Evening star., 1933-05-16
MITCHELL ACCUSED
OF @50,428 FRAUD
Financier's Actions Branded
Sham in Attempt to Evade
Income Taxes.
BY the Associated Press.

by the ASSOCIATED Press.
NEW YORK, May 16.-Charles E.
Mitchell. former chairman Of the Ma
tional City Bank, was charged in Fed
eral Court today with having defrauded
the Government Of s850,428 taxes on an
income of more than $4,000 600 by
spurious sales of securities
In his opening address TO the jury,
United States Attorney George T. Med
allie asserted that these were not in
reality sales at all, and referred to the
financiers actions as sham and pre-
tense undertaken with the purpose of
deceiving the Government.
The case was first called last Thurs
day, but was then adjourned until yes
terday. when another adjournment was
taken until this morning as soon as
the jury was completed The alleg-
edly illegal acts Of the former banker
occurred as to his income taxes Of
1929 and 1880. In both those years
he filed returns but he cited sales Of
securities which made what the Gov
ernment says was an enormous profit
INTO an apparent loss. He paid no tax
either year
Income Declared Wiped Out.
An actual net income in the year
1929 of s3,466,324 was deliberately
wiped out" Medalie said, "and the de-
fendant did not pay a penny on used
profits for that year.
In 1890, by another device. the de-
fendant managed to escape payment Of
income tax on net income well over
100000. by pretense Of a sale of 85 900
shares Of Anaconda Copper Co. stock
by which pretense he claimed to have
sustained a loss. This, like the pre-
tended sale to his wife, was a sham"
Discussing Mitchell's sale OF 1890
shares of National City stock to his
wife in 1929. Medalie said
Mrs. Mitchell didn't put up a penny
for that stock. and Mr. Mitchell did
not receive a penny. So unreal was
the transaction that no one took the
trouble to aff1x the ordinary tax trans
fer stamps to the stocks"
Holders Not Informed.
He said j. P. Morgan g. Co.. which
held the stock, was not informed Of the
transaction.
The Morgan company could not have
protected her interest in the stock as
owner" Medalie said. for the stock was
still in Mr. Mitchell's name and the
Morgan company knew nothing Of the
transaction"
Medalie said that in December. 1929.
Mrs. Mitchell's entire estate was only
$941 .000." whereas she was supposed to
have enough to pay s3,874.000 for pur-
chase of the stock from her husband.
Mrs. Mitchell never bought a single
share Of stock on margin, either"
Medalie said
Mrs. Mitchell. Medalie said. owned
500 shares Of National City Bank stock
that she could call her own"
Loan Is Hinted.
Although Medalie did not say So
spectators inferred that his meaning
was that the Mitchell stock was held
by the Morgan Co. as collateral
for loan Medalie spoke at length
Of interest paid on the stock, by which
it was assumed he meant interest on
the loan.
He charged that Mitchell paid this
interest 20 Morgan out Of the stocks
dividends SO the company would not
know the stock had been transferred
to Mrs. Mitchell's name. This interest,
he said, amounted to more than
Sl20 900.
Mrs Mitchell never could have met
those payments" Medalie said. even
if. indeed. she understood the transac-
ton at all
"Ostensibly as a gift, Mitchell on
April !, 1880, transferred to Mrs. Nit
Chell's account with Taft & Co. stock
with market value Of S42 500 to cover
interest on the stock held by Morgan
l. Co.
Large Gifts Made.
Every excuse was used for large gifts
Of this sort" Medalie said "On their
wedding anniversary, s25O00 or $50 600
on Mrs. Mitchell's birthday. anothes
like sum- He even celebrated his own
birthday that way, and, having run out
Of anniversaries. began making huge
presents for no special reason"
On October 2 1881, Medalie said,
Mitchell asked for an accounting on the
stock held in Mrs. Mitchell's name.
The memorandum indicated" Me-
dale said, that Mrs. Mitchell had paid
$4,000 in interest on the stock When
his birthday came along four days later
he gave her s25,O00"
On March "a. 1882. Medalie said, Nit
chell bought the stock back
AT that time. If the transaction was
real" Medalie said. Mrs. Mitchell
would have owed Mr.. Mitchell s3,879.-
900, the price Of the stock, plus what
he had actually paid in interest"
Claims Bank Stock.
In 1929 Medalie said, Mitchell put
in motion machinery for a claim
against the National City Bank, his
purpose being to wipe out with this
money his debt to j. P. Morgan g. Co."
He purchased %, 800 shares of Ma
tional City Bank stock. he said, and
put them up as collateral with the j. p.
Morgan Co. for loan to the bank
Subsequently he asked the National
City Bank, Medalie said, to buy the
stock back at around $500 a share, the
price he paid for it, although by this
time it was down to around $40 a share.
He completely forgot" Medalie said.
that he was supposed to have sold
1890 shares to Mrs. Mitchell for $2l2
a share"