Evening star., 1934-09-16
Move Intended to "Save
Treasury's Face" Declares
Former Secretary.
FICTITIOUS STOCK
SALES ARE CHARGED
Government Files Petition With
Appeals Board in Which 81 ,025,-
034 Penalties Are Sought.
BY the Associated Press.

BY the Associated Press.
The Treasury and Andrew W.
Mellon, for II years Secretary Of the
Treasury, traded verbal blows yes
terday over a new Federal effort to
collect $3,o75, ,1O3 in taxes and fraud
penalties from the Pittsburgh multi
millionaire.
The Government filed with the
Board of Tax Appeals a petition as
serting that Melon, while still Treas
ury Secretary, began the execution
of a scheme to evade his Federal in
come taxes" Involved, it contended,
were fictitious" stock sales and other
devices.
Striking back, Mellon declared in
statement issued here that the
move was made 'in order to save the
Treasury's face and to give some
semblance of justification for its par
ticipation in the inept political ma
neuver of Attorney General Cum
mings last Spring"
In its petition, the Treasury de-
clared fictitious" stock sales were en-
ployed as part of a comprehensive
scheme of tax evasion and avoidance"
Transfer of Holdings.
The plan was said to have included
use of family-controlled corporations
for tax-free transfer of stock holdings
to Melons son and daughter.
In his statement, Mellon expressed
surprise that the Treasury would take
'the astounding position that it in
taYdS fa fru 0IIt in q civil frihfIY1o1
the very same issue of tax evasion
settled by the Federal grand jury at
Pittsburgh last May"
A grand jury refused to indict Mel
Ion on taX-evaSion charges last May
and the Treasury soon afterward noti-
fed the former Ambassador to Great
Britain of an additional assessment
and penalties for 1881. He appealed
to the board and the Governments
action yesterday was in answer.
The Government is now seeking
$2,050,068 in addition to the s647, $50
which Mellon paid for 1881, and also is
asking $1,025 ,034, in fraud penalties.
The former Treasury head, how
ever, in denying the validity of the
assessment, entered a counter claim
Of sl39,045 for overpayment of taxes
in 1881.
The penalties were claimed because
Of the alleged use of family
corporations for transfer of stock to
Melons two children to evade taxes
without actual sale being effected
Mellon met the fraud charges with
an assertion that the Treasury "well
knows" its allegations are contrary
to facts.
at repeats the charges" he said,
thrown out by the Pittsburgh grand
jury, with the addition of one further
charge, both trivial and fictitious in
nature, and inserted merely as an
excuse to retry the old issues and to
make the public believe that some new
matter is to be considered.
Other Accusations.
"It even accuses me of the sale of
stock to avoid gift taxes, that law not
then being in existence, and to avoid
estate taxes, ignoring the fact appar-
emily that I am still very much alive.
ut seems almost unbelievable that
a responsible Government department
should lend itself to such a proceed
ing. 1t is quite clear that in my
case, the Treasury is not so much
interested in collection of revenue as
in attempting to discredit me-"
In making his return, Mellon COM
puted his gross 1891 income at Sl0,-
800, ,486 and his net income at $1,927,-
116. The Governments petition al
legged the gross should have been
$l5,95l 1858 with net of $13482, $3.50.
The Government also challenged
Melons report of $3,821,1 contribu-
tlons to charitable enterprises. It
contended only $3l0,918 was properly
deductable.
Mellon, the petition cited, in con-
nection with his official duties as
(COntinued on pape ia ColI,non 1l