Evening star., 1935-12-04
INCOME TAX PILOT"
CHARGED At TRIAL
Garnett Tells D. c. Court
Jurors of Alleged Plan
to "SettIe" Claims.

Wiring and dining, secret confer
ences and tapped telephone conversa-
tions will be described by the Govern
ment in the District Supreme Court
trial of two former Internal Revenue
Bureau employees and New York tax
consultant for what Secretary Nor
genthau has called "a plot to sell out
the Government"
Outlining the Governments case at
opening of the trial today before jury
in Justice r Dickinson Let's court,
United States Attorney Leslie c. Gar
nett told a lurid story Of alleged con-
spring by John w. Hardgrove, former
assistant chief conferee Of the Inter-
nal Revenue Bureau; Henning r. Mel
son, auditor Of the bureau, and Frank
B. McElhill of the New York tax con-
sulting firm of Callaghan g. McElhill.
Garnett charged the trio with plot
ting to defraud the Government in
connection with allegedly improper ap-
proaches made to Thomas N. Nc
Carter, president Of the New Jersey
Public Service Corp. and of the Edison
Electric Institute. McCarter heads the
list Of prospective Government wit
nesses.
Secret Meetings Alleged.
Garnett declared the evidence will
show McElhill "wined and dined"
Hardgrove and Nelson and that there
were secret meetings between Hard
grove and Nelson and mysterious tele-
phone conversations among all three
defendants in connection with an al
legged proposition to settle a $4,000
income tax assessment against Nc
Carter for fee Of $4,000.
Garnett read telephone conversa-
tions taken down by Internal Revenue
Investigators who listened in on con-
versations between McElhil and
Hardgrove and between Hardgrove and
Nelson after McCarter, upon instruc-
ton of the Treasury Department, had
pretended to accept an offer of Nc
Elhill to settle the case. The United
States attorney said McCarter reported
his suspicious" of McElhill to Treas
ury Secretary Morgenthau, explaining
to the cabinet officer that McElhill
had claimed he could get the assess
ment Cancelled within three days.
For tipping of" the Treasury re-
garding alleged approaches" made
to him for settlement of a $150,00C
tax assessment, McCarter was called
by Morgenthau "a patriotic citizen"
Many Other Witnesses.
Among the approximately IS other
Government witnesses to be called
were q dozen special agents of the
intelligence unit Of the Internal Reve-
nue Bureau, who, under direction Of
Elmer Trey, chief Of the unit, con-
Quoted a lengthy investigation which
resulted in the indictment of the three
defendants and q fourth man, Rich
ard E. Callaghan, partner of McElhill.
The charge against Callaghan later
was nolle pressed and it was an
nounced today he may be called as
Government witness.
In connection with reports that
considerable evidence was obtained
by Government investigators through
tapping telephone wires Of the de-
PENDANTS it was noted that the Gov
ernment's prospective witnesses in
cluded several "wire technicians" and
telephone company representatives.
It was understood phonograph records
were made of certain conversations,
but indications were the records would
not be played in court.
Hearing of testimony was delayed
because Of difficulty in securing q
jury satisfactory to the defense attor-
neys, who are William E. Leahy, rep
resenting McElhill; former United
(See TRIAL. Page a.