Evening star., 1934-10-07
Government Charges Ac-
cused Did Not Pay Money
to Those Claimed.
FIRM HANDLED BULK OF
S78,000,0O0 ROAD JOB
Louisianians Believe Indictments
Foreshadow Startling Revela-
tions to Come.
BY GEORGE HEALY, Jr.

NEW ORLEANS, La, October
6.-The Federal Governments s
income tax net, laid more than
a year ago and enlarged from
time to time to fit changing
circumstances; seems to be
drawing tight about some OF
Louisiana's best known political
leaders.
The catch" of three brothers
whose businesses have shared
heavily from proceeds of the
States bond issues for highway
construction was a major devel-
opment of the net-tightening
process during the past week.
However, the fact that the three
brothers were indicted was over
shadowed by the charges on
which the indictments were
based.
Harry B., John P. and Willis
w. Nelson are under indictment
for income tax statute violations
in connection with their pay
ment of taxes on the corporate
income of their Mississippi VAL
ley Co., Inc, a manufacturers
agency whose business has been
confined almost exclusively to
the sale of guard rails and a road
emulsion to highway builders
holding Louisiana Highway Com
mission contracts.
The Government charges that
the three brothers concern die
not pay out money for salaries
expenses allowances and COM
missions to persons they claim
received such money.
If the persons who the de-
PENDANTS say received large
salaries, expense allowances and
commissions" did not receive this
money, as the Government
charges, Louisianians ask, who
did?"
Grand Jury Meets Tuesday.
Subsequent action by the Federal
grand jury, which is scheduled to
meet again Tuesday. in the opinion
OF many observers, may answer this
often repeated question.
Indictment of the, three Nelson
brothers came following extended in
vestigation in Louisiana of special
agents acting under the direction OF
Elmer l., Trey, chief of the Intelli-
gence Unit of the Bureau of Internal
Revenue of the United States Treas
ury Department, among whom are
some of the same men who sent AL
Capone to the penitentiary, and did a
vast amount of work in the early in
vestigation of the Lindbergh kidnap-
ing case
Activity of the Mississippi Valley
concern, operated by the three Mel
son brothers, one of whom, Harry D.
Nelson, is a colonel on Gov. o. K.
Aliens staff, was started when the
Louisiana Highway Commission be-
gan preparations four years ago for
spending $78,000,o00 received from
the issuance of bonds. Application
for dissolution of the corporation was
published officially six weeks ago,
when the Highway Commission had
exhausted its road construction
money.
The Government charges in five
indictments that the net income of
the Mississippi Valley concern in the
fiscal years ending June 80, 1881, 1882
and 1888 was $245, 1862 greater than
was the net income on which the con-
cern paid income taxes. The Govern
ment charges further that salaries,
expense allowances and commissions
claimed by the company to have been
paid in 1891 and 1882 were S1e4, ,17462
In excess of expense allowances and
commissions actually paid to persons
listed by the company as receiving
such compensation.
Figures submitted by the Govern
ment in its indictments assert that
that company in 1881, 1882 and 1888
had a gross income of $l,049, 154.08
and that in these years it paid out
for materials purchased a total of
S646, .43, leaving $402,697.65 to be
accounted for by expenses of the oper-
alton of the manufacturers agency.
The Government claims that the
net income of the company, on which
1t should have paid taxes in 1881, 1882
and 1888 was $326,95l.41, and the
indictments assert that the company
actually reported net income of $751;
S1509.
In 1892, the Government charges,
the defendants deducted $ll6,200.96
for payment of allowances and COM
missions to certain members OF the
Mississippi Valley company. some of
whom are named in the indictment,
but not charged, whereas only So, ,661 AS
actually was paid to persons purport-
Ing to have received the larger
amount, and in 1881, according to
the indictments, the company de-
Quoted $66,68s.76 for allowances and
commissions. whereas only $7054.65
actually was paid to persons listed
on the company's books for these
items.
Differences between amounts de-
Quoted for allowances and commits
sions and amounts actually paid to
persons whose names appear on the
company's books for these items, the
indictments charge were $81, ,635.11 in
1881 and ,539.51 in 1882, or a
total of $194,17462.
A difference in the gross receipts
of the company claimed by the de-
PENDANTS and amount alleged by the
Government to have been received in
1888 amounts to S22, ,982.93, according
to the indictments.
The Government charges also that
the defendants claim of a loss on