The New York herald. [volume] (New York, N.Y.) 1920-1924, 1922-06-06
]. l. PHILLIPS HELD
IN WAR FRAUD CASE
Chairman of Georgia Repub-
lican State Committee Is
Arrested.
TIMBER DEAL INVOLVED
1t Is Alleged He Conspired to
Get Commissions and
Rebates.
TIMBER DEAL INVOLVED
Special Dispatch to TIE New Yoax HERALD

Special Dispatch 10 THE New YORK HERALD
New York Herald Bureau
Washington. ID. C., June s.
John L. Phillips, lumberman and
chairman of the Republican State
Committee of Georgia, was arrested
here to-day on a warrant in connec-
ton with an alleged conspiracy to de-
fraud the Government In post
lumber transactions and released on
$4,000 bail.
Attorney General Daugherty made
public tonight an AFFIDAVIT of Marcus
Borchardt. Special Assistant Attor-
ncy-General. upon which Commits
sioner Hit issued warrant for Phil
lips's arrest. The affidavit recites the
manner in which Phillips is alleged to,
have conspired with others to dispose
of surplus lumber supplies at the end
OF the war by methods which il is al
legged would have meant loss to the
Government Of more than $1,000, 900.
Phillips characterized the charges as
"old stuff and said they were. traceable
to Democratic propaganda He said
he believed the charges also were an
outgrowth OF the expose of Representa-
tives Woodruff (Mich) and Johnson
rs. d. of inaction by the Department
Of Justice in war fraud prosecutions.
When the warrant was issued for
Phillipss arrest ne was in Philadelphia
He is head OF the lumber firm of Phil
lips & Stephens OF Townsville, Ca,
with a branch office in Philadelphia I'M
der the name of J. l.. Phillips & Co.
Phillips said he boarded train for
Washington as soon as he learned the
warrant for him had been issued.
The affidavit states that upon the
signing of the armistice in November.
1918. the Government took an inventory
of surplus materials purchased for the
wa. which showed more than hundred
million feet OF lumber on hand.
There was meeting of a board of
officers representing the War Depart
ment and the War Industries Board with
representatives. OF the lumber industry.
The lumbermen protested against a sale
of the surplus lumber by the Govern
ment directly to dealers and consumers
on the ground II would result In an I'M
fair depression OF prices.
II was finally agreed that the lumber
should be sold through organized asso-
Citations OF the lumber industry already
established and that John l.. Phillips
and John Stephens should be recognized
by the War Department as the repre-
sentatives Of the Industry. They were
authorized to dispose OF the surplus
lumber or any part OF 1t which would
not be needed by the War Department:
in such a way as to protect the lumber
industry and the interests OF the United
States.
1t was proposed that Phillips and
Stephens should not receive any COM
pensation or any profits out OF the sales.
according to the Governments affidaviis.
beyond a IL per cent commission.
This agreement between the/ Govern
ment and the lumber Industry was put
In writing, dated February rs. 1919. and
signed by Phillips and stephens and on
behalf OF the Government by c. w. Hare
of the War Department.
The affidavit alleges that Phillips
and stephens "unlawfully and feloniously
have conspired. combined. confederated
and agreed together with unknown per-
sons to defraud the United States by
conducting these sales I'm their own per-
sonal interests. 1t Is alleged that opera
lions were neither i'm the interest OF the
United States nor of the lumber indus
try. and the Government of the United
States stands to lose more than
81, 900. 900.
instead of disposng OF the surplus
lumber through the ordinary channels
Of the lumber trade. Il is alleged Phillips
and stephens entered into secret agree
ments with persons who were not in the
lumber business and with some who
were to sell the lumber at prices much
below the market price on terms that
would give Phillips and Stephens large
personal rebates and commissions.
The affidavit also states that Phillips
and Stephens secretly agreed ito bribe
certain Government officials" who were
responsible for the sale of the luriber
and to cover UP their operations In the
reports which they made 10 tho Gov
eminent
The affidavit cites the following letter.
which it alleges. was signed and sent az
the instigation of Phillips:
May 2. 1919.
WASHINGTON, D. c.
Mr.. ROLAND PERRY:
In consideration of your having
furnished information relative to pur-
chase and sale and OF your services In
| aiding us purchase from Phillips a.
| Stevens approximately four million
feet of lumber at Noonai. Wis, and
| supplying information IS 10 how and
where to sell the lutnbe. ar profit
ana your AGREEMENT 10 seTNc US III
| connection with the shipment and our
| efforts to market all of this lumber up
to one-half of your time. We agree to
pay you So per 1000 fess upon all
| lumber sold and purchased by us In
| lieu of salary and travelling expenses
and In full Compensation for your
services.
| Yours truly.
METROPOLITAN LUMBER Co.
A. A. Henry is president of the COM
| nam, and SIGNED the latter a ouch