Omaha daily bee., 1921-08-05
State Acts
In Omaha
Failures
Attorney General Asks for
Grand Jury to Investigate
Blue Sky Promotion
4 Schemes Here.
Postal Laws Violated

A promise that state action will
he taken by September ] against
principals in big stock-selling cor
porations through which Nebras-
kans have lost millions of dollars
was made yesterday by Clarence A.
Davis, attorney general of Nebraska.
At the same time that he gave
out letter addressed to Judge
Troup, requesting him to call a
meeting of district judges at once in
order to impanel special grand
jury to investigate these cases.
Davis made known the following
facts:
That he holds evidence sufficient
to convict IL to IS officers OF de-
funct companies for embezzlenent
and misuse of corporate funds;
Damage Suits Possible.
~ That there are three times as
many more directors, attorneys and
other prominent men who "winked
at" even if they did not actually
profit by fraudulent transactions.
{ against whom he can obtain evil
dence;
That stockholders who suffered
heavy losses in several bankrupt
concerns have sufficient grounds,
in his opinion, to recover damages
from directors in whom they re-
posed trusts;
That three or four involved COM
panies were unquestionably con-
ceived with only fraudulent promo
ton intent:
That federal authorities will CO.
operate with the state in prosecut-
ing the cases.
Judge Troup will call confer
cnce of district judges the middle OF
this month to consider Attorney
General Davis request for the i'm
,paneling of a special grand jury, the
Judge announced at the end of
lu. cheon engagement with the at
torney general yesterday noon.
~ can't call 1t sooner because
Judge Redick and Judge Wakeley
are out of town." he said.
Troup will vote in favor of i'm
raneling the grand jury, he inti-
mated.
Assures Prosecution.
Should the district judges for any
reason fail to call grand jury, the
attorney general asserted he would
begin prosecution of the cases him
-elf.
S"I can proceed against at least
dozen of them myself directly, but
the mass OF evidence and its variety
is such that it should best be ham
died by a grand jury he explained.
He explained the federal angle in
the same way.
1--WE could prosecute about Is per
cent of these cases easiest on
charges of using the mails to de-
fraud, but IS per cent would be
best handled through the district
court"
"What we need is wholesale
cleanup of these Questionable enter
prises," he emphasized.
No Estimate of Losses.
Davis declined to estimate the
amount of money lost in corpora
tions which have failed recently.
THE actual loss by embezzlement
is not large but the loss from gross
misrmanagment and misuse of funds
is enormous. / couldn't begin to
estimate it," he declared.
Hundreds of lawsuits, promising
TO keep all the legal talent of Ne
braska busy for months to come, will
probably grow out of these cases. he
admitted. .-
Action in Three Weeks.
Asked whether he would not re-
quire a large array of assistants III
prosecuting these cases, Davis re-
piled that he would take up that mat
tcr as soon as the judges decided on
impanel;ng the grand jury.
1--WE want to begin acton within
three weeks" he said.
Davis will be in Omaha almost
constantly from now on i'll handling
These cases.
He spent the whole afternoon
Wednesday with auditors working
on the books of various concerns.
C..: Had Claws Dol