i'HK tttfc: OMAHA. Tt'ESliAY, OCTODEK i. H2l. rand Jury Holds J E. R. Gurney and Shafcr Brothers Six Men nI Woman Tilrn Into CutoIy on Charge Of Fraud in Financial Transaction. traiL4 from r r.ection with the operations of the Lion Bonding & Surety compiny, of which he a preident at the time it went into receiver hand ev eral months ago. ' One it for emrx-Mlement tf J60, POO from the Lion Hooding & Surety company; a second for enibeulement of $143,500 of certificates of deposit and a third for embezzlement oi $110,000 of notes given by officers and stockholders of the company. Capital Impaired. The indictments against Gurney ere said to be Used on investiga tions of his conduct in August, l')- ivitrn the company underwent an audit by a New York auditor, wh j reported to President Gurney an "apparent impairment" of capital. It is said that Gurney then got a number of notes nude out tj him self, signed by officers and stock holders of the company, and sent thee to 16 banks out in the slate, asking to have certificates o deposit in return or, in some canes, to liavc credit given the company, or a checking account. Also if is suid he risked to have these transactions made to appear a of June .10. The certificates of deposit and credits were then included in the company's assets. When the audi tor was unable to see that this im proved the situation, the directors of the Lion company passed a resolu tion acknowledging that JJOO.OOO in "voluntary contributions" had becu received from stockholders, stating that the stockholders had no claim to the return of this amount. No Personal Profit A few weeks later, it is said, Gur ney sent back the certificate of de- josit and other credits in the outside banks, received back the notes and tjie whole transaction was wiped out. Gurney himself did not profit by the deal at all, it appears. The grand jury report advises, in this connec tion, that the banks be prosecuted for violation of the banking laws. It points out that the irregularity per mitted the company xo continue in business to the ultimate loss of stock holders and others. Embezzlement Charges. The Shafers are charged with the embezzlement of three promissory notes totalling $30,000, the property of the American Bank Build'ng com pany, and also with embezzlement of $15,000 from M. F. Shafer & Co. qf which they were officers but which is now defunct. Marion F. Shafer lives at the St. Regis apartments. Ward Shafer's home is at 4816 Capitol avenue. The third man arrested was Sam uel H. Grace, chareed with embez zlement of a $20,000 certificate of deposit belonging to Division No. 1. Railway Employes department )f the American Federation of Labor, of which devision lie was secretary treasurer. , Grace gave bond at once for the $5,000 required. It was signed by Charles M, Garvey, owner of the Puritan laundry.- Robert G O'Bryan, secretary treasurer and manager of the Great Western Commercial Body company, was brought in and gave $5,000 bond to answer two charges of embezzle ment, one August 4, 1920, in connec tion with a check for $3,173.24 drwn by the company on C D. Lampert. I ana another alleged emoezziementot , $3,000 from the company. Woman Also Accused. Sam B. Musser, president of the American Brokerage and Develop ment company, was arrested late in the afternoon in his office in the Arlington block. With him was ar rested Miss Ruth C. Strickland, his stenographer. .. Three separate indictments charge the two with obta-'ning money under false pretenses. It is charted that on March 23 obtained $64 from Kathryn Calvert, on March, 25, $168 from Sophia Stern and on October 14, 1920, $50 from Catherine Gus lai'sbn for oil leases. They repre sented, it is alleged that their con cern had bought a drilling outfit for $11,000 anrj that a well was being drilled on the" alleged property in Montana, all of which representa tions were false, it is alleged. Miss Strickland was released late in the afternoon on her own recog nizance after she had promised to appear in court at 10 this morning. Musser remained in jail. Tony Bortka, South Side, was ar rested on the indictment for embez zlement. - With a partner, John Doe. he is charged wth having taken $4,000 from Nick Malinovich as "first payment" on a farm near Scottsbluff. . ' Distrct Judge ; Troup issued an . order late yesterday per mitVng Attorney General Davis to retain stock books of the Waterloo Creamery company, the Alamito Dairy company and the Great West ern Body company, as well as "rec ords and other evidence" in these companies collected by the special grand jury. - - .. (Sermon Informs Woman Pastor Mate Divorced Her Port Huron, Mich., Oct 3. Mrs. Flossie Baldwin first learned she had been divorced by her husband, the Rev. George Baldwin, when she sat in the congregation and heard the sermon he delivered.- - Neighbors told court officers that when papers were served Mrs. Bald win did not know what they meant and failed to oopose the action. The pastor charged his wife was untidy. There is a 6-months-old baby. - - . ' Nothing Can Revive Saloon, . U View of English Pastor London. Oct , 3. "Tbe American drinking saloon is dead. Prohibi tion ha killed it Nothing can re Yh it" v . In this trilogy of staccato sen tences. Dr. R. J. Campbell, vicar of Christ Church, Westminster, who has just returned from a long jour ney through the United States, gave n Former Bankers Are Held rjt V r- Earth Rallying From Meteorological Mumps (Continued From Pace One.) some othef cause, is entirely prob lematical. It is a act, however, that, what ever the cause, this terristial ball has been subjected of late to roucrh usage, notwithstanding that the war is over. A glance back at some re cent disasters and natural phenom ena show the following': Two million Koreans starving; in Manchuria owing to drought-ruined crops. , Three hundred buildings wrecked and many killed by hail storm and waterspout at Baez, Cuba. Three volcanoes, Villarica, Llakna and Lanin, spout flames more than 1,000 feet fro-n-xratcrs. Drought kills fish in River Seine ind France suffers most severe drought in 47 years. , Rhine and Moselle rivers, do great damage in highest flood in 136 years. Cloudburst and hail storm damage Rome, Italy. Vesuvius Shows Activity. , Mount Vesuvius shows activity and earthquake shock is felt from Leghorn to Lake Lugano. ' Italian destroyers carry inhabitants to safety as volcano Stromboli re sumes activity. Damage of several million drach mas done in Genoa by severe hail storms. Earth slide blocks Corinth canal. Cyclone devastes three , towns in Haiti. . Volcano Kilauea in Hawaii spouts immense fountains of lava. Activity of the volcano Popocate petl in Mexico increasing. Earthquake shakes Vera Cruz and four other cities. Lightning strikes oil wells, caus ing millions of dollars damage in Tampico and other districts. Mexicans pray to "water-goddess" to end drought: - . Volcano Colema in Jalisco is in emotion. - . Many lives lost in waterspout which destroyed part of Tangier, Morocco. . Floods in Philippines. Volcano Masaya in Nicaragua in eruption. ' Typhoon and floods in Philippines, and especially . on island of Luzon, do great damage. Six new craters opened in Mount Izalico, Salvador. Heat in the Alps causes glaciers to shrink and time mountain climb ers are killed. . ' . Seventyrfive dead in tornado which swept southern United States. Flood inundates Pueblo, causing $10,000,000 property loss. Forty-seven perish in San Antonio (Tex.) flood. One consolation of the freak weather, however, is the prospect of an "open winter." Snow in Michigan. Ironwood,- Minn, Oct 3. Sleet with intermittent flakes of show fell here this morning. The tempera ture was about 42 degrees at 10 a m. This is the first sleet and snow I it tf 4Vk f . js f ' 1 IV lAckS ' More Arrests Expected In $1,000,000 Robbery Chicago, Oct. 3. Three alleged leaders in the $1,000,000 union sta tion mail robbery last January will be up tomorrow for examination by postal inspectors. As a result, government officials believe all members of the gang not already in custody will be arrested within 48 hours. One of the trio is said to have confessed. From him $61,000 in stolen Liberty bonds have been recovered. The men are Frank Rio, indicted a score of times for bond thefts. Thomas Dyer and Robert O'Neill. The latter two have figured in po lice records in connection with rob beries and shooting affrays for 12 years. . ' ; Preacher Is Slugged. Houston, Tex., Oct. 3. R. Hecox, traveling preacher of Santa Barbara. Cal., was slugged and robbed as he was resting at a school house eight miles east of . here Saturday night, according to a report made to of ficers here today. Hemx was found this morning. He will live. Taste is a matter of tobacco quality Complete Report The leport of the grand Jury (o. lows: 1 bit grand jury, havint; been called for the special purpose of tnvrtti caiint alleged violation of the penal Uwt of our state relating to the conduct of offiicri and ditecturi of corporation!, companies, stock job. binf associations, and promotion schemes, under vriuui form, has been in almost continuous session since September H, and has worked diligently end faithfully to perform the duties of the oftiee, Inamuih at the invetigtin of corporations or companies on whom compUuti have been made required practically our entire time, we were unable to give other nutters the necessary attention they deserve, in fact found it impossible during this term to properly investigate other companies that appear to neej in vesication. Violation of Blue Sky Laws. In our investigation we found numerous instances where the laws of this state regarding the sale of stock, issuance of bonds, etc., have been violated, both directly and by subterfuge. This evasion of the law teems to have been aided by reluctance of the buying publ'c to call attention of the proper authori ties to such violations. However th:t grand jury hi not spent so much of its time in the in vestigated of technical violations of the blue sky law, and whether stock and bonds have been sold without a permit as it has spent in see ng whether the stockholder hat had an honest "run-for-his-lioney" after the stock u told. Most of our attention hat been directed towards the in tegrity and honesty of purpose of the management of these varous companies. The law cannot guar antee the success of the business venture, but it should in our opinion assure to the stockholder that cor porate business will be honestly con ducted. We want it understood therefore, that our time has been given to a scrutiny oi the doings of the officials of various companies, and we hereafter set forth some of the means and devices that have been used to loot the corporate treasury which we believe should be pro hib'ted. One. Excessive Salaries We found in some cases companies now defunct were paying as high as $1,000 per month to officers who gave only a part of their time to the conduct of the company affairs. We believe that the payment of excessive salaries s:mply because such an one is president or vice president of a company, and especially to one who docs not devote all of his time to the company, is gross mismanage ment to say the least. Two. Sales by Officers to Their Companies An officer of a corpora tion occupies a position of trust with t elation to the company's money. Certainly he should be extremely up right in all sales of his own per sonal property to himself as a cor porate officer. This jury has found numerous instances, however, where corporate officers have sold property which cost them nothing, or at most a small sum to their corporations for large sums of money at fictitious valuation, and have taken from the corporate treasury large sums in pay ment Amounts to Embezzlement It is the opinion of the iury that such transactions are fraudulent and amount in substance to the embezzle ment of money, and this grand jury has returned indictments accordingly. One flagrant example is that of a chemical formula acquired by offi cers of a company at. a price around $5,000, but which was sold to the comnany of which they were officers for $100,000, and money taken from the treasury accordingly. , Three. Fictitious Appraisals of Real Estate Numerous instances of this device have come before us. The valuation of property has-been arbi trarily raised on the books of the companies to entirely unwarranted heights, and such new book entries used to lead stockholders and pros pective stockholders into the belief that the corporation had earned a profit This fictitious appraisal of real estate was also used for floating large issues of stock. It is to be regretted that in some instances prominent citizens sub scribed their names on appraisal esti mates which their better judgment should have prevented them from signing, as they were then used to mislead the unwary investor. Overlapping Directoratet. In general it seems that inter locking directorates are legitimate. . We state it as our honest belief that the tobaccos used in Chester field are of finer quality (and hence of better taste) than in any other cigarette at the price. Liegett & Myers Tobacco Co. esteriie CIGARETTES of Turkish and Domestic tobaccos blended proper and useful in many fields if business, ilviwtvrr. tin device h Luii ud by nuiiy promotion schemes t s'ureaie from the is sett of a Urge company part of the ctt tr the benefit ol uvorei few of a tmallrr company; aUo in many c where directort were the Mine the eit of one corpora fen have been uei for the beiielt of another corporation indiscrim inately. This i a fraud and wrong ful diversion of money, and in tome Cases amounts to actual emhede. nwut of money by such direslurs. Attorney!. There are iustancet where attorneys seem to have coun seled and directed kiheniet whereby Urge stock Utuct were floated and payments of money made to om cert and directors of corporutiout for no consideration except thrir ability to milk their company No doubt those attorneys justify their conduct on the ground that they were limply adviturs, telling their knowledge of the law. It it the opin ion of this jury, however, that whe.i an attorney continually consorts with, advises, counsel and assists orliceri of corporation! in perpe fating frauds upon stockholders that he pastes beyond the legitimate relations of attorney and client anl becomes an accessory to the tran saction. CrLmet Outside Douglas County. Our investigation has uncovered several ciimes upon which we can not return indictments because they were not committed tn Douglas county. We feel that a proper spir it of law enforcement dictates that the facts of some of these should be set out so that action may be taken by the officers of various counties if they to desire. Complicated Example. One of the most complicated of these is disclosed in the affairs of the Lion Bonding & Surety com pany and the following statement is entirely justified by correspondence signed by the officers of that com pany and original documents, all of which are in the possession of the grand jury. In August, 19J0. when this com pany was probably impaired and was under examination by the United States Kovernnient, the officers se cured notes of several officers and employes aggregating $300 000. These notes were sent to 16 banks in Nebraska who issued therefor cer tificates of deposit in like amount All of them predating the certificates to the date of June 30, and some of them even altering their books to correspond. These certificates of deposit were taken as assets of the company by the auditors of the United States government and the insurance department or the state of Nebraska, within two weeks after such a showing the certificates of de posit were returned to the various banks which issued them and the notes returned to the makers and destroyed. The insurance depart ment was misled by this action and the company continued in business for a number of months afterwards to the greater ultimate loss to stock holders and polirvholders. It is rather difficult to determine what specific crime was committed in the perpetration of this transaction. The several banks who falsified their records are outside of Douglas coun ty and we therefore have no juris diction to indict them for falsifica tion of their books. Recommend Action. We suggest that the various prose cuting officers in the respective coun ties where these transactions oc curred take immediate steps looking toward the prosecution of these vio lations of the banking law. We have returned indictments charging embezzlement of the i amount of these certificates of de posit and notes, believing that the ; sUU'.'.a relating to embezzlement most nearly describes the thansaction which did take place in Douglas county. We think the attention oS the public ought to be called to the fac that it is this sort of manipula tion by the officers of various com panies, and the tacit co-operation therein of various bankers that has led to -the imperiling of the, stabil ity of many Nebraska banks. ' We feel that this grand jury 6ught not to adjourn wtihout rnak'ng some recommendations in regard to the Nebraska laws in reference to the general conduct of corporation af fairs. It is to be regretted that the corporate laws of Nebraska are de cidedly meager, and that we do not have on our statute books a com plete code governing in detail the id of Douglas nun nic nt ti corporations at have several oilier state, Thete aie rrr:ain definite reeom mendationi which we think ought to be mailed into statutory 'aw, and which would in Urge measure pre vent, or at least provide mode of punithnient for numerous other com panies which were prom oted during the 11 two or three years. Sale of Stock. first Undoubtedly a statute should be missed making it a felony for the officers of a corporation to pay dividends tu the tuxkliuldcrt thereof out of money received from the talc of stock. It it probable that this ttatutr should go still further and make it a criminal offense to pay cash dividends out of the apprecia tion on properties or under any other guise, unless such dividends represent an actual earned cash profit of the corporation. Second We believe that It ought to be made a felony for the officer of a corporation to deliberately i-til'ze the fund of the corporat:on in enterprise entirely foreign to the scpe of the corporate-character and the legiti'iiate transactions of the businest for which the corporation was formed. Th;rd We believe that some rea sonable standard of duty should he imposed upon the officer and di rectors of corporation to that gross neglect of attention to corporate business thould carry a penalty upon the ofticert and directors so neglect insr their duty. Fourth We believe a criminal penalty should be imposed upon the officers of corporations who issue large blocks of stock without con secration, thus diluting the value of the stock of the public who have paid cash therefor. The Matter of Rents. In pursuance to instructions by the court we wish to report that we have made an investigation of the rental situation in Omaha. After hearing the testimony of a number ot competent anr well in formed witnesses we failed to obtain any definite or conclusive evidence of an organization, combination or agreement among the owners or managers of residence or business property by which they have at any time sought to fix or control the rental price of detached houses, apartments, offices or store, rooms. We are advised that even if there were such combinations for the pur pose of fixing or controling rental prices in the state of Nebraska, there are no laws now upon our statutes by which parties forming such com binat'ons could be successfully prose cuted. We have been informed by com petent attorneys, and it has been ad mitted by complaining witnesses, that there is no law upon the statute books of Nebraska by which or through which the owners of real estate can be compelled to rent or lease their property nt any fixed or established price, and, in fact, it ap pears very doubtful whether any such law would or could be enforced with out violating property rights guaran teed by the constitution of the United States. Several cases were brought to our attention of recent increases in rent als. Some of these appeared some what reasonable for the reason that they were based on old leases made in 1916 and 1917; but in several other instances where increases were noted, there appeared to be no jus tification whatever, and owners or managers in such cases should be The Silk Shop Chiffon velvets and all silk duvetyn in Ameri can beauty, silver, sand, brown. Cdpen, navy and rich black. ft Millinery velvets, both Lyons and Panne, fea ture seasonable new shades. An unusually . large collection for $2.50 to $3.50 a yard. Several new Canton crepea in the most desir able qualities, $3.75 to $5 a yard. Soutb AUIe Main Floor Lamp Shade ' Making ts a Pleasure Here You are offered a selec tion which includes every new idea in shade mak ing as well as the new est materials, silks, crepes, fringes, braids, floral sprays and frames. A number of very attractive novelty frames are of in terest. Lessons in shade making are without charge. Daily classes, 10 to 122 to 5. Artamdlework Section 2d Floor Hair Nets 50c a dozen Sonia nets, cap and fringe shapes in all colors. Notion Section County. Grand Jury severely rebuked for rising rnit4lsand. aide from this apparent neces. thai aie alirady higher than they sity, we Mid nothing urthcr of iiu- khould, he. BUme the War. While rentals in same instance are undoubtedly hiwh and abnormal ly to, we believe that the situation it one of the results of the world war, and will evrntually right itself through the intul.ir channels .( supply and demand. We find that building of every kind has been retarded Uv the high cost ot construction and difficulty in securing lours, and it it doubtful if any substantial improvement can be hoped (or in the rental situation un til the tupply is tucti at to tntit the demand. Hotel and Innt. In accordance with the court t in ttructiont to ee that Sections 3lti4f4i anpratus and a night watchman VI llli; JICVICU .M.tt- UteS of Nebraska, relating to hotels and rooming houses have been com plied with, we had City Commis sioner tlarry B. Zimnun appear be fore us, and he has had an inspec tion made of such hotels and inns, and accordingly has presented to thi grand jury a separate report cov ering 49 such hotel and inns. This report shows the higher c'ass of hotel to be in excellent condition, but there are some irregularities in complying wth the law with soe of the second and third class hotels We have been informed by Mr. Zinimao that the proprietors of these hotels have been ordered to remedy the situation, and all rt these re r.uirements as made by conmvssioti - tr Zimman should be complied with. mis granu jury jrcommenus uiai ,1.A .ln..t .... ... .v.t.n I.. Douglas county work in conjunction with the city authorities with the view of having the hotel and in kecpers comply not only with the Mate law, but also with the provi sions of the Omaha city ordinances. Douglas County Hospital. In our inspection of the Douglas county hospital we found sanitary conditions ai.d food to be good, and believe the present superintendent is Piling his position acceptably so far as it is possible for him to do. We found, however, that the pro tection against fire is very poor, and the present fire nose being wholly un fit for use, and we recommend the immediate installation of new fire hose together with additional chemi cal fire fighting apparatus. We also found tlut there was an insufficient number of nurses in the hospital and recommend the employ ing of sufficient additional nurses to properly take care of the inmates of this institution. Further than the things mentioned we cannot see where conditions can be much improved upon, except through the building of a new ho? pital, but in as much as rather ex tensive repairs are now being made on these buildings this jury does not feel that at the present time it would be advisable to recommend a bolid issue for the purpose of erecting new buildings. We are very much of the opinion, however, that the pres ent buildings are unsuitable and feel that this matter should receive the careful consideration of the countv ! commissioners and citizens of Douglas county. . i Jury Visits Jails. The grand jury visited the various jails of the county and found the Douglas county jail to be well man-' aged, clean and habitable and cat" offer no criticism of its management or condition. South Side jail needs some repairs IFINTSR FASHIONS rHETHERshehasthemak ings of a tomboy or is a lady to die finger tips it is the supreme object of every one of our Winter fashions to accen tu ate the youthful loveliness of the littlest girl Brown Art Linen for 30c Specially priced for Tues day, this brown art linen for scarfs. All linen, 18 inches wide and only 30c a yard. Linen Section Fall Oxfords Black and brown kid and calfskin, lace and strap styles, militpry and low, flat heels. Trim appear ing, attractive lasts of the best quality. $8 to $10 a pair. it v, we fmd nothing further ol im We lefomn end thai the ci'y iail bo equipped with the neceMrv ttetl icllt lor confining the prisoner in the new building and tli.it taid cell be furnished with mattreste whrie prisoner ate held longer than .'I hours; a while the new buili'Pg ha been occupied for ome time there hat been no change w ith rderrnc u the accommodations lor the prisoner in general and the conditions of the old jail are intolerable, being unsani tary and over-crowded. Thi grand jury wislie t coni n end the management of Rivcrview Ionic. Thi institution we found li first-cla condition, wrll managed, elean and. a the name imulie. a "home." The additions of chemi- to be on guard seems anoimeiy necessary in the protection "M tno retained at the home and we J recommend. Grand Iury to Probe Ku Klux Klan Riot (Ciintlnurd Krom r .) mg. He asked this, he said, to he would know whom to hold responsi ble in case disorders occurred. After a conference with masked leaders at a house on the outskirts of the town where the kla'ismen L'.r .vccrmhltni?. a t which he trieI 1 lu,,,lli, ,u- ,,. to desist from violating what he interpreted as i?w a(a,nst masked men murcluiu; iii a pumic demonstration, me seen" returned to the business section of the town, vowing there would be no parade, according to eye-witnesses. Shortly afterwards a crowd esti mated at 3,000 persons many of whom had gathered from nearby towns to witness the parade, saw the front line of ghostly figures swing into step and begin their march toward the main street of the town, down a road leading in from Waco, Cheers Greet Marchers. As the sheeted marchers advanced, cheers from the crowd greeted them., mingled with hoots and jeers from those admonishing the sheriff not to interfere, and from the factions, opposing the demonstration. When the leader of the column, bearing an American flag, reached a street intersection near the main business part of the town, Sheriff' Luchanan, followed by his two depu ties and a crowd of spectators, halteil the standard bearer and grappled with him in an attempt to snatch the mask from his fact. Other marchers came to the as sistance of their leader, and in the' fight which followed the sheriff wa3 wounded. Immediately confusion reigned. A lusillade of shots was fired and it ' was someti-ne before order could be restored sufficiently to determine the casualties. Sheriniu, Tex., Grand Jury Probes Tar and Feathering Sherman, Tex., Oct. 3. A charge to investigate the tarring and feather ing here, Septe-nber 20, of Fred Zieglcr, former Hotel man, as well as the activities of any organization in the county which "presumes to take into its own hands the adminis- tration of justice." was delivered to day to an extraordinary grand jury by Judge Silas Hare. Recommending Pony Stockings for Children Appreciated alike by children and mothers for their wearing qualities. Pony stockings are made from the finest of se lected yarns, reinforced with triple knees, heels and toes. Lisle thread . in black, white, brown and cordo van, are 55c. The larger sizes, 65c. Boys' heavy ribbed stock ings in black and cordo van are 55c. The larger . sizes, 65c. Hosiery Main Floor 4 hit pmton of prohibition in Amer it. V ' i of the season. , - .