Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-03-02
PROMOTER Of
ALLEGED OIL
FRAUD NABBED
II. D. Mitchell of Oklahoma
Arrested at Devils Lake
By U. S. Marshal.

By.U. S. Marshal.
Devils Lake, N. D., March I'll. D..
Mitchell of Oklahoma. City, Okla
homa. was arrested in that place this
week by a deputy United States mar
shal. on a charge of using the mails to-
defraud resulting from his ~organiza-
Region Oil company. $4,000 of. funds
OF which he is charged with misap-
propriating. The federal grand jury,
{ sitting in Fargo, will consider
Mitchelrs case. as several Devils Lake
men have been subpoenaed to appear
before that body to tell what they
snow about Mitchell and his oil
schemes.
The arrest of Mitchell brings. to q
schemes in which he Ia alleged to
have been implicated. Last summer
nc arrived in Cando. Towner county,
from Oklahoma City. and becoming
acquainted with August Straub. an in
Huential resident of hat city. and
SAID that he had a lease on some land
IN Oklahoma that had oil possibilities.
he said the lease would cos $96, 900
and that he had an option thereon,
but that he would organize a company
to take over the lease and drill oil
wells on the land.
Worked in Towner County.
During the summe Mitchell was
instrumental in interesting a number
OF Towner county men in the project.
te came to Devils Lake. where he;
together with a number of oil sales
men whom he brought from Okla
homa, with him, cut a wide swathe in
the Great Northern hotel here. enter
tanning .lavishly. After having firmly
located himself in the city and inter-
estlng some local men. in his project,
he organized the Lake Region Oil
company. with capitalization at $780,
WOO. and members Of his gang gave
out the tip that the company would
soon make them all millionaires. The
company was not Incorporated, how
ever. but organized under the laws IL
okiahoma as a trust company, Stock
in it was sold at $1,000 a share. and
those who purchased the stock were
Assumes A~utocracy.
But Mitchell spoiled his game when
drawing up the constitution or articles
of association. when he had incorpor-
ated in them that he was to be the
sole trustee and manager of the COM
pany, and that no money was to be
spent by anyone but him, and that he
had absolute powers to check against
the funds of the company. He also
invested himself with authority to ap-
point two other trustees and these
trustees would have complete charge
OF the company.
Some of the stockholders became
suspicious. of this arrangement. and at
an indignation meeting in Devils Lake
in the fall, Mitchell was compelled 10
appoint Silver Serumgard, 8. A. Baker
and Ole Woolhood trustees, after
which his resignation as trustee was
secured. NJ
These trustees. however. were IN
able to find out anything" definite
about the amount Of money Mitchell
had received or the status of the al
legged lease. SO some of them a short
time e went to Oklahoma City to
meet Mitchell by appointment. who
said he would prove to them that
everything was all right.
Js Seemed Irregular.
Before the Devils Lake men got in
touch with Mitchell. they did some in
vestigating on their own hook and
learned that the actual cost Of the
lease upon which Mitchell had the on
ton was not $4,000 but $25, 900 and
that Mitchell, instead of having paid
$4,000 down on it, as he alleged. had
paid only $4,000. They also learned
lhAl IiC opIAOI tIdu cAplIcu. rDuC the
Atlantic Petroleum company, who
owned the land. consented to extend
the time. ~whereupon the Devils Lake
men said they would take it over fol-
$27.S50. and then deposited $4,000 &c
seal the bargain. In the meantime
however. it has been impossible to
raise the rest Of the money, and I,
now looks as IL the Devils Lake and
ether North Dakota members Of the
Lake Region Oil company, have lost
all they have put in the scheme,
Their attorneys state that in all the
actual loss will amount to about $72,.
900. as Mitchell admitted to them un-
alone had collected 5000 from resi-
dents of Ramsey. Benson. Towner and
Nelson counties. North Dakota. on the
strength of his claim that he held the
: least option and that the land would
bring oil.
Seven Suits Instituted.
Aside from this. even suits have
been instituted in Ramsey county, and
will be tried in this city at the March
term of the district court. enjoinine
Mitchell from collecting or disposine
of about $4,000 worth Of promissorS
notes which had been given him by
people hereabouts in payment fol-
stock in the Lake Region Oil com.
pany. The specific basis for action ir
these suits Is that Mitchell misrepre.
sented to the makers OF the notes the
situation. telling them that he actual.
ly owned the lease and that the Lake
Region Oil company was a corpora
ton. upon the strength OF which. they
charge. they bought. the stock and
CAV Mitchell their notes.
Arrest is Made.
Since Mitchell'sN difficulties with the
stockholders of the company, and
since his resignation. C.. NJ. Zeibach OF
Devils Lake, who was formerly his
secretary. has been appointed receiver
Of the company and is now in charge
Gen. M. H. Creel of Devils Lake had
been appointed with power of attor'
ney by the trustees to go to Oklahoma
/E.fH5r. =. .#. ~.