Show H JURY INDICTS INDICTS' SALT LAKE LOAN OFFICIALS STOKES HELD URD ON I CHARGE Of USING MAil TO DEfRAUD Two Others of Guaranteed Securities Company Are Named BOND SET AT I Seven Counts Arc e In I eluded in T True e Bill i Indictment or of or of the the Guaranteed Securities company fc et alleged use of the malls mails to defraud de- de fraud was revealed by bythe byth th the arr of Jeremiah Stokes general sat director and counsel for the no d corporation Others named hi the true l' l with Stokes are aro J. J J. J Morey l pres 1 dent and Charles E. E Hayes tar tary treasurer Stokes Stokes' bond was set at which had not been furnished d tt t noon The Tho true bill was returned bt the federal grand Jury which r re porte l to Judge n 1 t 50 son on l Monday Seven e n coonts are 1 di Indictment t tent six page alleging various arlous a. a acts t T t t fe was presented to the tho grand juh by Charles M. M Morris at attorney t. t torney torne and Edward M. M I and J J. J J K Smith assistant attorneys GATHERED EVIDENCE Postoffice Inspector C. C F F. D t t. t ton gathered the evidence I resulted in tire the return of the true true- bill S The officials are alleged to have conspired to defraud persons persons-by- means or of fraudulent and false q viceS vice'S representations and st of various sums it money and other valuable as loans to or as purchase price pric of bonds Installment purchase certificates and shares of the cap capItal capital Ital stock of a corporation to beor bo be or organized are arc charged P S The defendants are said to have ha converted much of the money and property obtained through lend channels to own personal per pera use and benefit The In- In alleges that man many ot their schemes were accomplished f through the government mans mails The Indictment sets forth th that t the announced or of tire the d defendants de was to organize und the laws Of the state of Utah a corporation to carry carryon on the busness bus bus- ness of selling stocks bonds in If purchase contracts q bonds and stocks and to lend money so 50 acquired secured by first I e mortgages es on real estate which Continued o on page 7 r. r StOKES HELD ON CHARGE OF USING MAIL TO DEFRAUD Continued from page 1 loans were to be made not to exceed ex ex- In amount 60 50 per cent of the appraised value of the real te estl accepted as security IS INcORPORATED The company upon organization April 6 G. G 1922 was calI called d th the Guaranteed Securities or of Utah which W was s later amended to read Guaranteed Securities com com- pany Among Amon the false representations listEd In ht the indictment t ate are That the corporation had Issued outstanding and tully fully paid p ld on April 20 1922 shares or of Its als capital stock or of th the par value of HJO per share whereas In truth and anu In fact the corporation did not at the timE have issued outstanding outstanding out out- standing fully paid ald mor more than th n shar shares s ot of the capital stock That the corporation at the close of business JUly 31 31 1924 had hau total resources atno amounting to wh whereas rea In iii truth and In tact fact th the corporation did not ha have ve resources s sIn In excess of That the corporation at all throughout tine p period alleged was financIally and in a prosperous pros pros- p rous condition whereas In truth and In fact the corpor corporation at no notime notime time was either financially sound or 01 In a prosperous condition ACCOUNTS WRONG That the corporation on December December Decem- Decem ber 4 4 1924 had a profit and surplus surplus sur- sur plus account of over and an earned pro t fr from m busIness paid aid for In an an amount ot of about additional whereas In truth and andin andin in tact fact the corporation did not have hae a real or actual profit and surplus aCCount or of oVer I or any oth other l' l sum nor an earned profit from busIness paid for tor amounting to but Jt that the book accounts purporting to show such profit and nd sur surplus lus were Wholly fictitious That the corpora corporation would pay pa payin In dividends not less than 10 per percent cent per pel share on its entire outstanding outstanding out out- standing capital stock pa payable able semiannually Ie after atter January I 1 1924 to tn truth and in fact th the corporation could not pay dividends divi- divi den s In an any amount but that the corporation was wholly nt That the corporation would pay 25 per tI cent stock dividend lIvid end to all stockholders of record whereas In truth and nd In fact the corporation corporation corpora corpora- tion did not and the defendants well knew that the corporation did hot Intend to and could not pay the 25 23 per c cent nt stock dIvidend without forcing itself Into receiver receiver- ship COULDN'T PAY the corporation would pay large dividends l on issued d capital Stock whereas In truth and In fact the defendants well l knew new that the corporation JI cO not at any anytime time on account ot of Its financial condition pay any dividends on HSI Issued capital stock or wise That the monthly fInancial Statements tate State tatem m ments Issued b by the corporation n reflected re- re r the actual and true condition condition condi- condi tion ot of the financial condition or of the corporation as of the date ot of Issuance issuance ance ot of each lach nt whereas In truth in tact fact the financial did not reflect the actual actual ac- ac and hue condition ot of the affairs at- at fairs fahs ot of the corporation the corporation did not lend any money on real state estate security except where the loan did not exceed exceed ex- ex GO 50 per pel Cent ot of the appraised value or of the real estate and where th the mortgage so 0 was not a first mortgage whereas In truth buth and In tact fact the corporation did lend money mone on real state estate where the loan was In excess ot of 50 per dent cent ot of the appraised value ot of the real re-al State estate and where the mortgage taken and accepted was a second mortgage ge That the corporation would not and did not lend any mon money Y except by a first mortgage In truth and In fact fact the corpor did lend money without ut any security It ity whatsoever Except the signature of the person signing the note hote or without any sIgnatUre whatever cr of the person to whom whom the tho loan was made More Morey I is charged with having s sent nt a letter to Mrs Sarah J. J Folk Los Angeles on April 7 7 1924 an- an that n. n 20 per cent dividend dividend divi- divi as to IJ be declared d at the May 1 mt meeting and that her holdings of twenty shares shareR w would uld be Increased accordingly accordingly and that a cash dividend dividend divi- divi of hot less less' than 10 per cent per pel annum on the tho entire outstandIng Ing capital stock was wa expected to tobe tobe be paid The letter adds I am w very ry much inter sted In having our customers Profit by taking advantage of this condition and strongly ly advise you ou to take taka such further amount or of this stock as you ou are able to handle handl LETTERS CITED Numerous other letters rs of t similar nature are cited In the indictment nt Stol Stokes s Is s alleged lIe g d to have written to J K Stauffer Los Angeles Angel s. s on May 28 28 1925 1125 reporting Ung that a 25 iI per cent stock dividend had beeh declared and set l aside by th the directors tors and that It would be delivered as soon MOn as the surplus reaches The letter added d that thata a deal was pending with eastern bond buyers to place llac worth ot of bonds on the lh market at II a net profit or 4 p per r cent 6 Stauffer In a n lous l letter tt had apparently attempted ted to force a settlement set sH- on Mrs Folks Folk's Stokes sug suggests ests that Stauffer await developments devel- devel d vel- vel before attempting a forced settlement lIac Is accused or of sending n a letter letter let let- ter to George orge E. E Coke Cokeville Wyo Wo The letter was ot of it a personal nature throughout In wh h he refers refers re- re fers to family affairs and deplores the presence prence pre pre- nce ot of his two professional protes rs Hayes Hares concluded the letter with Ith the statement that the state ste s te securities ties tle had b been en asked fora for tor a 11 permit to sell the stock ut at 1 to and suggesting that Stoffer sell sell a friend or of his named Larson some or of the stock at that figure In one or of the company's letters to BIll Moris Eureka Morey tore stated stat tal- pd ed You wIll find that representation rep rep- made by this com company pan or Mr Col Coleman man will be full fully carried d out This com company pan has a er very large capital to Lack back Its contracts being tully fully p paid ld to Mr fr Coleman Was the Eureka sn salesman lesman BOUGHT ELEVEN TIMES Another letter to MorIs sIgned by Stokes as general gene Gales dIrector tells of one bond buyer who has bought bonds from u us because or of orthe the satisfaction th that t these thes guaranteed first re real l ta e estate te mortgage niort- niort gage gold bonds give Once a cus Comer tomer always a a. c customer stomer has proven eon en true with our institution tu n Another to Moris Mori Morey told ot of an offer from a ew York bond house to buy all the bonds The writer stated that he intended intended in- in tended to close the deal and yoU its is n a stockholder will receive gr great at benefit from that busIness Mr man Coleman told me he thou alit ht you ou mIght want a little mote moN stock aid and I told him hl that I would wO like to have you own enough t to make you ou 40 O. O and then n a 25 25 per cent nt would increase that 1000 making your Interest totaling upon payment am pt of The Th company operated It a branch office In Los Angeles known R as the Guaranteed Mortgage Securities S Company of America Inc and han transacted considerable business in Ih that city according to Inv tion the company went into the hands ot of the rec receiver h r on December G 5 IUS 1925 George H. H Blood being appointed d by th the court as receiver r. r The court I took the action upon petition or of Stauffer as 1 R. R cre creditor |