Evening star., 1922-06-06

IN FRAUD CHARGE
Georgia Republican Out on
$4,000 Bond-Loss of
100000 U. S. Holds.
Charged with irregularities in the
disposal of government lumber fol-
lowing the war. whereby more than
sl,O00,00O would be lost to the United
States" John Lewis Phillips, repub-
lican state chairman for Georgia,
was arrested here yesterday as the
first of the alleged war "profiteers"
and was released on bail for action
by the grand jury.
Freed on $c5.OOO Bail.
Phillips was released on $4,000
bail. after being arraigned before
United States Commissioner Hit, who
issued the warrant for his arrest
The hearing was brief; George T. Sui
livan. attorney for Mr.. Phillips,
waived examination and bail was i'm
mediately furnished.
The warrant, which was issued late
Saturday. was sworn to by Marcus
Borchardt, special assistant to the At
Attorney General John w. Grim, but
this became known only when the
complaint was made public last night,
following the hearing
Phillips, who first heard of the is
SuanCe of the warrant at Philadel-
phia through press dispatches. tele-
graphed authorities here that he was
coming to Washington. Deputy mar
shals met him at the station and
placed him in custody. At the COM
missioners' hearing were Assistant
Attorney General Grim. in charge of
all criminal matters for the Depart
ment of Justice; Special Assistant At
torney General H. w. Anderson of
Virginia. and Mr.. Borchardt, the com
plainant, for the government: Mr..
Phillips and his attorney, Mr.. Sulli-
van.
Above Board. He Says.
Mr. Phillips following the hearing
declared that all his transactions
with the government had always
been "clean and above board" He
said he was surprised at the issuance
of a warrant for his arrest before the
grand jry had indicted him, and at
tributed it to politics.
The complaint, made public by the
of Justice outlined the
procedure used by the government in
of it's excess lumber after
the war. which. in brief, made John
Lewis Phillips and John Stephens as
agents Of the lumber interests in the
of the sales" They were to
distribute the lumber. the complaint
said, and should receive as compensa
ton, l. per cent commission. The
had been made at a con-
ference between officers of the War
the War Industries
Board. and the war service commit
tees on building materials held IN
January. 1919. The arrangement was
in a contract signed by {.
W. Hare for the government. and by
and Stephens on February
25, 1919. Hare yesterday proffered
his cooperation to the Department
Of Justice in prosecution of the lum-
Der case.
Terms of Complaint.
notwithstanding the duty and OBJ
legation of said John Lewis Phillips
and John Stephens" the complaint
said, ito conduct the business of dis
posing said surplus lumber fairly and
in accordance with the un-
arrived at the confer
ance. in behalf of the United States
and of said lumber industry, said
John Lewis Phillips and John Step
phens, continuously from said Febru
ary 95. 1919. until the date of this
unlawfully and felonious-
y have conspired to defraud the
United States by conducting said
business in their own personal inter-
ests without regard to the interests
If the United States or of the lumber
whereby large sums of
100 would be lost to the United
States and the purpose Of the agree
nent arrived at at said conference
would be utterly defeated.
said Phillips and Stephens. instead
If disposing of said surplus lumber
through the usual and ordinary chan
iels Of the lumber trade and to the
,est interests of the United States, as
vas contemplated by said conference
md agreement. were to enter to
and secret agreements
With persons not heretofore estab-
Is with others who were SO estab
ished, to dispose Of said lumber to
uch persons not only at prices very
much less than the market prices Of
'uch lumber at the time of such dis
position, but upon terms which would
involve the receipt by said Phillips
md Stephens of rebates and commits
lions from those persons for the per
'onal benefit and advantage Of said
Phillips and Stephens, and said Phil
ips and stephens were to bribe GER
ain government officials who had
luties to perform in the premises;
md said Phillips and Stephens were
hereupon to make returns to the
United States in which their said
conduct would be con-
.ealed and were to induce said Off
ials to do likewise"
Letter Il Embodied.
Embodied in the complaint was the
ext Of letter dated May 2, 1919, al
eyed to have been caused to have
,een written" by Phillips to Roland
Perry of Washington, d. c. 1t read
IS follows:
"In consideration Of your having fur
lished information relative to purchase
nd sale and of your services in aiding
Is to purchase from Phillips and Ste /
hens approximately 4,000, 900 feet Of
umber at Nenah, Wis, and supplying
as to how and where to |
ell the lumber at profit and your |
greement to serve us in connection f!
With the shipment and our efforts to !
market all of this lumber up to one /
alf of your time we agree to pay you |
2 per thousand feet upon all lumber /
old and purchased by us in lieu of |
alary and travelling expenses and In ;
uIl compenSa ton for YOUR services |