New-York tribune., 1920-11-07
Held
On Bond Deal
Fraud CHARGE
CONTINUED from page sne)

obligated' to take the securities at "a.
he beat Fanshawe down to the comproS
mise price OF S912, which, the Comp
trolcr asserted. was the one stain on
his administration
Justice Kernochan urged yesterday.
in order to prevent similar losses 70
the state in the future. that suitable
action should be taken by the Legisla-
ture and the Governor with q view to
safeguarding public funds.
On the submission of the proper pa
pers to him. Justice Kernochan said
he would be ready to issue warrant
for Comptroller lravis's arrest. 1t is
not probable that this action will be
taken. however. according to state
ments made last night at the District
Attorneys, office. The indications are
chat tic entire matter will be taken to
The grard jury Immediately and that
n!canWhlic the Comptroller will remain
in thc custody of his counsel, Mr.. Me
dale. Nj. Pccora intmated that this
method Of procedure probably would
be followed
The placing Of the entire investiga-
ton before the grand jury may re-
suit, it was said last night, in the
indictment of other persons who have
figured prominently in the inquiry
Justice kernochan's decision held
that the testimony taken during the
Investigation had shown that the Comp
trollcr has had about S6,000,0O0 to in
vest annually for the state sinking
funds ard TINT 92 per cent Of the
inves. s.tmcnls made during the last five
years had been negotiated through two
firms George +. Gibbons & Co.. Of
40 Wall Street. and Albert l.. Judson.
who was associated with Fanshawe.
The decision says that Gibbons g.
Co., in their sale Of bonds. amounting
to more than $1,000, 900, made q great
profit on these transactions and seemed
to be favored By the Comptroller. Their
offers were frequently accepted, the tes-
timony showed, about the same time
that offers from other firms that we're
equally as good and in some cases bet
ter were refused.
Judson Made Many Sales
The decision also claimed that ,Tud-
son made large profits on each OF the
sales to the Compt roler that ne nego-
tiated. These Ju1sor sales amounted
to 76i3 PEI lent o, az the bonds
bought by the state. Judscn was able.
Judge Kernochan sad. to go out into
the open markct afte, agreeing upon
purchase price With the Comptroller.
and before the day Of delivery acquire
the securities at Il n Ich lower figure
than that agreed upon with the tate.
The court alleged that it would not
be held that the Comptroller was Ur-
able to make purchases ~ the same
scale OF prices that Judson bought Al,
because it had been testified to by
Of these transactions of Judson's the
seller thought the bonds We're being
purchased by the State Of New YORK
and declared that the state could have
acquired them at the same price at
which they were obtained by Judson.
Judge Kernochan said that it seemed
from the enormous profits made by
oudson that little or no care was taken
by the Comptroller in the investment
man nad an exceptional opportunity
to profit by this laxness. The court
expressed the opinion that in the
moral obligation sale" of November,
1917, the state paid 991s to W. s.
anshawe & Co.. acting for Judson.
>ithough the market price was 82 at
thc time of the pur>hase.
The District Attorney examined
carefully into all the circum stances
surrounding thie sale, the court as
serted, and ample opportunity was
given TO all to explain the reason for
It. The testimony was so conflicting,
and witnesses were SC contradictory,
that it was absolutely impossible to
establish any basis on which the c,,-
'atence Of any moral obligation to
purchase the bonds could rest.
The decision maintains that the pur-
chase OF this block Of securities, which
was so Improbable to the state. was
made by the Comptroller without con-
sulting with the Attorney General, his
legal adviser. lie made the purchase
on his own responsibility and without
Jusfiticatlon, and as a result of it the
state lost unnecessarily $4,000
Justice kernochan praised Mr.. Pecora
for his; handling of the investigation,
and declared that the Assistant District
Attorney deserved the thanks OF the
community for The facts that he has
brought to light
None of the principals whose names
nave figured prominently in the in
qulry vas III court esterday, although
Mr.. Travis was in the building when
the decision was rendered.