The Omaha morning bee. [volume] (Omaha [Neb.]) 1922-1927, 1923-10-09
Hotel Promoters
Given Sentences
to County Jail
Frank Schaaf Must Serve One
Year and Gregg, Gore
and Lohmeyer Three
Months.

Lincoln, Oct S.-F'rank L. Schaaf,
president Of the Nebraska Hotel COM
pany. was sentenced to a years inn
prisonment in the Dodge county Jail,
in federal court here today. T.. Q.
Gregg, James II. Gore and II. L. Lob
meyer, other officers in the company,
were given sentences of three months.
The four men pleaded guilty a week
ago to the first count of an indiet-
ment charging them with using the
mails to defraud in connection with
Hotel company and the Nebraska
Building and Investment company.
Execution of sentence was sus-
pended for 80 days. except in the case
Of Gregg, who indicated a desire to
begin serving at once. Judge Munger
also ruled that surrender could be
made at any time within the 30-day
period to the United States marshal.
Addressing the court before SEN
tence was passed. the hotel company
promoters assured the judge that they
had acted in the best Of faith in their
promotion and urged that that be
considered in determining the sem
tence.
+ w. c. Dorsey OF Omaha, special
prosecutor for the government, out
lined, to considerable extent. the
financial operations of the company
and said that evidence had been pre-
pared which showed that the stock
transactions had been fraudulent in
intent.
Deny Fraudulent Intent.
In an analysis of the book and
sales values Of the company, Expert
Accountant Huston showed how a
profit made by the hotel company
had been turned over to the invest
ment company where it was dis
bursed in the form Of dividends. He
critics had several times been appreci-
ated in value, the surplus that was
thus built up being disbursed in divi-
dends. Tho appreciation had
amounted to 100000. and this was
included In the sale price of the
properties to the Investment company
for 81 200 900.
Frank NJ. Tyrell, counsel for the
defense, declared that he was familiar
panies and that in his opinion the
officers had been perfectly sincere in
their transactions.
In his estimation their greatest fault
was in selling stock TO buyers who
were unfamiliar with the business in
question and demanded their money
back when hard times came One of
the promises of the promoters had
been to return Of money paid for
stock, after due notice, within the
period of a year.
Court actions for the return of
money had undermined the credit Of
the company, he said, and assisted In
making the company insolvent. He
pointed out that the officers under
indictment had never profited to any
great extend by the promotion and
were now financially ruined.
"If there had been no technical
violation OF the law" he declared.
these defendants would not have
pleaded guilty. They had no intention
OF defrauding anyone. They did not
intend to make a. false statement.
Defendant Breaks Down.
Mira. Schasf. when asked by the
court If he cared to say anything per-
sonally. reiterated Attorney Tyrell' 8
statement that they had been sincere
in their dealings. In talk that con-
sumed a half hour, he outlined his
activities for three years with the
company. stating that he had never
|peronally profited from the companies.
and had, in fact, used his own money
to attempt TO save them from bank
ruptcy.
Mr.. Lohmeyer said that not only
had he induced his own brother to
put 10000 in the company, but that
he had put in his wfes money as
well.
Mr. Gregg was greatly affected by
the Situatlon and broke down several
times when addressing the court. He
said that he had always acted In good
faith, that he had put all his own
money into the company. and now he
was financially ruined.
In his summing up, Judge Munger
said that he had considered both the
losers, who had in some cases been
reduced to poverty, and the situation
OF the defendants, and declared that
the truth must be told in matter sailed