The San Francisco Call. Newspaper, November 20, 1898, Page 1

the Library This Paper not to be taken from g Call D dniate’ "VOLUME LXXXIV —NO. 193, SAN, FRANCISCO, SUNDAY, NOVEMBER 20, 1898—THIRTY-TWO PAGES. PRICE FIVE CENTS. HALF A MILLION DOLLARS SUBJECT T0 ATTACHMENT BY McDONALDS CREDITORS The Old Banker’s Valuable Possessions at Norfolk Will Legally Be Seized and Confiscated. J. B. Haggin and Horace W. Carpentier Assisted the Dishonest Financier to Cheat His e T S S S S SR S e e 5 + 4 the Pacific Bank to recover half a president of the Pacific Bank, is names of two dishonest corporatio: of Norfolk. All transferred to Horace W. Carpenti sible consideration of transf; name it now stands. erty belongs to Dr. R. H. McDonal TP FF 444444444+ ++444444 The Call presents this morning the facts that enable the de- positors of the People’s Home Savings Bank and the creditors of McDonald. This enormous sum of money, that is owned by the old Norfolk Company and the Park Place Company. Title to Dr. property was acquired by these companies through a series of crooked transfers and real estate transactions. cDonald realized that the Pacific Bank was on the verge of col- lapse he organized the Norfolk Company and the McDonald Com- of his valuable holdings, aggregating in nt over $500,000, were transferred to these companies. This only the beginning of the dishonest manipulation by which Dr. McDonald hoped to cheat his creditors. The property was again $180,000. Haggin and Carpentier again red the property to Theodore N. Ramsay, who lost but very little time in turning it over to the Park Place Company, in whose There is not the remotest doubt that the prop- fiscation by the ereditors of the McDonald banks. Victims. B L T e s million dollars from Dr. R. H. at Norfolk and is held in the ns. These concerns are known as When Dr. er and J. B. Haggin for an osten- d and is legally subject to con- e R R R T R R PP PGPS TP PP PGP 1t of its promise The| this mo the ev nec 3 sufficient s robbed denc rs of the Peo- | he de- nk to tully >'s Bank and Home rep- , and, | he names | it is really the | . McDonald and sub- | n under the rules of | to Dr. McDon- that the de- e McDonald | it. Lawyers | n in vain for > fact of now recorded in tk rations known as the Norfolk Com pany and the Park Place Company, | two concerns organized by Dr. Me- | Donald to defraud his creditors and to sure to him the poss n of prop- | ; that does not belong to him right- | Y what follows The Call will show how Dr. McDonald’s valuable interests were transferred dishonestly to these corporations. Every step in the legal v that was necessary to protect old financier from his creditors will be traced in detall, and the depositors | n take the course that is neces- recover the property. Some tion was instituted to re- of this property, and *t or the incapacity employed by the de- 's Home Savings ferced from Dr. 1 of that insignificant illion dollars should ned. The Call will ing how the money may ed through proper legal‘ perty at Norfolk be- , and he now en- quired from it, the the property of the tors of the Pacific le’s Home Savings yositors and cr nk and the Peop. Bank. The facts eral public The history that is neces ¥ to demonstrate Dr. McDonald’s possession and ownership of this property is of exceptional inter- est. The names of men prominent in this community and others are neces- sarily involved in the recital. Dr. Me- Donald Was powerful in this city and it was his privilege to use prominent men | in his scheme to rob his creditors. In his gigantic plot to protect himself from the legitimate consequences of his wretched financiering he was able to use the names of such men as J. B. Haggin and Horace W. Carpentier. It will be remembered that Carpentier wag the man who loaned his name and | his influence to Dr. McDonald to cheat | the creditors of the Pacific Bank out | of the Market-street property. Carpentier in conjunction with Hag-z gin went further than that and helped | to defraud the creditors of the banking | institution out of the tremendously valuable property which is located at | Norfolk. In the expose The Call pre- | ents this morning there is not a fact | or detail mis It will be shown to | the general public and those more | vitally interested that a few days be- | fore the Pacific Bank went down in| disgraceful bankruptcy Dr. R. H. Mc- Donald organized at Norfolk two di honest corporations. One of these cor cerns wi pany, to which Dr. R. H. McDonald transferred a great deal of land that he owned in the suburbs of Norfolk City. This company meant and means simply nothing more or less than Dr. R. H. McDonald himself. The prop- erty that stands in the name of the Norfolk Company belongs to Dr. R. H. McDonald and is subject to legal con- ation. ORGANIZATION OF THE McDONALD COM- PANY. The other corporation that was organ- ized by Dr. R. H. McDonald is not now in e ence. It was known as the “McDonald Company,” and was or- | ganized six days before the Pacific Bank failed, and two days after Frank 7. McDonald, without authority, trans- ferred the Market-street property of his father to the fake corporation that had been organized to cheat the creditors of the McDonald banks. With an in- solence that seems almost incredible Dr. R. H. McDonald used the names of honest men to conduct this scheme. When the dishonesty of the organizers became apparent these men retired in disgust from the company and a re- organization became a necessity. The | company was remodeled and new men were introduced and new schemes were planned. The old banker, who wished to save his private fortune from his creditors, saw that he would have to more completely disguise his operations if he wished to retain his property. He therefore had the “Mc- Donald Company” transfer his valuable water-front lands in Norfolk to Horace W. Carpentier and J. B. Haggin, two intimate and serviceable friends of the old man. They in turn transferrec the property to Theodore N. Ramsay. This transaction took place when it became apparent to the conspirators that publicity threatened to destroy all of the results of the tremendous theft. Ramsay was a willing tool of Dr. Mc- Donald, and when the proper time came did as he was told. It was necessary to involve the valuable interests of Dr. McDonald in a bewildering maze of legal technicality. Transfer after trans- fer became imperative, and aithough the water-front property at Norfolk had passed from Dr. cDonald to the “McDonald Compan from the “Mec- Donald Company” to Horace W. Car- pentier and J. B. Haggin and from them to Theodore N. Ramsay, it was necessary still to make another trans- fer. Dr. McDonald, who has been exposed to this city as one of the most crafty and dishonest bankers that ever op- erated in the town, was equal to the occasion. He organized another com- pany, the Park Place Company, to which Theodore N. Ramsay transferred all of the interests held by him. The consideration for this transfer was, from any point of view that may be taken, absolutely absurd. For a con- sideration of five dollars Theodore N. Ramsay transferred to the Park Place Company land that was worth hun- dreds of thousands of dollars. s known as the Norfolk Com- This land belongs to the robbed de- DR. McDONALD banker and his attorney left Norfolk. The fact that the “McDonald Com- pany” was organized simply for the purpose of defrauding the creditors and the victims of the wrecked banks has been public property for over five years. How the company was organized, how- ever, has never been exploited. The fact that even at that stage of the pro- ceedings Dr. McDonald did not dare show his hand in the transfer of his property has never been published. The records of the courts of Norfolk, how- ever, show that McDonald and his at- torney disguised all of their movements and did not record any of the transfers made by McDonald to the company bearing his name. It was known in t i Dr. McDonald, was transferred to this corporation. This property was lo- cated in the suburbs of Norfclk and in- cluded about one hundred and sixty acres. After the Norfolk Company was formed Dr., McDonald determined to organize another corporation, fearing at the time that his connection with the Norfolk Company would become apparent and that his creditors would levy upon the property already trans- ferred. He therefore organized the “McDonald Company.” This concern was the product of his own brain and was established for no other reason than to defraud the creditors of the Pacific Bank. In pilanning the great this city as a matter of gossip that Me- | corporation Dr. McDonald informed his LN AND HIS INF = tional Bank of Norfolk. Itis more than a coincldence that Dr. R. H. McDonald was interested in the affairs of this in- stitution, which failed in 1885. The cashier and one of the directors of that institution were convicted of fraud. After the collapse of the concern Dr. McDonald was sued for $120,000, and that sum of money was by legal action obtained from him. In payment of th= | Judgment the old banker agreed to make six payments each of $20,000. | Some of these payments are still due and must be satisfied within a year. | FRANK McDONALD HASTENS TO SAVE HIS FATHER FROM RUIN. Shortly after the incorporation of the McDonald Company, as already indi- cated, the Pacific Bank failed, and the directors of the Norfolk corporation realized that they had been used for ;a dishonorable purpose. They there- | fore resigned their positions and it seemed Inevitable that the McDonald | Company must collapse. Dr. McDonald was equal to the occasion, however, and telegraphed to his son, Frank V. Mec- Donald, who at that time was in this city. The old man informed his son that the original directors of the cor- poration had resigned, and that it | would be necessary for him to come at LUENTIAL ALLIES. The Call presents this morning the evidence that is sufficient for the creditors of the McDonald banks to recover over half a million dollars owned by Dr. R. H. McDonald at Norfolk. This enormous sum of money is represented in land owned by the old banker, but now which held in the names of two corporations, the Norfolk Company and the Park Place Company. When the Pacific Bank was on the verge of collapse Dr. McDon- ald dishonestly transferred his Norfolk property to protect it from legal confiscation. peared in the names of the corporations thus indicated. allies of the old banker. The property passed through several hands and finally ap- In the various transactions J. B. Haggin and Horace W. Carpentier acted as advisors and positors of the People’s Home Savings Bank and the deluded creditors of the Pacific Bank. The Park Place Company is the cor- porate existence of Dr. R. H. McDon- ald himself. For the first time this vi- tally important fact has been made public to the people of San Francisco. The way Is now clear for a legal con- fiscation of the tremendously valuable interests of Dr. R. H. McDonald at Norfolk. In his great scheme to de- fraud the depositors of the People's Home Savings Bank and the creditors of the Pacific Bank, Dr. R. H. McDon- ald was thoroughly aware of the legal conditions that limited his operations. When he realized that the Pacific Bank was about to fail he determined to take every possible legal action to protect himself from the confiscation of his private fortune. He had already or- ganized the Norfolk Company and had transferred to it many acres of land in the suburbs of Norfolk City. THE HISTORY OF THE OLD BANKER'S PLOT. - That was, however, the beginning of his scheme. He had already deliberate- 1y robbed the Pacific Bank of over $200,000, and he determined that he would secure himself through legal technicality from the loss of hundreds of thousands of dollars more. He knew that the dishonorable end of the Paci- fic Bank was inevitable, and he sent for one of his attorneys. His attorney was informed of the true condition of af- fairs and was instructed to involve the private property of Dr. McDonald in such a maze of legal obscurity that it would be impossible for the creditors of the Pacific Bank to trace the move- ments of the wily old financier. The conference between Dr. McDon- ald and his attorney took place in New York City in the early part of June, 1893. The old man declared that he wished to place his property beyond the possibility of attachment. The at- torney was ordered to exercise his legal knowledge an. institute the necessary proceedings to cover the tracks of the old banker. The attorney and Dr. Mc- Donald went from New York to Nor- folk, and the day after they arrived in Virginia the McDonald Company was organized. Dr. McDonald transferred to this bogus corporation all of his Norfolk property that had not already been transferred to the Norfolk Com- pany. After the organization of the “McDonald Company” and the trans- fer of the old man’'s property to this organization the aged Donald had first transferred his valu- able holdings to the McDonald Com- pany and then from the McDonald Company to Horace W. Carpentier and J. B. Haggin. It has been, however, impossible to prove this fact until now. McDonald did transfer property that was worth and is worth at least five hundred thousand dollars to the Mc- Donald Company, and he is now en- Joying a revenue from the land. All of the old banker's propert- that was not included in the transfers to.the Norfolk Company was deeded over to the McDonald Company. These deeds, however, were not recorded for the simple reason that at that time the old banker and his attorney did not dare risk the uncertain chance of publicity. Dr. McDonald came into possession of the Norfolk property shortly after the war of the rebellion. The earliest re- ported transaction in which his name figures occurs in 1872, when the old man gained possession of a very consider- able amount of Norfolk land, situated chiefly on the water front.. This land rapidly increased in value until the time when C. P. Huntington and the Chesapeake and Ohio Railroad sought to make Newport News, which is just across the James River, an important port of export and entry. McDonald understood the advantage of his posi- tion and held the land, with the idea that the great railroad magnate would seek to obtain it. THE NORFOLK COMPANY BROUGHT INTO EXISTENCE. The property was retained by the old banker for many years. The letters of his son indicate how clearly the family hoped to retain this property as a new' basis for a new fortune after the fail- ure of the McDonald banks. When this failure became inevitable Dr. Me- Donald and his son Frank planned to retain the property and protect it from any possible attachment by the cred- itors of the defunct banks. On June 8, 1893, fourteen days before the Pacific Bank failed, Dr. McDonald formed the Norfolk Company, & corporation organ- ized and planned with the sole purpose of defrauding the creditors of the Pa- cific Bank. Dr. McDonald, as might have been expected, was the president of the company and chief owner of stock. The vice president was F. S. Edminster, who was also vice president of the McDonald Company, and, as al- ready demonstrated in The Call, a will- ing tool of Dr. McDonald. Shortly after the Norfolk Company wus formed val- uable property in Norfolk, aggregating approximately $116,000 and owned by attorney that it was his purpose to so arrange his property that it would not be subject to attachment. The down- fall of the Pacific Bank was known at that time to be inevitable, and Dr. Mc- Donald, in his own words, did not in- tend to be caught in the trap. On June 15, 1893, the banker and his attorney were at Norfolk and made application to the State authorities of Virginia for a charter for the McDon- ald Company. In asking for this char- ter Dr. McDonald declared that the purpose of the corporation was to ac- quire, develop, improve, hold, lease ard sell real estate, water and gas and tele- phone property, to acquire and con- struct ship yards and build ships and factories of various kinds. The capital stock of the corporation was fixed at not less than $300,000 nor more than $5,000,000. In this connection it should be re- membered particularly that the ma- nipulation of telephone stock was men- tioned in the articles of incorporation. At that very time Dr. McDonald was exercising every endeavor to protect his possession of very valuable tele- phone stock in this city. When he or- ganized the company he made himseif as a matter of course president of the corporation. Alfred P. Thom of Nor- folk was made the vice president, Charles G. Ramsey of the same city was selected as treasurer and William A. Wren, also of the same town, was elected secretary. The directors of the concern were as follows: R. H. Mc- Donald, Alfred P. Thom, F. 8. Edmin- ster, John B. Whitehead, William A. Wren, Charles G. Ramsay and Frank V. McDonald, The charter for this company was granted by the State au- thorities on June 16, 1893, the day after Dr. McDonald arrived at Norfolk, and held his first meeting of organization. A copy of the charter and articles of incorporation was sent to the secretary of the commonwealth of Virginia and placed on file at Richmond. Six days after this important tran- saction the Pacific Bank failed. Several of the directors, who were very prominent citizens of Norfolk, re- alized thet they had been duped into a scheme to rob the creditors and de- positors of the McDonald banks. They then declined to be parties to such a fraud and in indignation withdrew. Among those who retired from the cor- poration was W. A. Wren and John B. Whitehead. Wren is a member of the prominent firm of Nottingham & Wren, an influential irm which deals in coal at Norfolk. Whitehead was at one time president of the Exchange Na- once to Norfolk and reorganize the cor- poration. | _Frank immediately took a train for | New York and from there went to Nor- folk. Every effort was made to retain. the directors in their original positions, but without success. It was found nec- essary to amend the original articles of incorporation, and on July 3, 1893, the articles of incorporation were amended and the number of directors was re- duced from seven to five. The new Mec- Donald Company was organized by the old banker and his son, Frank, with the following directers: R. H. McDon- ald of San Francisco, Frank S. Edmin- ster of New York, Charles E. Putt- farchen of San Francisco, F. V. Mc- Donald of San Francisco and J. Car- roli Montague of New York. Notwith- standing this reorganization of the Mc- Donald corporation it was impossible for Dr. McDonald and his assoclates to regain the confidence of the people of Norfolk. Everybody in the town un- derstood thoroughly that the corpora- tion had been organized for a dishonest purpose and Dr. McDonald, fearful of an expose, determined to transfer his property directly to two private indi- viduals. The records of Norfolk show that most of his property, which was situated in what was known as At- lantic City Ward of Norfolk City, and in Norfolk County, outside of the city limits of Norfolk, was transferred di- rectly to Horace W. Carpentier and J. B. Haggin. The records show that this transaction was made on October 18, 1893. The consideration for the transfer was named as $180,000. There is on rec- ord at Norfolk a receipt indicating that this sum of money was paid by Carpen- tier and Haggin to the old banker. Three years later, however, on May 8, 1896, Carpentier and Haggin trans- ferred this very property to Theodore N. Ramsay of Norfolk. The ostensible consideration for this transfer was $150,000, and in payment for the prop- erty Ramsay gave three negotiable promissory notes, each note calling for $33,333. All of these notes were dated January 14, 1896. The first was made payable on May 14, 1897, the second on January 14, 1898, and the third on Jan- uary 14, 1899, In order to secure pay- ment of these three notes, Ramsay, who was then the ostensible owner of Dr. McDonald’s property, executed a deed of trust to Cortland Van Rensselaer of New York city. Ramsay, who was an agent of Dr. R. H. McDonald, having come into possession of valuable Nor- folk property, lost no time in again transferring it, so that all trace of it might be lost in the maze of legal tech- nicalities that Dr. McDonald had created to protect himself. As might have been expected a certain considera- tion was named for this transfer. Tha property was at that time valued at least at $500,000. Carpentier and Hag- gin had received it for the ostensibla consideration of $180,000. They had transferred it to Theodore N. Ramsay for a nominal consideration of $150,000, and when Ramsay again transferred it the consideration was $5. Ramsay transferred the property to the Park Place Company, in whose name the property now stands. The Park Place Company as a mat- ter of course is Dr. R. H. McDonald himself, and in the name of this con- cern the vast bulk of the old banker’s property is recorded. In the last few years some of the land has been sold to laboring peopla and investors of moderate means on tha instaliment plan. Most of it, however, has been retained by the old man, who has received since the collapse of the Pacific Bank and the People’s Home Savings Bank all of the profits that have resulted from sales and rents. It will be remembered that Dr. Mc- Donald made a flying trip to Europa after the collapse of the Pacific Bank. He returned very recently to America and is supposed now to be living at Montreal, Canada. It hag already been indicated that at least one suit was in- stituted to recover from Dr. McDenald some of the property that he had pro- tected under the guise of these cor- porations. J. B. HAGGIN AND HORACE CARPENTIER WERE McDONALD'S ALLIES. One of these actions is of exceptional interest. It was instituted by a real es- tate firm of Norfolk and proved con- clusively the dishonest organization of the two companies and the guilt of Dr. McDonald. An action was brought for payment for services rendered by Tie- bault & Co., real estate agents of Nor- folk. This company was employed by Dr. McDonald as his agency in trans- ferring his property to J. B. Haggin and Horace W. Carpentier, and after that transfer to Theodore N. Ramsay and the Park Place Company. In con- sideration for its seryice in these trans- fers the company d ded a commis- sion of $7500. Payment of this sum was resisted and the real estate company sued Dr. McDonald for the amount. Rather than have the sult pressed to a conclusion, Dr. McDonald compro- mised and Tiebault & Co. released the attachment that had been placed on the old banker’s property. The second suit that was filed to recover something of the property that Dr. R. H. McDon- ald had transferred to cheat his credit- ors was instituted by the People's Home Savings Bank. The suit and its history are of exceptional public im- portance at this time. The action was filed on October 15, 1897, by the People’s Home Savings Bank of San Francisco, and the follow- ing were made defendants: R. H. Mc- Donald, James B. Haggin, Horace W. Carpentier, Theodore N. Ramsay, Cort- land S. Van Rensselaer and the Park Place Company. The purpose of the suit was to recover from Dr. R. H. Mc- Donald $252,000, with interest at 6 per cent from September 30, 1895. In or- der that there might be no misunder- standing in reference to the character of the suit, it was stated that the legal action instituted by the People’s Home Savings Bank was intended to affect all land standing in the name of Richard H. McDonald on October 17, 1893, and which by him were conveyed by deed of October 18, 1893, to James B. Hag- gin and Horace W. Carpentier. McDONALD AND HIS CONFEDERATES BROUGHT T0 THEIR KNEES. The attorneys for the People’s Bank set forth in their complaint that it was their purpose to set aside as fraudu- lent every transfer that related to the McDonalds’ Norfolk property, begin- ning with the conveyance of this prop- erty to James B. Haggin and Horace ‘W. Carpentier. This suit, which should have revealed all the intricacies of Mc- Donald’s legal jugglery, was never pressed to a conclusion. There is in the court of Norfclk County a record that shows that on May 2, 1898, the lien placed upon the property by the Peo- ple’s Home Savings Bank was released. This decree of the court means simply that Dr. R. H. McDonald, J. B. Hag- gin, Horace W. Carpentier and the di- rectors of the Park Place Company compromised the suit. The attorney for the People’s Home Savings Bank had worked upon the case for over a year, and while he had begun without hope of profitable result he concluded by gaining possession of most important evidence in reference to certain per- sons in these questionable transfers of property. When the suit was first instituted Dr. McDonald and his- associates pro- fessed to be highly indignant at the charge that they had made fraudulent conveyances of the property. When the records and the evidences of their transactions were presented, however, they sought to secure a compromise. ‘The basis of compromise was fixed at $25,000. Subsequent negotiation, how- ever, reduced this amount to $15,000, which was paid to the People's Home Savings Bank. In consideration of this payment it was agreed that damaging evidence, discovered by the attorney for the People’s Home Savings Bank, be withdrawn from the court recorde. Frank S. Edminster, it appears, was the person who supplied the damaging evidence. As The Call has already in- dicated Edminster and his assoclates disagreed and the old parasite of Dr. McDonald gave up the information that proved of such great value to the People’s Home Savings Bank. It was understood at that time that Edminster in consideration for the information