Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1919-03-03
THREE CONTRACTORS ARRESTED
BECAUSE OF NOVEL SCHEME
OF GRATING.
SOUGHT MONOPOLY or
PuRcAAeE OF GOODS
Arranssd 20 Submit Blank oIds TO Be
Filled In Dy o~lss- Passing On Pro.
pssaIs-o~iesr rendered Bride
Lieutenant and His Fianess Uncover
PIot-sams Fraud at othsr Camps.

Des Moines, March s.--Disclosures
involving millions Of doIlars' worth Of
government properly and laying bare
a scheme by which, 1t 10 claimed. GER
tain brokerage firms and manufactur-
ing plants gained = monopoly on the
manufacture and purchase Of govern
ment supplies. came to light in Des
Moines late Saturday night with the
arrest Of ,. Rhoads. Norfolk. Va,
wealthy broker: Arthur koerner. ma
tive Austrian and alleged brains OF the
enterprise. ana A. Gross. Minneapolis
The arrests wers made after three
months investigation by the depart
ment OF Justice and the army intelli-
gence section.
The central figures IN the expose for
the government were First Lieutenant
II. r. yanstrum. Minneapolis contract
or now executive officer for the sal
wage section Of the Quartermasters
corps at Camp Dodge. and his fiancee.
employed in brokerage office In
Washington.
Lieutenant vanstrum and his fiancee,
whose name Is withheld, worked IN
conjunction with the army intelligence
section and the department Of Justice,
posing at alltimes as the dupes OF
koerner and Rhoade.
The simplicity Of the scheme and
its first apparent legitimacy are as
founding.
Operated In Many Camps.
Information which has been gained
by government officials in the investi-
CATION of the case, 1t is said, gives
evidence that similar operations have
been carried on in at least five other
amps and environments in the coun-
Try and probably will lead to an In
vestigation involving many army Of
ficers.
1t also explains, government officials
say. why in some localities certain
firms seemed to have q monopoly on
government contracts both for manu-
facture and construction, and for the
purchase Of goods ready for salvage
now that the war has ended the gov
eminent has no more use for them.
Practically all goods are purchased
By the government or sold through the
competitive bid system. In the award
ing of contract for manufacture bids
are offered and the contract goes to
lowest bidder. In the sale Of goods the
contract goes to the person or firm Of
fering the highest price.
1t was on this system that the
scheme was based.
In practically all camps one officer
opens these bids when they are re-
ceived and approves and awards the
contract.
Chance to Get Rich.
Three months ago Lieutenant Van
strum was in Washington on detached
duty. He was approached by koerner.
according to reports Of intelligence Of
ficers. and after becoming we'll &C
quainted Koerner preached the scheme,
telling the officer there was an OPP
portunity for him to become rich.
Lieutenant yanstrum in his official
capacity at the cantonment opened
bids and awarded contracts for the
sale Of salvaged property.
koerner suggested. according to
Nanstrum, that certain men backing
him would send a blank bid to him st
Camp Dodge for the purchase Of $4,000
SONcI DlduhctS "HlCU were W 10
sold. Vanstrum should open all bids,
determine which was the highest and
fill in the blank bid for a small amount
in excess Of the highest amount offer
ed, thus insuring the purchase for the
sender of the blank bid. Tor doing
this Lieutenant Vanstrum was to re-
ceive percent Of the purchase price.
In order to prevent the possibility
of detection, the money to be paid
Nanstrum was to be given to his fiancee
in Washington for delivery by her to
the officer.
Secret Service Notified.
Lieutenant -Vanstrum Immediately
notified the army intelligence section
and was told to proceed with the UNI
dertaking. At the same time officers
and since that time have never lost
trace Of Koerner and his confederates.
Conferences held between Lieutenant
Vanstrum, his fiaence, Koerner and
Rhoade, who is alleged to have fur
nished the money. were photographed
by officials in Washington.
a. P. Sherwood and p. D. Haley,
agents Of the department Of Justice in
Des Moines were notified and also
First Lieutenant Walter G. Arnold,
camp intelligence officer at the can
Torment and First Lieutenant Louis
Tyroler.
Minneapolis Man Held.
The blank bid was received accord
ing to schedule Lieutenant Vanstrum
opened It and photographs of the
h1ank ihiA nh -. No y
for 20 per cent Of the purchase price
as it required. were taken. The officer
then in the nresAnnas ns 1ritnesse= 81.
led in the bid and the check and they
again were photographed.
Gross. q member of the firm Of
Gross Bros, dyers and cleaners en-
tered the case when Rhoade went to
Minneapolis where he is alleged to have
sold the contract Tor the blankets to
Gross for profit OF $4,000. The pur-
chase price OF the blankets was $685.
The bids were opened Feb. II.
Lieutenant Vanstrum in the mean
time was given check for $1,000 made
out to his hancee in Washington and
Endorsed over to Lieutenant Vanstrum.
The check never went through the
woman's hands.
The evidence that Gross knew OF the
nature of the transaction. officers say,
is not strong but he was placed under
arrest pending a hearing in the case
which probably will be held before ]. E.
Piper United states commissioner,
this morning.
At no time during their stay in Des
MONIES were Koerner and Rheades out
from under the close watch and hear
ing OF intelligence officers and agents
OF the department OF justice.
+ -