Evening star., 1922-07-18
TEN MEN INDICTED
| IN LUMBER DEAL
War Fraud Grand Jury
Charges Conspiracy lnvolN-
/ ing $1.854.076 Loss.
FIRST RESULT OF PROBE
Action Follows Justice Depart
ment's Determination to
Sift War Deals.

An indictment charging conspiracy
to defraud the United States out OF
more than sl,OOO,000 in connection
with the disposition of government
lumber following the war was re.
turned today by the special grand
jury which has been in session since
June l investigating the transactions
This is the first Indictment to be re-
ported by the grand jury empaneled
to invesiig.t tie war frauds for which
investigation by Attorney General
Daugher.y ard a special corps Of assist
ants. Congress appropriated 100000
Those indicted are:
John L. Philips John Stephens,
Ernest c. Morse, Charles S. Shotwell
George NJ. Chambers. Frank T. Sulli-
van, Roland Perry. Charles Philips,
jr.; Gus Eipzen and Mitchell A.
Tourat, jr.
Lumber Agents Employed.
The indictment sets forth that the
government seeking to dispose of ex-
cess lumber after the war placed
John Lewis Phillips and John Ste
phens, as agents of the lumber inter-
ests, in charge of disposing of the
lumber, for which they were to re.
arrangement had been made at a
conference between the War Depart.
ment, the War Industries Board and
the war service committee in 1918
and contract was signed with Phil
lips and stephens in February, 1919
Instead of disposing of the lumber
through the usual and ordinary
channels of the lumber trade, and to
the best interests of the United
States, it is charged the defendants
conspired and agreed to enter into
secret and fraudulant agreements
with persons not heretofore estab-
lished in the lumber industry, as well
as those SO established. to dispose OF
the lumber to such persons at prices
very much below the market figures
and on terms which would provide
rebates and commissions to Philips
and Stephens for their personal ben
eft and to the detriment of the United
States.
The audit of the War Department
shows that the amount of lumber sold
was valued at S4,697.171.13 for which
the United States received only $2,-
S43.095.09, leaving a balance said to
be due the government of $l,S54,
076.04.
Under $4,000 bail.
Phillips was arrested on his ar
rival at Union station, June 5. He
had been spending the week end in
United States Commissioner Hit, who
had issued the warrant and gave bail
of s25.000.
The warrant had been sworn to by
NJ. Borchardt, a special assistant to
the Attorney General, who had worked
up the case. The presentation of the
matter TO the grand jury was in
charge of Assistant Attorney General
Grim and United States Attorney Cor
don. The other defendants are expect
ed to arrange bail at once.
The lumber scandal was made pub
lie by Representative Woodruff. who
had printed in the Congressional
Record copy of memorandum un-
der date of March II, 1922. written
by Ernest c. Stewart, in charge OF
the contract and audit section. This
memorandum showed that the con-
tract dealt only with four kinds Ot
ium ber-sprYce. pine, fir and hem
lockout that the sales included
thirty varieties in which We're in
corporated millions of feet of mahogany,
cherry, walnut and other valuable hard
woods.
The memorandum also indicated
that in nearly every instance the pur-
chaser named in the sale was not the
real purchaser. and the price return
ed to the government for the mber
did not in any instance represent the
amount received from the ultimate
Conscience