New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1922-06-23
sl,OOO,OOO Oil
Fraud Charged;
Six Are Indicted
Petroleum Producing and
Refining Corp. and Pro.
mOtcrs Accused of Com
spring TO Misuse Mails
Many Dupes Reported
Names of Prominent Finan-
ciers Used as ''Indorsers"
of Fifth Ave. Concern

An alleged oil stock promotion fraud
in which the investing public is said
20 have been mulcted Of nearly $1,000
600 was revealed yesterday with the
fling IN Federal Court Of an indict-
mcnt charging the Petroleum produc-
Ing and Refining Corporation and six
individuals connected with ts finauc-
ing with using the mails 10 defraud.
When a receiver was appointed for
the concern in January. 1921. 1t was
found that even the furniture had been
sold from lis office az fss Fifth Ave
rue. and that The only asset available
for the payment o. creditors was a
certificate for 800 shares Of worthless
stock
Moses Polakoff. tho Assistan. United
States District Attorney. who presented
the case 20 the grand jury. said ycster-
day that he had been impressed as
much by the crestfalien air OF the vic
tins whom he had seen as By the com
pctencss Of their losses.
Invited TO Donate
All Of them had apparently felt that
n signal honor mad been conferred upon
them in the offer OF the bonds, and the
prosecutor admitted that ne had never
seen more high-toncd circulars than
those sent out by the Petroleum Com
pany Instead % the usual printed
prospectus. 10000 beautifully engraved
Invitations" were sent out 10 the
sucker list The alleged intended
victim was invited 20 inquire how he
may participate with a number OF other
business men in underwriting the origi-
nal issue Of securities Of the company
The management is composed, the
circular continued. "of responsible
business men and practical oil oper-
ators Of twenty years experience
whose integrity and ability are in
dorsed by the following;
Harry Sinclair. president OF the
Sinclair oil Company.
y. Z. Perry. yice-president Of the
Cosdon oil Company.
Charles VI. Schwab, chairman OF the
Bethlehem steel Corporation.
William +. Corey. chairman Of the
Midyale Steel and Ordnance Company.
"lndorsers" Threaten Action
Such a statement. Mr. Polakof re-
marked. was almost enough 20 win thc
confidence Of an experienced investor
but the indictment charges that II was
false and misleading. Evidence col
locted by the government indicate,
that Mr.. Schwab threatened criminal
prosecution when informed Of the use
Of his name and that Mr. Corey pro-
tested vigorously this "unjusiihable
action.
Still more misleading. according 20
the District Attorney, IL the explana-
ton Of the sale Of securities without
the customary employment OF banks
and brokerage houses.
The indictment charges that u was
part Of the alleged conspiracy that
large proportion 81 the funds received
from the sale Of bonds should be d.
vcrted 70 the use Of the individual de-
PENDANTS According 20 the report OF
the postoffice inspector who investi-
gated the case. only 30 per cent OF ire
money paid for the securities found
is way 20 the Treasury. and nearly
half Of this amount was used Tor eN-
pensc accounts and other overhead
charges connected with the financing.
OF the remaining So per cent the re-
port states, 25 per cent represented the
commission OF the road salesman per
cent was divided between the two sales
managers. George G.. Hynson and
George L. Derr; 10 per cent was paid
10 Hynson for furnishing the so-callod
sucker list" and % per cent went 20
William A. Stuart. president Of the
company. in part paymen; for OIL leases
in Texas. for which he is alleged 20
have paid approximately $4,000.
In addition the report states that
Hynson and Dcrr received a fixed
salary from the company OF $4,000 a
wear. while Stuart's compensation was