Evening journal., 1921-10-24
CHARGE FRAUD
INSTOCK SALE
National Guarantee Credit
Co. Accused of Nation
Wide Manipulations
$4,000 SAID TO
BE INVOLVED

Sale of more than $500. 900 worth
Of stock through false and fraudu-
lent representation: fraudulent ap-
preparation OF more than 100000
to their own accounts the forma-
ton of four other companies. through
which they manipulated for their
own benefit money obtained from
purchasers Of stock. and gross mis-
management are charged against the
officers of the National Guarantee
Credit Corporation in a bill in equity
filed i'm Philadelphia by n group Of
stockholders Of the corporation.
After Judge Rogers. who received
the complaint in Common Pleas
Court No .. had read the charges
he announced that he would notify
Director Cortelyou to investigate the
operations OF the fve companies in
volved. Then he remarked that
'it would be lucky II somebody did
no go to Jail or II there were not
warrants issued by the District At
torney for conspiracy.
The court appointed Thomas J.
Meagher and Francis NJ. McAdams
temporary receivers for the corpora
ton and issued an injunction against
the corporations interference with
the receivers or disposing Of any
Of the property or assests Of the cor
poration.
The companies involved with the
National Guarantee Credit Corpora
ton IN the action are Worth & CO..
fiscal agents for the corporation; the
Federal Finance Guaranty Corpora
ton. Justice & Co. promoters OF the
Federal Corporation. and the Ma
tional Music Stores Inc.
Officers OF the National Guarantee
Credit Corporation mentioned in the
bill OF complaint are William II
Hubbard. president; James Callans
vice president, II. A. Arnold. treas
urer. Charles G. Gartling. secretary
and COUNSEL r. A. Rowcroft. assist
ant secretary. and Franklyn spiese,
general manager. All Of those men
are directors. together with A. NJ.
Fiannigan.
Three thousand men and women
scattered over tho length and breadth
Of the United states are those who
invested in the National Guarantee
Credit Corporation. according to the
court record.
Those who brought the action are
William T. Bryan. T wayland Pot
ter. Joseph Bechtel. Andrew +.
snively. A. J. Crawford. Bertha
Hummel. Gustav A. Hummel. Theo-
dore T. Smythe, Charles J. Olsen
and the Harrison Brush Company.
Their combined holdings are 144
shares OF preferred stock and sew
enty-three shsres OF common stock.
In the brief hearing before Judge
Rogers yesterday Mr.. Gartling, who
appeared as counsel. said that ne
would disprove all the charges
brought, Malice on the part OF
some OF the plaintiffs, he said
caused the suit.
The bill Of complaint states that
the offices Of the defendant corpora
ton are in Suite 1900. Franklin
Bank Building
The plaintiffs set forth that the
National Guarantee Credit Corpora
tion was Incorporated January 25.
1919. under the laws OF the State of
Delaware. ito conduct general
banking business but in particular
10 finance the sale OF all motor We
hicles (trucks tractors and passenger
cars), for dealers and consumers. on
the ume-payment plan"
The corporation was authorized "a
issue 100000 shares OF preferred
stock at $50 par value. an aggregat,
Of 100000 and 100000 shares o
common stock. without a named pal
value
After the Incorporation OF the Ma
lional Guarantee Credit Corporation
according 70 the complaint. It's OF
ranizers joined in forming Worth 4
Co Delaware law furnished IN
charter. Capitalization was auth
orized at 100000 mo par value
stock. most OF which is held by IN
incorporators
The complaint continues:
The principal purpose for whic
Worth & Co.. was incorporated, an
the only business Il transacted sine
its Incorporation was the sale OF m
stock OF the National Guarante
Credit Corporation"
Here comes the charge OF frau
In the promises quoted for H.
"saiesmen's instruction boof;"
"Immediateiy after the organiza
ton Of the two companies a contrac
was entered into whereby che Ma
flonal Guarantee Credit Corporate
agreed 10 pay Worth CO. IS per cen
Of the selling price OF each unit o
stock sold. each unit consisting o
two shares Of preferred and on
share OF common: II also agreed q
pay Worth & Co. all Of Its expenses
including upkeep OF Offices. salar.
of officers. etc; II also furnished ans
equipped all the Offices OF Wortl
& Co.; there we're about twenty
eight offices OF Worth & CO. scatter
cd throughout the United States
the expenses OF which are borne b,
me National Guarantee Credit Cor
porauon, defendant in this action.
IL was subsequently agreed b.