Julian Petroleum Corporation (nicknamed "Julian Pete") was a Los Angeles-based oil company. It collapsed in 1927 amid large-scale fraud, taking over $150 million from 40,000 investors.
 | |
| Industry | Oil |
|---|---|
| Founded | 1923 in Los Angeles, California |
| Founder | Courtney Chauncey ("C.C.") Julian |
| Defunct | 1927 |
| Fate | Dissolved |
Key people | S.C. Lewis, Jacob Berman and stockbroker Ed Rosenberg |
Background
editJulian Petroleum was started by Courtney Chauncey ("C.C.") Julian in 1923. C.C. Julian had been successful the previous year in drilling for oil in Santa Fe Springs, California. The company sought out investors with colorful advertising such as: "Widows and Orphans, This Is No Investment for You! ... My appeal is addressed to people who can legitimately afford to take a chance." However, the California Corporations Commission began investigating the company for fraudulent sales promotions.[1]
Downfall
editIn 1925, C.C. Julian sold his interest in the company for $500,000 to Sheridan C. (S.C.) Lewis and Jacob Berman (alias Jack Bennett). The following year the company merged with California-Eastern Oil Company. An audit revealed the company had issued 4,200,000 unauthorized shares of stock and on May 5, 1927, the Los Angeles Stock Exchange halted trading in Julian Petroleum. The company had created financial pools from 400 prominent local businessmen, including Cecil B. DeMille and Louis B. Mayer, to support the over-issuance of stock. The funds were loaned to Julian Pete for short terms at high interest rates. A number of these investors were charged with violating state usury law but either the charges were dropped or they were acquitted.[2][3]
Aftermath
editS.C. Lewis, Jacob Berman and stockbroker Ed Rosenberg were acquitted in May 1928 on charges involving the Julian Pete fraud. However, District Attorney Asa Keyes was charged with accepting about $100,000 in bribes from Julian Petroleum officials in connection with the acquittal of the accused officials. He was found guilty in February 1929 and sentenced to one to 14 years in prison. He served 19 months before being pardoned by Governor James Rolph. Buron Fitts, who was the lieutenant governor, resigned in 1928 and was elected Los Angeles County District Attorney and appointed prosecutor in the trial of Asa Keyes.[4]
S.C. Lewis and Jacob Berman were convicted in November 1928 and were sentenced to seven years in prison on charges relating to the sale of nearly $1 million in gold bonds of the Lewis Oil Company.[5]
C.C. Julian faced charges in 1931 in Oklahoma of conspiracy to defraud investors of $3.5 million. He then jumped bail and fled to Shanghai, China, where he committed suicide in March 1934.[1]
Financier Motley H. Flint was shot and killed in July 1930 in a courtroom by machinist Frank D. Keaton. Keaton said that he lost $35,000 in Julian Pete stock and blamed Flint. Flint was formerly a vice-president of the Pacific Southwest Trust and Savings Bank and had been indicted several times, but the charges were dismissed or he was acquitted. He was awaiting trial on another indictment when he was killed.[5]
References
edit- ^ a b Jules Tygiel (December 3, 2006). "What a money-gusher". Los Angeles Times.
- ^ Stock Scandal to Re-enter San Francisco Court The Nassau Daily Review June 25, 1927
- ^ Financing California Real Estate: Spanish Missions to subprime mortgages By Lynne P. Doti
- ^ My First Forty Years In California Politics 1922 - 1962 by Robert V. Keitny - Oral History Program University of California Los Angeles
- ^ a b Cecilia Rasmussen (March 16, 2003). "Motley's Crew Bilked Investors in Oil Stock Scandal". Los Angeles Times.
Further reading
edit- Tygiel, Jules. "The Great Los Angeles Swindle: Oil, Stocks, and Scandal During the Roaring Twenties." Oxford University Press. 1994. ISBN 978-0195054897
- Hutson, William Gardiner. "My Friends Call Me C.C." Sunstone Press. 1990. ISBN 978-0865341432
- Finney, Guy W. "The Great Los Angeles Bubble - A Present-Day Story of Colossal Financial Jugglery and of Penalties Paid." Milton Forbes Company. 1929.
- Baker, Lorin Lynn. "That Imperiled Freedom." Graphic Press. 1932.
- New Vistas in Rottenness by Patrick Gaffey The Drill Press 2006