The New York herald., 1922-04-18
SAY EXCHANGE firm
HELPED BUCKETEERS
Clark, Childs & Co. Involved
in Crash of Chandler
Brothers.
'REAPED NET PROFITS
Client of Bankrupt House
Tells Court of Inter
locking Deals.
CHARGES EMBEZZLEMENT
Change Of Venue Denied to In
solvent House in SUI
preme Court.
CHARGES EMBEZZLEMENT

That the firm OF Chandler Bros. &
Co.. which failed last July with La
bilities OF $3.000,o0o operated as a
bucket shop with the support and aid
Childs & Co. of 165 Broadway. was TIE
charge made before Supreme Court
Justice Cannon in Brooklyn yester-
day.
John A. Kilmore, now of Mechanics
burg, Pa, has brought suit in the
Supreme Court OF Nassau county for
the recovery of $500 arising out of the
alleged Misrepresentation by the Chan
dler company of 100 shares of Erie
Railroad stock and also for credit
balance he claims is due him.
The defendants asked for a change
OF venue from Nassau county to New
York county on the ground Of "conven-
icrce of witnesses and the Interests of
Justice" Among the defendants are
James +. A. Clark. Herbert H. Childs.
Charles A. Morse. Frederick Pulsifer, w.
Claiming Burbank. William Z. Meffert
Richard Wharton and Hans Nova.
1ldIk. SniluS 0 NJ. Is liOl iidulcu DIS
(, defendant but the men above referred
IT, are declared to be members of that
firm. The other defendants are Edward
s. Little. Lewis Waring. Earl Menden-
hall and Fred t. Chandler. .Tr.. trading
ss Chandler Brothers & Co, and as in
dIviduals.
klmore contended he bought 100
shares of Erie Railroad stock through
Chandler Brothers and deposited $500
ii. l.. -
chased through Clark. Cnilds & Co..
but was resold the same day. At the
direction OF Clark. Childs & Co., he
added. a statement of account was sent
to him stating the stock was being car
ried for him. More margin was de-
n,anded of him and he put up $500 more
On June s. 1921, to protect TIE threat
ened sale of stock (which was not even
carried"
Contention OF Defense.
The defense contends that Clark.
Childs & Co. for years had executed
buying and selling orders for Chandler
BROTHERS and that the latter became
Indebted to the former for the purchase
ys various securities and had pledged
certain stocks with that firm as security.
When Chandler Bros. & Co. went bank
rupt, Clark. Ciiilds & Co.. pursuant to
rule and customsold out the securities
held by them for the account of Chand-
lcr Bros. & Co.
Referring to the Chandler Bros. &
Co financial condition after bankruptcy,
counsel for the plaintiff in a rrief filed.
said.
However. from among assets of
otherwise negligible value-there being
less than 100000 liquid assets for dis
tribution among over s3.ooo.ooo Of
creditors-dligent search later revealed
documentary proof that behind the
shadow and empty form of Chandler
Bros. & Co. loomed the substantial
frame of one of the great Stock Ex-
change firms of New York.
ITO the documents discovered was
added the testimony of three OF the four
bankrupts and OF some of the employees
OF the defunct firm. which rounded out
the documentary proof and disclosed
beyond the point of doubt that during
Chandler Bros & Co.'S seven months
career as an insolvent and as bucket
shop It had been supported and aided
by the great and rich firm Clark, Childs
e. Co. Of 1s5 Broadway, whose partners
had full knowledge of Chandler Bros.
& Co.'S circumstances.
Reaped Gross Profits.
1T was revealed that during the lat
ter half of this period the carcass Of the
defunct, though outwardly lifelike. Chan
dler Bros. & Co. had been supported,
paneplied and paraded before the public
by Clark. Childs & Co.: that its affairs.
which, fell from its lifeless hands. had
been completely managed. and that II
had been continuously maintained and
stcered IN fraud by the powerful arm OF
Clark, Childs g. Co: that the latter had
by it's professedly gratuitous and gener-
Gus assistance in distress reaped almost
all of the gross profits and more than all
of the net profits OF Chandler Bros. &
Co, and during the harvest had sup
ported and held up Chandler Bros. e.
co. MS a solvent. reputable house, though
it was daily bucketing It's customers or
ders BY wash or offset sales or pur-
chases of the customers stocks, which
we're at no time bona fide carried for
the customers. and was persistently and
calculatedly embezzling moneys and Sc
curties of it's customers"
In an affidavit. w. Claiming Bur-
bank. one of the defendants. denied the
Chandler firm was operated "as colos-
aat bucket shop which went through the
form Of purchasing and selling stocks on
the exchange through Clark, Childs &
Co. but did not actually hold or carry
stocks for its customers. This statement
Is absurd on its face"
The motion for change OF venue was
denied.
no member OF Clark, Childs e. Co.
would comment upon the charge.
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