The New York herald., 1922-04-07
OIL FRAUD CHARGED
In INDICTMENT OF 10
Ten New York Men and Seven
in Boston Accused in Al
legged S1,000,000 Plot.
ONE BANKER rs INVOLVED
Activities Of Petroleum Cor,
poration Of America Mem
tioned-FIint Makes Denial.

tioned-FIint Makes Denial.
BosroN, April 6.--An alleged oil fraud
said to involve the loss OF 100000 TO.
investors here and possibly millions In
ether parts OF the country was disclosed
fy Federal attorneys here to-day when
they made public the names of nineteen
oil hnanciers In New York. Boston ana,
Tsolyoke who have been indicted secretly
by the Federal Grand Jury for fraudu-
lent use or the mails. s-
I Charles NJ. Ludden. an attorney. ana
John r. Giicreast. an official Of the f'N-
change Trust Company, both of this city,
and Frederick e. Hersey, president OF
the Motor Speciality Company OF Wall
tkam, were arrested on the charges
which concern the activities OF the pe-s
troieum Corporation OF America- Aif
pleaded not guilty and were held IN
S2.500 bail "a.
The Federal authorities gave out the
following additional names or those In
dicted Chtpman f. Babcocis. Jacob ii.
Mettier. Fl. Francis Foley. Frank w.
Bernard, Edward A. Clark, all Of Bos-
ton.
Edward n. Bushnell OF Holyoke.
Aiwyn Bah, Jr, Ed win b. Caldwell,
Charles r. Flint. George e. Gudebrod.
Boland H. Blaisden, Clarence D. Innlan,,
Burt Fl. Clements, Raymond d. Fuller,
John A. sheliite and James I. Carlton.
an Of New York city. 7
Nature of Charges.
The Government alleges the petroleum.
corporation, organized under the laws
of Delaware. falsely advertised that It's
capitalization was 3So.0oo.o0o. that the
Standard OIL Company was Interested
In II, that # constituted tho holding
company for thirty-one Oil concerns,
that It had capital stock for sale ana
that 1t had properties producing 12o.-s
900 barrels Of oil daily with an annual
income Of $50,000s00o. q
The defendants well knew" the in-
dictment said. that the Petroleum Cor
poration Of America had not been and
was not fully financed. that they were
selling stocks they did not have, that
they did not operate extensive oil fields
and that they had newer acquired a prop
erty consisting Of thirty-one companies
named by It In its communication
The defendants were also aware, the
Indictment declared. that the standard
OIL Company was not and never was
interested IN the corporation. and that
the statements as to production, income
and capitalization were false. ~
IN 1919. the indictment alleges, Jacob
w. Mettier and John A Shellite Of New
York came to Boston, representing TO
Babcock & Ludden. who are said to
have been interesfed In the Franklia
on Company. that the petroleum cor
poration. than being organized. would
take over tho Franklin OIL stock and
issue stock In the corporation In ex-
change. share for share. Franklin Oil
stock was conveyed to the corporation
the indictment said. together with oil
properties located In Colorado.
Statement Makes DENTAL. X
subsequently,, 100000 Of unsold
treasury stock of the Franklin Oh was
sold by Frank Bernard, with the IN
derstanding that II could be exchanged
for Petroleum shares. The defendants
well knew" the Indictment declared.
that the Franklin on Company had
never been taken into any merger or It's
property delivered to tho Petroleum Oh
Corporation OF America on the basis OF
an exchange OF its stock at par for the
stock of the Petroleum Corporation OF
America. ta
Frederick z. Hersey, ono Of the three
arrested, issued a brief statement pro-
testing his Innocence Of the charges
against him.
II was connected with the Franklin
OIL company, inc SLdLclIE-lN Stlu.
was used as a figurehend for the accom-
mediation of otherA My arrest is n dis
ttnct surprise"
According to Federal officials. Jacob
w. MettIer Is at present In Texas, and
III. Francis Foley. another OF those m
dicted, Is IN Brooklyn. Edward A. Clark
Is said TO be on vacation trip to
Florida
z. q. Caldwell, whose name also is
mentioned IN the Indictment. fs president
OF the American Standard Metal Prod
ucts Corporation. He refused TO discuss
the indictments, but hfs attorney, W.
Morton Garden. declared that 20 ms
knowledge only IS. 900. 600 OF the author
fzed stock of $50, 900. 600 had been issued
by the petroleum corporation. and that
none OF II had been sold or rlfsrcpre-
scented 20 far as the corporations direct
hnowledgs was concerned.
Charles r. Flint when Informed
through the newspapers Of the finding
OF an Indictment In Boston alleging con-
sriracy with number OF persons In
rludinr his New York. associates on the
board Of directors fthe Petroleum Cor
poration of America. TO use ths mails TO
defraud. last night declared evnphatically
that II must be due 70 q thorough mis-
apprehension, that there was ana couid
bo absolutely no foundation for such ac-
cusa ton and that cone one must have
furnished the authorities with rnfslead-
ing and wholly untruthful Information
IIoLYoKE, Mass. April 6.--Edward III.
BUSHNELL OF this city. who with other
men was indicted by the Federal Grand
Jury on a charge OF using The mails
with intent to defraud as result OF
the activitiesof the Petroleum Corpora
ton OF America, said this afternoon tnat
~ knew nothing OF the activities OF that
concern. Mr.. Bushnell said he was
director OF the Franklin OH Company.
and when that concern sold out about
four years ago 20 tho Petroleum Cor
poration hfs stock was Transferred to
the latter concern. He said he had
never held office in the corporation and
u..~A