Evening star., 1937-01-28
|SW|SS METALS
| CLAIM ALLOWED
0'Donoghue Rules for U. S.
in Case Which Involved Gov.
ernment Ex-OffiCiaIS.

prosecution of two high Government
officials, Justice Daniel w. O'Donoghue
of District Court late yesterday allowed
$14,000,000 claim by the United
States against a Swiss corporation
which allegedly had obtained payment
Of war claim through fraud.
The case involved the disputed claim
by Sociate Suisse pour zaleur de
Metaux Of Basle, Switzerland, in 1921
against an alien property custodian for
$1,000, 900, representing proceeds OF
the sale Of stock seized in New York
during the war and sold under the
trading -with-the- enemy act. The ad-
ditional $7,000,000 allowed by Justice
ODonoghue represents interest on the
original award.
officials Indicted.
AS result of the award to the Swiss
company, Harry M. Daugherty, then
Attorney General, and Thomas W.
Miller, former alien property custodian
were indicted and tried in New York
in 1927. Miller was convicted, but the
jury disagreed as to Daugherty and
-he charge against him was dismissed
Reviewing the international mach
nations that preceded and accom-
panied settlement Of the Swiss COM
pany's claim, Justice O'Donoghue said
that about $4,000 of the bonds paid
to the Swiss concern by the Govern
ment were traced directly or in
directly, but with certainty, to the
Attorney General, Harry Daugherty,
and to the alien property custodian,
Miller"
Stock Sale Involved.
Evidence to which Justice ODonog-
hue referred as indicating that some
of the bonds went to Daugherty was
to the effect proceeds from the sale
Of these securities were deposited in
Daugherty's name In a bank which
later failed, and that In 1880
Daugherty claimed, under oath, that
he was the true owner Of the money.
The Swiss company's claim con-
cerned proceeds from the sale Of
American Metal Co. stock which had
been seized during the war as the
property of two enemy German cor
porations.
Contending 1t was the ;vrue owner
Of the stock, the Swiss company filed
claim September 20, 1921, with the
alien property custodian, Miller.
Miller allowed the claim the next day
and two days later it was approved
by the Attorney General and orders
of approximately 100000, the court
found.
Finding that agents Of the Swiss
company who handled the claim were
paid more than 100000 for services
that involved only a few days work,
Justice O'Donoghue said it was
strange" that Miller should have
gone to New York to have dinner with
the Swiss company agents and pay
them more than $6,000,000 there.
Fraud Held Shown.
"The court concludes" Justices
O'Donoghue declared, "that fraud has
been shown in the claim the plaintiff
made before the alien property Gus
todiari and that that fraud resulted
in the United States turning over
about 100000 to the plaintiff and
that accordingly the United States is
entitled to recover ."
The current litigation was insti-
tuted by the Swiss company for
$3.50 900, which it claimed as unpaid
interest on the $1,000, 900 award from
the time the stock was seized until
1921, when the principal was paid.
The government counter-claimed that
1t was entitled to recover the s7,000,-
900 with interest on the ground that
that original claim was fraudulent,
and that its allowance had been Sc
cured through a conspiracy involving
Miller and Daugherty.
Attorneys for the Swiss corporation,
Julian 3. Beatty of New York and
McKenny, Flannery & Craighill Of
Washington, are expected to appeal
from Justice O'Donoghue's decision.
If his ruling ultimately is affirmed,
the Government still faces the prob
lem Of collecting from the Swiss con-
cern.