Evening star., 1927-10-10
Lease to Reserve Is Set
Aside on Grounds of Fraud
and Corruption.
FALL FALSE TO TRUST,
SAYS BUTLER'S OPINION
Cites Clandestine and Unexplain-
able Acquisition of $230,5OO
Bonds by Former Secretary.
By the Associated Press.

BY the Associated Press.
the Government won a complete
victory today in the Supreme Court
In Its effort to have Harry f. Sin.
clair's lease of the Teapot Dome naval
oil reserve in Wyoming Cancelled.
The court, in a unanimous opinion
delivered by Associate Justice Butler
held that Sinclair's lease and contract
mad been made by Albers 3. Fall
while Secretary of the Interior with.
out authority of law and that fraud
ana corruption in the transaction had
been proven by the evidence.
The effect of the decision was 10
affirm the decision of the Eighth Cir.
cult Court of Appeals, rendered by
Judge Kenyon, canceling the Sinclair
lease and contract on the ground Of
fraud and corruption.
Sinclair Firms Held Trespassers.
The court held that the Sinclair
Crude Oil Purchasing Co. and the Sin.
clair Pipe Line Co., which operated
storage tanks a pipe line and pump
Ing station on the reserve. were tres.
passers in bad faith. They are not
entitled to compensation from the
court to reimburse them for their ex-
penditures, it was held, but must 20
to Congress for relief.
The decision ends the civil litigation
over the naval oil reserves growing
out of the Senate's investigation. The
Governments victory today was as
sweeping as it was in the .Ooheny
case, which resulted in the cancella-
tlon OF that oil magnate's lease of the
Elk Hills naval reserve in California.
ran VINO IS to go on trial here next
Monday with Sinclair on a criminal
cnarSe OF conspiracy to defraud the
government in connection with the
leasing, was denounced in the lengthy
opinion read by Justice Butler as
falthless public officer
IL mas been the contention of tba
government that $230,5OO in Libertv
Donds found their wa from SincIni.
70 ran after the latter had resigned
from the cabinet.
Payments Are Mentioned.
Justice Butler reviewed the case IN
detail and mentioned alleged payment
OF Liberty bonds to Fall by Sinclair
or his representatives,
And tie clandestine and unexnlain.
able acquisition of these bonds hv
Fan, he said, confirms the belief
generated by other circumstances in
the case, that he was a faithIess pub
llc officer There is nothing in the
record that tends to mitigate the sim
The court today held that the trans.
fer to Fall of Liberty bonds obviously
was mot a straightforward transac.
tion''
1t strengthens and confirms tbe
inference" the opinion added. 'sthat
ran had been willing to conspire to
oeIfaud the United States: and, taken
In connection with other circum.
stances disclosed, it is persuasive evil
dence of such a conspiracy between
him and Sinclair"
Purchasing Corporation Hit.
Justice Butler referred to the cre..
tlon of the Continental Trading Co.
Lmted, of Canada, as the agency to
purchase oil produced on the Teapot
Dome reserve, and declared that Sin.
clalr's failure to testify "makes
strongly against the company.
The records show that the Govern.
nent, notwithstanding the diligence
to be expected" Mr.. Butler
said, was unable to obtain the tes-
imony of Blackmer, ONeil Stew
lrt. Eberhardt or Osler (oil men iden.
lned with the financing arrangement
n respect of the transa ction by which
ne Liberty bonds recently acquired
~ the Continental Co. were given to
md used for Fall.
ana the record contains nothing TO
Indicate that the petitioners controlled
my one of them. or did ANYTHING tn
prevent the Government from obtain.
nS their testimony. or that they or
ne evidence they might have given
vas within petitioners power.
Sinclair on Different Basis.
But the failure of Sinclair tn tes.
i1y stands on different basis. Hav.
ng introduced evidence which. uncon.
Iddicted and unexplained, was suffi.
rem l" sustain its charge, the United
yates was not required to cali the
rlhclpal representative of the com.
any. His silence makes stroneiv
galnst the company 1t is as If he
eFSonally held the lease. were do.
shoant and failed to testify.
after setting forth that the con,.
,'ati oId not allege bribery, Justice
~ requires no discussion To make
pain that the facts and circ1nos
tances above referred to reoni,ad
.ndlng attending the making OF the
Ease ana agreement, Fall and Sfnclair
consplred to procure for the
lahmoth Co. IA Sinclair concern) ali
ne products of the reserve on tba
asls OF exchange of royalty oil for
obstruction work, fuel oil. etc. that
al so favored Sinclair in the making
the lease and agreement that II
as not possible for him loyaIIv or
lltnIuliy TO serve the interests of the
nlted States or impartiaIly to cnn.
ldef the applications of others for
Eases In the reserve. and that the
'ase and agreements were made
'audulently by means of collusior and
onsplracy between them"
The decision in the Teapot Donna
ase ends three years of litigation
rowing out of the Senate oil investi.
alton. which was initiated after the
aSe Of the Wyoming naval oil re-
srve to Harry +. Sinclair by Albert
Fall as Interior Secretary.
Tie other naval oil reserve invoIvad
lat on Elk Hills. Calf, awarded to
dward l.. Doheny by Fall. was re-.
ored to the Government by the Sin.
RENE Court in decision early this
Ear.
Fraud and corruption were charged
7 the Gov ernment in both cases. with
legged Liberty bond payments to Fail
Sinclair figuring prominently in the
sapot Dome case, and the 500. .0O0
lyment to Fan by Doheny in ew.