foster as counsel for Dumont
and Shuldiner. He intimated that the
defendants had a good defence and
suggested that they be released in bail
of $4,000 each pending the trial.
Surety was furnished and they were re-
| leased
discovered by Expert
Mr. De Witt explained that the wide
spread frauds were first discovered by
"A. L.. Boyd, the railroad expert of the
Interstate Commerce Commission. who
has directed the Investigation of th
matter since the first of The wear Mr..
Boyd found that there always been
a small portion of the railroad freight
that either went astray or had no
cialmants. This material the railroads
clspoSed OF after reasonable length
OF time and used the money thus OBJ
tanned to adjust legitimate claims
Each Of the. roads had certain
brokers who were Entrusted with the
sale OF the strayed freight. Some of
them gave excellent satisfaction. 9th
ers seemed unsuccessful in getting
good prices for the commodities and
returned little money.
IN furtherance of the conspiracy the
/ Indictment describing the covert acts"
charges that on February 7, 1917, the
/ brokerage company, Dumont e. Shul-
olner, sold ten sacks of sugar for
/ 500, and that on February 25 the de-
PENDANTS sent the director general. in
charge of the Central Railroad Of New ",
Jersey, SIS, "n full and fair payment fo r
ten sacks of sugar"
The payment Of $500 by Shuldincr
to LowNe on August 9, 1918, and a like
sum on August 10 to Johnson, is an
other of the overt acts charged in the
| Indictment
Employer Accused
After explaining that johnson and
Louvre were employed in the office of
the freight claim agent of the New
Jersey Central, the Indictment thus
charges:
"The defendants agreed with each
other that the defendant Lowre would
deliver from time to time to the brok
erage company, Dumont and Shuldiner,
quantities of astray freight which
would be the property of the United
States, and such freight should come
under control of him by virtue of his
employment.
The defendants further agreed with
each other that Shuldiner and Dumont
would sell the freight which would be
delivered and receive therefor large
sums of money, and that they, the
defendants, would secretly, corruptly
and unlawfully retain, appropriate and
convert to their own uses large part
OF the money which would be received
and the defendants each of them knew
that the money was the property Of
the United States"
The arrangement for the sale of
astray freight, Mr.. De Witt stated
instead of being made with underlinps'
was made with the officers of the Long
Island and Central Vermont railroad
companies on 10 per cent basis. De-
spite this agreement, the Indictment
charges, the defendants made false re-
turns.