Jasper County Democrat, Volume 22, Number 84, Rensselaer, Jasper County, 17 January 1920 — UNCOVER HUGE U. S. SHIP GRAFT [ARTICLE]

UNCOVER HUGE U. S. SHIP GRAFT

Government Defrauded of Billion Dollars by Pacific Coast Shipbuilders. 20 MAGNATES ARE INVOLVED Grand Juries to Act In Three State*— Fraud Said to Have Been Worked by Payment of False Vouchers. San Francisco, Jan. 16. —Frauds involving more than 11,000,000,000 in connection with the building of ships for the government in Oregon, Washington and California have been unearthed by government investigators. It became known here when William H. Tidwell, special agent of the treasury department, was appointed chief assistant to Special Assistant United States Attorney General Bert Schlesinger here. The government, according to Information from authoritative sources, is alleged to have been defrauded through shipyard conspiracies working by the payment of false vouchers for sums that shipbuilders obtained illegally. Score of Magnates Involved. A score of very prominent shipbuilding magnates are understood to be involved in the investigation, which Is said to have reached the strge calling for special federal grand Jury sessions in the cities of Oregon, Washington and California where big shipbuilding plants are located. Cost-plus contracts awarded by the government for construction of vessels during the war, by which the builders were allowed 10 per cent over what they claimed to be the cost of construction, were said to have been the medium of the alleged frauds. First Jury Action In Seattle Assistant'Attorney General Schlesinger is to leave for Seattle, where, it is understood, the first federal grand Jury sessions dealing with the reported discoveries of government agents working under Schlesinger will be held. Subsequent meetings of federal grand Juries will be held in other large cities of the coast In rapid succession, it was said.

It is understood that Attorney General Palmer, on the strength of the scope of the alleged discoveries of graft, has ordered the United States shipping board to hold up claims approximating $37,000,000 to await the outcome of the investigation. Silent In Washington. Washington, Jan. 16. —Department of Justice officials admitted an investigation of financial transactions In Pacific coast shipbuilding had been ordered, but declined to indicate the nature of the evidence obtained. Officials of the shipping board likewise were silent on the reported disclosures of fraud. The investigation, it was recalled, was instigated by former Chairman Hurley of the shipping board. It was the intention of the board, about eights months ago, to go into the books of the shipbuilding companies Itself, but plans later were changed and the entire matter turned over to Attorney General Palmer. There was no Intimation at that time, however, that the alleged fraua would attain any such proportions as government agents now believe they have uncovered. Names of Suspects Veiled.

Information which came out piecemeal here tended to show that at least seven large shipbuilding corporations were Involved in the alleged fraud. Their Identity was not disclosed and probably will not be until federal Indictments have been obtained and executed. e The government was said to be preparing its case with a view to avoiding certain legal technicalities which have led to long-drawn-out fights in attempts to recover illegally paid funds on certain other war-time contracts. The opinion vnong officials here seemed to be that the alleged fraudulent transactions were limited to on the Pacific coast. It was said that no reasons for investigating Atlantic and gulf coast yards had been presented thus far. Although several illegal transactions were discovered in some of the Eastern yards shortly after the signing of the armistice they were cleared up without resort to courts.