New Vistas of Rottenness - Part 3
By Patrick Gaffey
In early June the Los Angeles Times headlined its editorial, "Let’s Keep Cool," warning against "wild rumors." On the 23rd it explained what it meant: "Carrion buzzards" were attempting to "unsettle public confidence in institutions which form the corner-stone of the business structure of Los Angeles." The Times did not explain how anyone could undermine public confidence in the local business structure further than its key businessmen already had.
None living were more prominent cornerstones of the Los Angeles business structure than the Times’ owners, Harrison Otis and his son-in-law, Harry Chandler, who had won the older man’s heart by ruthlessly blackmailing him into a partnership. Together they led the conspiracy which bought up cheap, arid land in San Fernando Valley, stole the water rights of the residents of lush Owens Valley, then used fear and lies to persuade Los Angeles voters to pay for a 233-mile-long aqueduct. When that aqueduct reached the San Fernando Valley, the farmers of Owens Valley were ruined, the conspirators profited in the tens of millions of dollars, and Chandler and Otis stood astride Los Angeles.
Now the Times would do everything necessary to protect itself and the business community it dominated. Its editorials began to lie again: "...not a single Los Angeles bank is even slightly involved."The consolation the paper found in the disaster must have struck despondent investors speechless: "...very little of the money paid for this stock actually left the community. The great bulk of it is still here, in active and useful circulation"—useful to those who controlled the local economy and made a profit on nearly every transaction. But the Times gave the community its guarantee: "Everyone criminally involved in the Julian mess will answer for his acts, without regard to his position in the community." Meanwhile the Times looked forward to the population "getting back to our jobs and letting the courts take care of what remains to be told of the story of Julian Petroleum." What little remains to be told, was the strong implication.
Indicted, the Pacific Southwest bankers surrendered their profits to the newly appointed Julian Pete receivers. Changing his mind again, Harry Haldeman did, too. Again hope rose that investors might recover some small pieces of their investments.
When grand jury testimony made its way into the newspapers, readers discovered that, while printing a river of unauthorized stock over 16 months, Jacob Berman had collected investments and loans totaling one hundred million dollars. In the 1920s the figure did not seem possible. He had deposited sixty-six million in bank accounts, promptly withdrawing it all. $34 million had disappeared.
District Attorney Asa Keyes sent agents after Berman, his $625,000 money belt and his knowledge of rumored European bank accounts. Berman led an entertaining chase, surfacing in New York, announcing he was not in hiding, then disappearing again. Ocean liners were searched, fruitlessly. Telegraphing Keyes along the way, Berman made it to France, then England, then back to the U.S. without apprehension. Then he suddenly surrendered on September 9, 1927, in San Francisco and announced he was broke.
Photo: Asa Keyes
About this time Haldeman changed his mind again and reclaimed his profits from the receivers. Under threat, Louis B. Mayer surrendered his.
The Julian Oil Corporation receivers sued Haldeman and others, asking triple damages on behalf of the stockholders. Raising hope only to dash it, the judge ruled that the defendants had clearly broken the usury law, but that the receivers lacked legal standing to collect the money.
When Lewis, Berman, the heads of the Wagy brokerage and one of the Pacific Southwest bankers went on trial in a group of ten of the most important indictees, "Ace" Keyes, instead of prosecuting the case himself, handed it to an inexperienced deputy. Charges against three of the men were dismissed. On May 23, 1927, the other seven were found innocent.
As a succession of wealthy Teapot Dome defendants beat the charges against them, a cynical national conviction grew: "You cannot convict a million dollars." The Julian scandal seemed to prove the theorem again.
Charges remained against 41 men. The judge in the case, clearly dissatisfied with the trial just concluded, still felt that the evidence against the first ten was far stronger than that against the remainder. With most of the ringleaders acquitted, he threw out the charges against everyone but Jacob Berman.
In the face of widespread outrage and frustration the Federal government indicted Lewis and Berman for mail fraud—not for their roles at Julian Petroleum, but for their previous activities in the Gold Note campaign at Lewis Oil in New York. On October 30, 1928, both were convicted.
But the Julian scandal was not over. The day after the convictions were announced, the Los Angeles County Grand Jury stunned the city, revealing the results of a secret investigation: In a long series of meetings in the shop of tailor Ben Getzoff, District Attorney Keyes had defied Prohibition, sucking down liquor to the point of drunken stupor, while accepting thousands of dollars in bribes from Berman and Ed Rosenberg in exchange for the promise of their acquittals in the first trial.
Keyes retired shortly before the truth emerged. His former assistant, war hero Buron Fitts, was elected Lieutenant Governor, but then abandoned that office to win the race to succeed Keyes. Since the charges against Keyes emerged between Fitts’ election and his planned accession to office, Fitts was appointed Special Prosecutor to bring his former boss to justice. An ardent believer in Prohibition, Fitts seemed just the righteous man to teach Keyes a lesson.
Details revealed in the trial were as painful to the public as Keyes’ betrayal. Having been revealed as a heavy drinker, the county’s chief law enforcement officer was now exposed as a chronic gambler. Gambling, of course, was as illegal as alcohol. Berman testified that Rosenberg told him he had paid Keyes $125,000, which Keyes needed to pay off gambling debts. The bribers bought Keyes’ daughter a new Chevrolet. Money here, money there. An expensive watch. Golf clubs. The bribes totaled nearly $200,000.
In twenty years as deputy district attorney and five as D.A., Asa Keyes had been strongly opposed by the powerful Los Angeles Times, Keyes said because he refused to obey the paper’s dictates—which was probably true. Now attacked from all sides, Getzoff, Rosenberg and Keyes were each convicted and sentenced to one to 14 years in prison. Getzoff lived up to his name; his sentence was suspended because of his poor health and for his testimony against the others. From the county jail, where he awaited transfer to San Quentin, former District Attorney Keyes denounced Getzoff as "a squealer."
If the scandal were conceived by an angry god to disgrace the ruling elite of Los Angeles, the conviction of Keyes would seem to have completed the work. But any such intelligent designer apparently wanted to disgrace not just the elite, but every class of Angeleno. The Julian scandal continued to slither down its serpentine path.
In June 1929 Harry Haldeman was tried for usury. This time the judge ruled that using pools to buy up stock did not technically involve loans, so the percentages paid could not constitute usury. Haldeman was acquitted.
Photo: Lt. Fitts
In October S.C. Lewis, incredibly posing again as an advocate for investors, sued the Los Angeles Stock Exchange for its failure to protect buyers of Julian stock. Leontine Johnson, Lewis’ former secretary, was called as a witness. An attractive woman in her early thirties with high cheekbones and a massive chin, her brunette hair hidden under a fashionable cloche hat, she testified that H.B. Chessher and other stockbrokers had paid her $5,000 down and $100 a week, promising her $25,000 more in bribes for advance information about Lewis’ suit. She took the money, but told Lewis. Together they cheated the brokers, repaying their bribes with false information. As with so many witnesses, some side dishes Johnson served were more painful than the main course of bribery and treachery: Newly impoverished investors read that broker C.C. Streeter made nearly $5,000,000 in profits on Julian stock, that broker Abe Morris made more than that and that Chessher did about as well. Still other stockbrokers told her of huge profits.
Though Miss Johnson—soon revealed as the former Mrs. H.R. Rule—looked more than capable of taking care of herself in a fair fight, the newspapers called her the "girl" witness. The eminent Harold J. Barneson of the H.J. Barneson Company similarly underestimated her. As she argued with him and other stockbrokers over the size of her bribe, he said he thought $30,000 was enough "for any little girl." She may have been only a secretary—she sported the moral credential of having been secretary to film censor Will Hayes—but, like everyone else in Los Angeles, her eyes had widened as she heard of the fabulous millions falling from the Julian scandal. Now some of that money was falling within reach. She testified, "I stopped telling Lewis everything. I went into business myself."
She went into business with Morris Lavine, a well-known journalist, who agreed that what she knew was worth money. She knew how the sleazy political machine of attorney Kent Kane Parrot and his "underworld" partner, well-known saloon owner and gambling and prostitution kingpin, Charlie Crawford, were involved in the scandal. She and Morris decided to blackmail the underworld. They demanded $75,000 from Crawford to keep quiet. As well as they knew Los Angeles, they should have known the underworld and the law were on the same side.
Lavine found that out when he went to Crawford’s office. Crawford handed him $75,000 in cash. When Lavine stepped outside, he was arrested. Crawford, Parrot and their ally, recently resigned state Corporation Commissioner Jack Friedlander, had contacted the new District Attorney, Buron Fitts, and told him what was up. Now Lavine and Johnson were charged with extortion. The $75,000 was held as evidence. The newspapers wanted to know what Johnson knew that was worth so much.
Photo: Leontine Johnson
"Entire Julian Quiz Reopened" read the Times headline March 18, 1930. Three years after editorializing its hope that the mess was finally ending, the paper was forced to report that the grand jury was investigating it all again-and more: an allegation that S.C. Lewis, with the help of Crawford, Parrot and others, had donated $120,000 to the election campaign of Governor C.C. Young in return for the appointment of Friedlander as California Corporate Commissioner friendly to Julian Petroleum. Far from ending, the Julian scandal was just rising to its feet. The next day more testimony revealed how corrupt the Julian trial really was: Berman had not only bribed District Attorney Asa Keyes, but two of the jurors as well. And Lewis had bribed a third, Mrs. Caroline Love.
In a March 21 editorial, "The Bottomless Pit," the Times again warned against blaming innocent businessmen for the scandal, but urged that the government "should this time go completely to the bottom, if any bottom can be found." Which was the obvious question: Was there a limit to corruptibility? Would any resident of the White Spot choose morality over cash?
On April 1 seven men were indicted for violations of the California Corporate Securities Act, including some who had escaped justice two years earlier: former Julian Petroleum President S.C. Lewis; his assistant, Jacob Berman; Pacific Southwest banker Motley Flint; Ed Rosenberg; the Reese brothers, who had owned Wagy & Company; and attorney Henry MacKay, who had headed the first Million Dollar Pool.
On April 7 Berman testified that Lewis had paid Governor Young not $120,000, but between $200,000 and $250,000 for the appointment of Friedlander as a Corporate Commissioner who would keep his hands off Julian Pete. The Times took the occasion to hope that the last ugly facts had been revealed, but conceded, "So far, every turn in the crooked and slimy trail has opened new vistas of rottenness."
One such vista was a back alley view into the life of one of the bribed jurors, Mrs. Love.
As Tygiel says, Caroline Love seemed an unlikely criminal, a woman who had spent much of her life working in civic organizations. "A somewhat pathetic sight," the Times found her at her first grand jury hearing. "A plump, middle-aged woman, a night in jail had added nothing favorable to her appearance and tears flowed from her eyes...."
Her sister, Mrs. Minnie Belle Woodley of Redondo Beach, who was also arrested, "studiously avoided photographers and had nothing to say."
Selling Mrs. Love’s jury vote was the idea of J.H. "Jack" Weaver, a 72-year-old hotel man, living in San Pedro. He talked to retired furniture dealer and fellow boozer W.B. Love, and then to Love’s wife, Caroline. She testified that Weaver told her, "We will squeeze old Lewis for what we can get out of him and then go after the other defendants, because they have the big money."
Mrs. Love, apparently a Christian woman, could not agree to commit such a crime without an argument. She said, "Weaver told me that he thought he could get $10,000. I told him that I did not believe that was enough. I thought that $20,000 might be an interesting sum." S.C. Lewis would only pay $10,000. The Loves and Weaver settled for that, and Lewis gave Weaver the money.
Three days later Mrs. Love had not received a penny. Lewis found Weaver drunk in a hotel and took back the $7,100 still unspent.
Hearing what had happened and not trusting her husband, Mrs. Love decided to go into business herself. She contacted Lewis directly, and they again agreed on $10,000, now to be paid to Caroline’s sister, Mrs. Woodley. But somehow the second deal was never consummated. Either Mrs. Woodley or Mrs. Love "got cold feet," and the second $10,000 never changed hands, which likely saved both of them from prison.