The San Francisco Call. Newspaper, November 13, 1898, Page 1

SSANFORN & Al aTATE N\ /q v all to be t ' the Librar L his rap>- aken from +re Y- VOLUME LXXXIV NO. 166, SAN FRANCISCO, SUNDAY NOV’IEMBER 13 189S—THIRTY-TWO PAGES. PRICE FIVE CENTS. SENSATIONAL ALLEGATIONS OF BRIBERY AGAINST THE BOARD OF EDUCATION Directors Charged cepted Money for the Lincoln School Samuel L. Waller of the Board Named as the Man Who ; Handied the Sack. perior Court yi st seven Educatior terday, in which at of the Board of outright of hav- bribes, and, along with | s, of having partici- one of the most outrageous | scandals that has eve come to light [ 2" in San Francisco. During the past two years there has been a strong undercurrent of taik tk the present Board of Education which the mem cated, but the ch brought home t While m 4 made to expos of what was said to be a ring i board, they have never succeede to the present time. If the a the complaint true, the rascals in the r iisagreed just as their them. mpts h been have less actions now | fice is | “all is to termir enabl thus e conspirator, i r Samuel L. Wall 1 to be the “business man” rd, through whom the t others were bart r. He is| of the | votes of at d away for a sideration. He implicates s tors whom he could con- | trol, Directors P . Gallagher, Ban- tel, Burns, Drucker and Hammond. This trol ton his own vote, made the con- And President _arring- r Carew he also is said to have counted upon when it came to| voting. The disclosure the alleged board was surface yesterday innocent look- commenced in entitled John P. Fran- Com- Crim- sensational of nolds, pla pany (a corporation) and P. J. | tween the Empor s | The tenants brought suit to enjoin the | board from granting the lease, and the | With Having Ac- Lease. and Fifth streets, knowing his intimate knowledge of the various departments secured his ald to carry out their ne- schemes. In an affidavit printed where he g into the most minute details the unsavory scheme by which the board was manipulated and | malk » charges against a num- Of the men he ac- feasance in office Samuel | School Director, Charles | of the Board of | ok, the alleged | all the corruption, of the Grand Jury, . Williams, clerk in the Jus- Court. In addition to these Phil ins, the politician, was also in- d, being one of the directors in the corporation seeking the lease. ecific acts of corruption now developed over the leasing of | the Lincoln School property. This con- | s of eleven business buildings, be- | ium and Fifth street, Some three years ago the d of Education, having the prop- erty under its jurisdiction, advertised | for bids for the leasing of the property. on Market. a Supreme Court finally decided in favor of the board. All this time Phil Crim- | mins and James A. Snook contemplated bidding for the lease. J. A. McDonald also had the same object in view. | When the lease was in a condition to | be offered to the highest bidder in | open market Crimmins and Snook, ac- | cording to Reynolds' sworn statement decided that the surest way to secure| the coveted document was to put up | flicient money to buy the votes of the :hool Directors. Snook, who is one of | Crimmins’ closest friends, ontracts | for all hardware supplied the Board of | Education and for all the wagon mater- | ial supplied the Fire Department. These | valuable concessions may be among the “services rendered” by the board, and for which $4000 in money is alleged to have been paid Director Waller. It was at this stage of the proceed- ings that Mr. Reynolds swears he was| approached by E. W. Willlams, clerk | in the Justices’ Court. The outcome of | this meeting was a conference between Reynolds, Snook and Waller. At this conference, he says, Waller agreed for (it T hqq.“h°°=°o°bB°°°°Qb° o, 2 ) TN Yoee"® JAMES A. SNOOK, Who School °°¢>0°°°OOQOQ s - *Ceiesnas0="" Reynolds Says Manipulated the Q ° ~meee o° SS8c080e0 080 NO000000000°%° ®e Board. mins, E. W. Williams and James A. Snook, defendants. Back of t simple recital is all the scandal incidental to the leasing of the | Lincoln School property last December by the Board of Education. At the time | of letting the lease The Call learned | that crooked work would be attempted, | and detailed a man especially to follow up the case. He could not develop where the scheming would be attempt- | ed, but as the following narrative dis- closes his presence deterred the arch- | conspirators from carrying out their original plans. Reynolds, who is the plaintiff in the suit, is a newspaper reporter who was for years detailed for work in the City i.all. The plotters, who were endeav- the sum of $4000 and for the additional sum of $1000 for himself to purchase enough votes in the Board of Education to secure the lease for these people. Waller was to be the almoner of these people, paying them as the votes were delivered. That he carried out his part Reynolds declares is evidenced by the fact that the majority voted solldly every time anything came before them affecting this corporation’s interest in the Lincoln School property lease. The first “services rendered” was when the advertisements calling for bids was proposed. These advertise- D R O R R R R R R R R R SR E e Snook announced that we had come to an understanding, and I then said to Waller, “Have you seven votes in that board that you can count on?” I said, “How much will it cost to control those votes in the interest of Snook said We will pay you $4000 if you will carry out your agree- I then asked him for the names of those Dr. Burns, Drucker, Hammond and himself, making in all seven votes.—Extract From + i 3¢ 3 4 215 have:= + this lease ?” He said, “It will cost $4000.” + are willing to pay $4000. 3¢ ment with us and deliver us that lease.” + he could control, and he gave them as follows : e + 24 Jobn P. Reynolds’ Sensational Affidavit. 34 JOHN P. REYNOLDS, the B D L O e R an o S S S R o e Man Who Declares the Board He said, : “Thatis all right. We Ragan, Gallagher, Bantel, R R R R R R R P e of Education Was Bribed. to understand. This had its effect, as but two tenants of the property bid for the stores occupied by them. Th were Marston, the restaurant man, and Prager, a clothier. No one else could seem to fit their bids to the extraordi- nary wording of the specially prepared advertisements. This was victory num- ber one for the corporation and its hire- lings in the board. The next victory was in regard to the bond originally required of each bidder. When the syndicate put in its ‘bid it agreed to give a bond for $100,000. The conspirators stood by that offer until they saw the job was safely through. At that time, it is said, Jacob Samuels requested the board to reduce this to $25,000 or $30,000. There was more than method in his madn ‘While they were in a position to give the required bond the four men who had agreed to act as sureties each demanded as com- pensation a block of stock in the cor- poration. In the meantime a surety company had been found that would give a gilt edge bond for one-half of one per cent or about $150 per year. The action of the board in accepting this bond was, it is alleged, the per- formance of a duty they had agreed to render when they were subsidized. In keeping with this was the alleged action of the board in the matter of insurance. Under the condition of the lease the insurance would go to the city if the buildings were destroyed, the syndicate paying the premium. To a committee from the board was dele- gated the duty of visiting insurance companies and securing a maximum of insurance. This committee, Reynolds swears, visited companies already fixed by the syndicate and the highest amount of insurance they could secure was $24,000. Director Derham opposed this, affirming that he could secure $65,000. In spite of this showing the re- port of the committee was accepted, showing, according to the plaintiff, that the “solid seven” still remained bought. When the time came for the opening of bids, so states the complaint, the manipulators in the Board of Educa- tion laid their plans carefully. Secre- tary C. W. Welch was to open the bids. The amount in the document supplied | by the syndicate was to be left blank | and Secretary Welch was to fill in the amount after scanning the other bids. This course was abandoned as a Call reporter, specially detailed for, the pur- pose, was watching the proceedings. In lieu of this information was ob- tained by which the corporation was enabled to bid $41 per month more than the next highest bidder, thus securing the lease. This lease, which Reynolds avers was | obtained by fraud, and is thus illegal, is very valuable. The syndicate pays at the present time $4000 per month rental to the board. It receives from its ten- ants $4800. The lease runs for ten years. No tenant has a lease for more than five years and some have one only from month to month. There is a gradual culling out of the bad tenants, so that it is estimated that when half the term of years has expired there will be a net profit of $2000 per month on the $4000 invested. This would ex- plain the anxiety of the syndicate to secure the leasehold. The first incorporators of San Fran- cisco Real Estate Investment Company were merely dummies used by Smook and Crimmins to further their plans. It was intended, according to Reynolds’ story, that at the prover time they would be retired and the arch-conspira- tors would take the helm. The origi- nal incorporators who are not impli- cated in the alleged purchase of School Directors were P. J. Martin, C. S. Ben- edict, F. M. Meigs and Fred B. Burnell of San Francisco and O. M. Tupper of Oakland. These were dropped one by one until when the critical time was reached and the lease secured they had all been retired. The principals in the corporation now are James A. Snook, ex-secretary of the Grand Jury; E. W. ‘Williams, clerk in Justices’ Court; John P. Reynolds and Phil Crimmins, poli- ticlan. The original board was pur- posely composed of substantial busi- ness men to lend incorporation to it. Mr. Reynolds says that after he had carried out his part of the agreement regarding the securing of the valuable lease, as he certifies to in his com- plaint, he received but 1000 of the 1850 shares. He has been unable to make his associates disgorge the balance, but affirms that he will bring all the power of the courts to bear on them. After the complaint was filed with the County Clerk Mr. Reynolds went before a notary public and swore to | the affidavit published elsewhere in this column. This affidavit is now, in | the hands of his attorneys. e |REYNOLDS MAKES MANY SERIOUS ALLEGATIONS 'Charges Various City Officials With Malfeasance in Office. The afidavit made by John P. Rey- nolds reads as follows: In the Superior Court | In and for the City and County of San Franeciseo, State of Cali- fornia. John P. Reynolds, g Plaintiff, vs. San Franeisco Real Estate In- vestment Company (a cor- poration) and P. J. Crim- mins, E. W. Williams and. James A. Snook, Defendants. State of California, e City and County of San } ss. Franeisco, \ JOHN P. REYNOLDS, the plain- tiff above named, being duly sworn, deposes and says : During the month of December, 1897, E. W. Williams, clerk of the Justices Court, during a conversation in his of- fice in the City Hall asked me if I was willing to make some money. I replied that I was, and he said that there was money to be made out of the lease of the Lincoln School property, consisting of eleven buildings on Market street, getting that lease. ments were— prepared by Alexander Vogelsang, attorney for the Board of Education, and by Jacob Samuels. who had been employed by the corporation to represent it before the board. They oring to secure the valuable leasehold on the property on the corner of Market were so jumbled up as to be impossible bought it all. POOOOCOOOOrO000O0000000000000 0000000000000000C000000000000000000000VWOOO00000000000CO SNOOK DENIES REYNOLDS' ALLEGATIONS. James A. Snook, one of the originators of the San Francisco Real Estate Investment Company, em- phatically denies the charges made by Reynolds, that the lease of the Lincoln School property was ob- tained by bribery. Mr. Snook says: «“The suit filed by Reynolds is a flagrant attempt to blackmail. He is not entitled to 875 shares of stock in our corporation. He lies when he says we secured the lease of the Lincoln School property by bribing members of the School Board, through School Director Wauler. No money was ever paid to Waller or to any one else to obtain that .ease. We were the highest bidders, and for that reason the lease was given to the Investment Company. «Tt is true that the books of the corporation contain an entry of $5000 paid to Attorney Jacob Sam- uels. This sum was paid ior legal services rendered by Mr. Samuels and was not used to bribe any one. I never met Waller in the Louvre and never, directly or indirectly, paid him any money for the purpose of “Reynolds was one of tne original members of the corporation. He was given 1000 shares of stock in consideration for services in connection with the newspapers. When we organized he was employed on The Call and he told us he could prevent any adverse criticism being made in that and the other cicy papers if an attempt was made to secure the lease referred to. I have known him for a number ofyears and thought he was honest. Some time ago he was borrowing money on his stock and Mr. Trevor, the present secretary of the corporation, hearing the stock was being peddled around to money-lenders, “I wish to emphatically state that there is not a word of truth in Reynolds’ story.” 0000000000000 000C000020000C0000000200200000000000000000 [ o o © (4] © (] C (4] (4] (4 © © © (4] © © (43 © o © © © o (4] © o Five Thousand Dollars Said to Have Been Distributed Among Seven Men for Services. extending from the Emporium to Fifth street. I asked him what the nature of the business was. He said that the lease, by virtue of decision of the Su- preme Court, was about to be let and that if we went the right way about it it could be acquired. He said there were a number of bidders for it, some of them tenants and some who knew the value of the affair, and that it might be a hard contest, but that he and his friends were willing to spend a considerable amount of money, even up to $5000, in order to get possession of this lease. He asked me if I had any influence with the Board of Educa- tion. I told him that I had, and he asked me if I could talk business to them. I said I could. I said I could talk to Mr. Walker. He said, “Well, you see Mr. Waller and find out whether he can control things.” T told him that Waller was the mainspring of the “business men” of the Board of Ed- ucation, and he instructed me to go ahead and break the ice, gets things in shape and see what we could do. I called on Mr. Waller and told him that I represented people who were think- ing of bidding on that thing, and thought there might be some money in it for some of the members if things went just right. He said: “I don’t object. That is what I am here for.” I told him that I would see him again and introduce him to some of my peo- ple. In the mean time I had been in- troduced to James A. Snook, who was at that time secretary of the Grand Jury, and who was the main mover in the scheme to get possession of the lease. Snook told me to ‘“tie” Waller up, to get him in such a vosition that we could talk business together. I did so by arranging a meeting, called on Waller at his place of business at the corner of Grant avenue and Geary street, made an appointment to. meet him that evening at the Louvre restau- rant at the corner of Market and O'Farrell streets. I also informed Snook of the meeting, and we three got together there. Waller was given to understand that Snook and I were in a measure rivals for the possession of this lease. A secret agreement ex- isted between Snook and Waller, by which Waller was to recelve compen- sation for his services in manipulating John P.Reynolds Makes a Start- ling Affidavit lnvelving High Officials. | board that you can count on?” He said, “I have.” I said, “How much will it cost to control those votes in the in- terest of this lease?”’ He said, “It will cost $4000.” Snook said, “That is all right. We are willing to pay $4000. We will pay you $:000 if you will carry out your agreement with us and deliver us that lease.” I then asked him for the names of those he could control and he gave them as follows: Dr. Ragan, Gal- lagher, Bantel, Burns, Drucker, Ham- mond and himself, making in all seven votes. Besides this he said Barrington was safe enough, as he always voted with the majority and that Mr. Carew would probably come in all right and he was interested in keeping solid with the majority combination of the board. Q. But he sald that neither of these men would cost him anything? A. I am going to explain that. Yes. It is understood that neither Barring- ton nor Carew would be approached with coin. He said also some of the others would come in without being kpaid; that Hammond and Drucker, through friendship for himself and Dr. Ragan, could be easily handled. I know that to be a fact also because Drucker has always followed Ragan and Ham- mond—well, I won't mention who it was that he followed. The remainder were to be paid a portion of the coin. It was definitely agreed at that time that Waller was to receive for the benefit of those who voted the sum of $4000, no definite amount to be named for any certaln director. We don’t know whether he ever pald that or how he paid it or anything about it. We know that it was paid. Q. You know that you paid it? A. I know that the corporation paid it, but whether he paid $500 or $1000 to each of them, or put it in his pocket, or paid it out in $50 driblets, I don’t know anything about it. When the question of services was arrived at the first we required was the wording of the adver- SAMUEL L. WALLER, to Whom Reynolds Alleges the Bribe Money Was Paid, the board over and above whatever sum was paid for the votes of the board. Q. How do you know that such a se- cret agreement existed? A. Snook told me so. It was all done right there in the room. When we had had a drink and sot settled down to business we wrangied about getting to- gether and not have a fight over this thing. We agreed that we had better be amicable about it. We got Waller to talk about the manner in which he could control the board, and then Snook and I, in pursuance of a previous un- derstanding, decided to go outside and try to “get together” ourselves, mak- ing an appointment for an hour later at the same place. We went outside and took a ride on the cars, and it was then arranged that I was to push ‘Waller to the wall by asking him point blank what it would cost in coin to control that Board of Education, and also the names of the directors who could be controlled, and all particulars. Snook announced that we had come to an understanding, and I then said to ‘Waller, “Have you seven votes in that tisement for bids in such a manner that no one outside of the corporation could understand what was wanted. Q. What corporation do you refer to? A. The San Francisco Real Estate Investment Company. Q. That corporation was organized prior to these conversations? A. It was being organized at that time. Just what date the papers were filed I don’t know, but it was formed, of course, prior to the getting of the lease. This thing was all a sort of trust arrangement among ourselves. There were no documents or anything of that kind. We simply agreed to do certain things and it was carried along in that way. Q. Explain how that corporation was formed? A. The corporation that was origl- nally formed to secure a lease was, in fact, a dummy. A Mr. Martin, who was a capitalist, who was reputed to be worth $250,000, was its president, and a number of well-known business men - Continued on Third Page.