The Washington herald., 1922-06-06
Georgia Republican Lead
er Valves Hearing Be-
fore Commissioner.
DEAL IN LUMBER
SPECIFIC PLANT
Declares He Hurried Here
From Philadelphia
At Once.

John Lewis Phillips. of Atlanta
and Philadelphia. first of the al
legged war profteers to be consid-
cred by the special grand jury
empaneled for the purpose of in
yestigating war fraud charges be-
fore Congress. has been arrested.
Waving a preliminary hearing.
Phillips was charged with con-
spiracy to defraud the government
of more than s1,OOO.000 in wartime
lumber transactions, and was re
leased on S25.0OO bond. subject to
call when an indictment is handed
down by the grand jury.
The warrant for Phillips arrest
was issued last Saturday by United
States Commissioner Isaac r. Hit,
upon the affidavit of Marcus Bor-
chardt. special assistant to the At
torney General.
ArraiEned Immediately.
Upon his arrival here late yes
terday afternoon from his country
home in Philadelphia. Phillips was
taken into custody by two deputy
United States marshals and ar
raigned before Commissioner Hit.
Following his release he hurried
to downtown hotel. where he will
remain pending further action. He
stated that he did not know that
warrant had been issued for his
arrest until newspaper accounts of
such action had been brought to
his attention at his Philadelphia
home.
Besides being a millionaire lum-
herman. Phillips is credited with
being the man who perfected the
organization of the Lilly White"
Republican party OF Georgia
Amdavit Made Public.
According to the afidavit made BY
Borchardt. which attorney General
Daugherty made public yesterday
afternoon. Phillips and his partner,
John Stephens. Continuously from
February IS. 1919. until the date of
this complaint-June 3-unlawfully
and feloniously have conspired. COM
bined. confederated and agreed to-
Eether. and with divers other per-
sons to this afiant unknown. at and
in the District Of Columbia. to de-
fraud the United States"
The affidavit states that a con-
ference among the officers of the
War Department, the War Indus
tries Board at Washington. and the
War Service Committee on Build
ing Materials. was held on January
and 20. 1919. for the purpose of
devising a method Of disposing of
surplus lumber which had been pur-
chased by the government during
the world war period.
Decide on Lumber Sale.
The conference concluded that, in
order to protect the lumber indus
try and at the same time to advance
the interests Of the United States.
the sale of this surplus lumber
should be made through the organ
lied associations of the lumber in
dustry already esta blished. and that
John Lewis Phillips and John Ste
phens should be recognized by the
War Department and its officials as
the representatives Of the lumber
industry. and should be authorized
TO dispose OF all surplus lumber
that the department did not desire
to retain.
The conference also concluded
that Phillips and stephens should
not receive any compensation OF
profits cut of the sale Of this lum-
Der other than a commission of IL
per cent on the sale price. and that
the two representatives Of the lum-
ber industry should at all times do
all things necessary to protect and
conserve the best interests of the
United States.
Disregard Z. 3. I'm Charge.
obligations of John Lewis Phillips
and John stephens to conduct the
business Of disposing Of this sur
plus lumber fairly and honestly"
the affidavit reads. "in accordance
with the understanding arrived at
at the conference. in behalf of the
United States and of the lumber
industry. said John Lewis Phillips
and John Stephens. continuously
from February 25. 1919. until the
date of this complaint. unlawfully
and feloniously have conspired
to defraud the United
States, and to commit divers Of
fenses against the United States.
by conducting said business in their
own personal interests without re-
gard to the interests of the United
States or the lumber industry,
whereby large sums of money. ag-
creating more than sl,000.O00.
would be lost to the United States.
and the purpose of the agreement
arrived at at the conference would
be utterly defeated
Said Phillips and Stephens. in
stead OF disposing OF this surplus
lumber through the usual and ordi-
nary channels OF the lumber trade.
nd to the best interests Of the
Saited States, as was contemplated
-, the conference and agreement.
<--~ to enter into fraudulent and
secret agreements. with persons not
heretofore established in the lum-
Der industry. as we'll as with others
who were so established. to dispose
Of said lumber not only at prices
very much less than the market
prices of such lumber at the time
of such disposition. but upon terms
which would involve the receipt by
said Phillips and Stephens of re-
bates and commissions from those
persons for the personal benefit and
Advantage of said Phillips and
stephens.
Said Phillips ana stephens were
to bribe certain government Off
cials who had duties to perform in
the premises: and said Phillips ana
stephens were thereupon to make
returns to the United States in