The Birmingham age-herald., 1924-01-20
PRESTON MOTOR OFFICIALS UNDER
 19 INDICTMENTS
Five New Counts Added By Grand Jury At
 Recent Session
DEPUTIES HUNTING
 THREE OFFICIALS
William C. Oates, State Official, Gives Out
 Statement

Sheriff's deputies searched Saturday for R. A. Skinner, James T. Driver and Preston Orr. officers of the de- funct Preston Motors corpora tion, to arrest them under indictments re- turned secretly by the Jefferson coun- ty grand jury ten days ago.
 These men were indicted several months ago on If counts for alleged blue sky" operations in the sale of stock and debenture bonds in the cor poration through the circulation of grossly false" prospectus. The new indictments contain five counts and ae- euse them of defrauding 30 Alabama merchants in trade building campaisn contracts"
 All the cases will be reached for trial about February 1, according te William c. Oates, executive officer of the Alabama securities commission, who worked up the evidence which led to the indictments. MT. Oates at the recent grand jury session presented { great mass of information in connec. tlon with activities of the company officials.
 Thirty Eight Notes
 The three defendants said Mir. Oates. took notes from 3S merchants for PremO automobiles. which were to be used in trade campaigns with . guarantee that business would be in. creased 30 per cent. These notes wero discounted for $52, 500, and the cars were delivered to only seven of tho merchants. When the notes fell due they were in the hands of innocent purchasers (banks ill Memphis and Birmingham) and the merchants had = t-. when took the notes they could not deliver the cars. This was their last desperate effort to raise money before they hit the rocks''
 Mir Oates said the federal govern. ment iS now Investigating the activ. ities of the three men with a view to ascertaining whether the mails wero used to defraud
 Sensat tional ttories of the alleged operations of the defendants were laid before the grand jury by Mir. Oates. All papers in the cases are in the hardo of County Solicitor James G. Davis. who will personally conduct the prose. eutien.
 Hundreds Bought Stock
 Between 6G3 and $50 Jefferson county citizens purchased either com. mon or preferred stock in the corpor. ation before it was thrown in bank. ruptey last March, and there were hundreds of other losers scattered over the state," Mir. Oates declared.
 Most of the operations of the off. eers were without authority of the SC. eurities commission" he added. "A. G. Patterson. chairman of the eommis. sion, has instructed me to prosecute these cases vigorously. The commis. sion is determined to protect legiti. mate business in Alabama"
 Each of the indictments found by the grand jury constitute a felony in the event of conviction and carries . sentence of one to seven years on each count There are 19 counts in all.
 Testimony placed by him before the by Mir. Oates as follows:
 Alleged False Reports
 skinner. Driver and Orr filed falss reports with the securities commission; they issued false and misleading pros- peetus to stimulate stock sales; they represented to stockholders that the company was on paying basis when it was losing heavily; they paid fake divi. dends out of the capital stock to hide the truth from stockholders and to lure additional investors, and they flooded the state with propaganda saying ths company was offering a safe. sound 8 per cent investment when their quar. terly reports were showing heavy losses"
 Losses for 1922 were $549, ,197. .:34. ac- eording to the eompany's report. Only 430 cars were produced during tho nearly five years of operation, Mir. Oates said.
 James .. COxe is receiver of the corr poratlOn and will be one of the state'0 witnesses at the approaching trials.
 Skinner, Driver and Orr are now uns der bond for appearance on the first in- dictments. Officials have not indicated whether increased bonds will be asked in view of the recent additional indict. mentS. -