Brownsville herald. [volume] (Brownsville, Tex.) 1910-current, 1925-05-29
FEDERALCOURT
ORDERS ELKHILL
CLAIM CIVENUP
Fraud Upon u. S. Is
Charged as California
Judge Orders c o n
tracts Cancelled
tBy The Associated Press.)

LOS ANGELES, Calf. May 29.--
Branded by federal court as trespass-
ers on oil lands Of the United States,
the Doheny interests today prepared to
carry to higher tribunal the decision
handed down here yesterday by Judge
Paul j. Mccormick ordering them to
give up for cancellation their leases in
naval oil reserve number /. California,
and their contracts for construction ot
oil storage facilities at Pearl Harbor.
Hawaii.
Two reasons for declaring the Elk
Hills leases and contracts void are cited
by Judge Mccormick in his decision:
First, fraud upon the United States"
involved in E. Doheny's payment of
100000 to Albert B. Fall. then secre-
tary of the interior, and second, trans
fer by President Harding Of naval oil
reserve control from then avy to the
interior department in excess of his ex-
ecutive authority as president.
The decision points out that Fall was
very active in procuring the transfer
of the naval oil reserves" to his de-
partment but did not resort to any
false, fraudulent or untrue representa-
tions of fact" in persuading the presi-
dent to order the illegal transfer.
100000 Payment Fraud
Of the 100000 payment, however,
Judge Mccormick declared it "consti
tutes a fraud upon the United States
Of America and renders void all con-
fpan o4i do
the Pan-American Petroleum and Trans
port company, or its subsidiary. the
Pan-American Petroleum company and
the United tSates of America subsequent
there to-.
Payment Of the 100000 to Fall at a
time when Doheny's oil lease and con-
tract proposal were pending in the in
terror department, the court adds, was
contrary to good morals.
What was widely discussed at the
time of the senste oil Investigations as
"the little black chatchel" angle Of the
Fall payment also comes in for a few
paragraphs of comment in the courts
decision. Judge Mccormick pointing out
that "said Edward l.. Doheny did not
transmit said sum in the usual manner
customary in business transactions" but
chose to deliver it 9 in a satchel by the
hands Of .dward l. Doheny, Jr.'
Fall. the court emphasizes, was the
dominating figure in the governments
negotiations with Doheny. Edwin Den
by, then secretary Of the navy, is de-
scribed as passive throuhgout all the
negotiations, signing the leases and
contracts giving Doheny interests con-
troll Of the $1O0,OO0,000 oil lands "under
misapprehension and without full knowl-
edge Of the contents Of said documents. :"
Ordered OFF Leases
AS early as July IS, 1921, almost
year before the first 1922 contract was
signed. the decision recites. Fall wrote
to Doheny "there will be no further
possibility of any further conflict with
1navy officials and this department a.
have notified Secretary DENLY that
should conduct the matter Of naval
leases" A
In general. the actions of Fall and
Doheny are described by the court as
a maneuver to give the Pan-American
Petroleum and Transport company and
its subsidiary such complete control or
naval oil reserve No. I. that all COM
petitors of Doheny would be virtually
Continued on Page Two)