At the beginning of the summer of 1962 nobody much cared about the story except for a Press Democrat staff writer. By midsummer it was the top news in the Bay Area. As the season came to an end, a mania over the case had gripped all of California, with tips and false leads flooding police telephone lines.
The pressing question everyone wanted answered: Where were the Arnesons? Mildred and Jay had been missing over six months when the first PD article appeared. They had no close friends in Santa Rosa so there was no one to raise an alarm over their unusual disappearances, but her family in Washington state was convinced something terrible had happened.
They presented the Sonoma County Sheriff with their suspicions and even evidence of crimes. Yet the office stubbornly refused to investigate and treated it like a routine missing-persons case, which is to say they did nothing as the months passed. “It’s primarily a matter of waiting for leads,” the sheriff’s investigator said. The PD slammed the department for what it called “official indifference.” In a headline, no less.
And then there was Eva Anna Long, who had also vanished. She was supposedly a friend of the Arnesons – were they all together somewhere? The inspector in charge of the case believed so (while leaving open “possible foul play”) even though the woman had an incredibly sketchy history. She was already wanted by the sheriff for recently pulling a gun on someone and her name was actually an alias.
At its core this is a true crime story which any competent writer could sum up in 2,500 words or so – as several have in years since. (Monte Schulz, son of Peanuts cartoonist Charles Schulz, wrote a novelized version called “Naughty.”) Sure, it can be framed as a straight-forward “Motive, Means and Opportunity” crime, but only by going back to the original sources can we grasp what made this tale so remarkably compelling; it sucked everyone in because each new detail was wilder and crazier than the last. It was like receiving a piece of a jigsaw puzzle nearly every day which changed the emerging picture from what you expected.
Another overlooked aspect of the story was the fierce competition for the latest nugget between newspapers, radio and TV reporters. There were accusations that some were plagiarizing news from the Press Democrat, and those charges were not completely unfounded.
Sadly, we can’t go back 60+ years via my Wayback Machine (I really should have sprung for the rust-proof undercoating) but we do have most of those newspapers online, so it’s easy to follow the story as it unfolded. And although I’ll have more to say about this later, the Press Democrat deserves highest praise for its coverage. It would have been easy for the newsroom to accept the sheriff’s position there was no reason for concern and wave off the family’s plea for help. Instead, editors took the initiative and assigned Neale Leslie and Bony (Boniface) Saludes to dig into the story – and primarily thanks to them all was revealed.
The essence of our story began when the PD’s first article appeared on July 1, 1962 – two hundred days since Mildred Maude Arneson vanished. Almost all of the background details covered below trace back to those first investigative reports that summer.
(RIGHT: Mildred Arneson c. 1950. Photo enhanced using HotPot AI)
Mildred and Jay’s only year in Santa Rosa was unhappy. Early in 1961 the 58 year-old woman purchased the Rose City Motel at 1385 Santa Rosa Avenue (today it’s a Starbucks drive-thru). Built in the 1920s, it was typical of the little motels that dotted the American West after highways became ubiquitous – it was first called the Rose City Auto Camp and later the Rose City Motor Court. There were twenty 2-3 room cabins and what few classified ads that can be found mention they were heated and had furniture. The Arnesons lived there and Mildred ran it, but business was poor. The place was a dump.
Mildred had some property in Washington state, and shortly before she disappeared told a realtor she was planning to sell it and use the money to retire somewhere in South America or Mexico. She wrote her mother on December 14 she was about to make a six week trip down there with her new friend Eva Long, who was lending her $10,000 for the junket. A day later Mildred signed over a grant deed for the motel to Mrs. Long as collateral. The notary who certified that was the last person to speak with Mildred.
Eva and her husband Ralph had passing acquaintance with the Arnesons and were staying at the Blue Bonnet, a nearly identical motor court next door. They were in Santa Rosa because Eva said she was being harassed by insurance investigators because of her $100,000 suit for supposedly permanent injuries. She was a passenger in a San Francisco taxi when it hit another car and she was left with a bad limp.
Then one mid-December day the couple who owned the Blue Bonnet learned Mildred had supposedly left for a South American trip and Eva had purchased the Rose City Motel “sight unseen.”
The woman who called herself Eva moved in to the motel with Ralph and announced it was now named the El Sombrero. With Jay still living there, it fell to Ralph to feed and bathe him. Jay Thomas Arneson was suffering the final stages of Parkinson’s disease with a paralyzed lower lip that made him difficult to understand. The 70 year-old WWI vet and major in the Army Reserve had been on a disability pension for a quarter century.
It was apparent to Blue Bonnet owners Joan and Nigel Dodge that Eva knew nothing about running a motel as she pestered them constantly with questions. At first the Dodges were pleased to assist her, as people always were. Eva had an air of helplessness which made you instantly trust and want to make her feel better. She was a diminutive woman at a little over five feet tall and 43 years old; besides her limp she had a blown-out pupil that might be mistaken for a glass eye. She still spoke somewhat broken English and would cock her head while reading or listening to someone – presumably because this was her second language, having come from Munich.
It was a couple of weeks after Eva and Ralph took over when the first police car arrived at the El Sombrero. One of Mildred’s sisters tried to phone the motel on New Year’s Day and discovered the number was disconnected. She contacted the sheriff’s office and asked for someone to check on the situation. The deputy encountered Eva and asked her to call the sister. Eva told the woman she had “just received a card from Mildred in Mexico City” and all was well. Then the sister asked to speak with Jay. He said hello and in a voice the PD described as a sob, added “I don’t think I’ll ever see Mildred again.” Eva came back on the line and explained he was upset by his wife’s hasty departure.
Jay disappeared near the end middle of January. Eva first told the Dodges a couple of “sinister looking” men showed up in the middle of the night and put him in a white Cadillac with Mexican license plates. Then just three days later, Eva told them she escorted him to Letterman Hospital in a taxi.
It was shortly after that when the Dodges began to suspect the Arnesons had been murdered. Eva began doing a suspicious amount of “garbage burning” behind the motel, with a pile she kept burning continuously for weeks. It seemed like she was getting rid of everything inside – mattresses, furniture, curtains. The stench was awful. Joan wondered if it was to cover up the cremation of human remains.
Mildred’s family grew increasingly anxious as more weeks passed without hearing from her, with her mother saying she believed “the woman who bought the motel did her in.”
Clues were rapidly accumulating. Her December letter to mom said she would be first driving Jay to a nursing home in San Diego. Such a reservation was indeed made, but Mildred and Jay never showed up. The Arneson’s car remained parked in Santa Rosa.
By now the family had made their concerns known to the Sonoma County Sheriff’s office and Inspector John Coffman was assigned to the case. He considered those details, yet not a single red flag was raised for the remarkably incurious investigator. He also visited Eva at the El Sombrero and came away convinced there was nothing to investigate – the Arnesons must be enjoying a vacation somewhere. Too bad he didn’t go next door and ask the Dodges what they thought.
Fed up with Coffman’s shortcomings, two of her sisters drove here in February to meet with the sheriff and file a missing persons report – but first they made a side trip to check on another of Mildred’s cabin motels in Westport, Washington, a summer resort town where lodging shut down for the winter. They found the place had been ransacked; most furniture was gone along with doors and wall paneling in the office. It undoubtedly left them shaken, but all they could do was notify the town marshal before leaving for California.
As Coffman seated himself comfortably and waited for leads to roll in, the missing person report certainly ruffled someone’s feathers. Immediately after the sisters returned home, a telegram to one of them arrived on February 28 sent from Salinas:
Dear Bea: I would like for you to keep your nose out of my affairs. Jay and I are all right. If you keep this up everyone will be upset. Tell mother not to worry. I’m all right. I was within 100 miles of you a couple of weeks ago, after I heard what I heard I stayed away. Would you please accept Jay’s check at this address. I will write in two weeks so don’t be upset. And please stay out of my affairs. Love. Mildred Jay and John.
As promised, a typewritten letter to their mother arrived a couple of weeks later, postmarked from Tijuana:
Dear Mother: Hope your feeling fine. Jay, John and I are alright. John said not to worry. I bought a new car a Cadillac. I been in a little trouble but I always work out my own troubles and affairs all my life. I am fifty-seven now and its about time my family keeps their nose out of my affairs. If anyone ask you where I am you don’t know and if anyone ask you any questions you don’t know. And I am writing to you under a different name thats if you want to hear from me.
Now mother don’t worry about me and take good care of yourself. Tell the children not to worry also. I’ve sold most of my property outright. You know Bea’s always been jealous of me even when I had the Turkey Farm she said I should knit sweaters for them I never did forget that. I’m sending Jay’s pension checks to you to hold on to them until we get settled. I’m also if you meddle I’m having my utility bill sent also. Well, nevermind I’ll write to Westport and them send them. As I sold the cabins. The ground couldn’t be sold.
I have a habit and it’s very costly and don’t ask me to explain that’s half of my trouble Jay wants to write to Jack and tell him we are alright. This all for now. Love to all from
Mildred, Jay and John.
There were red flags galore in those messages. First, no one in the family knew “John,” who they were apparently supposed to recognize. Mildred’s grammar and spelling were far better and she wrote letters in longhand, not typed; her age was 58, not 57; she called her mother as “Mom” and signed herself “Mil.” And the telegram to her sister was addressed to “Beatrice Brown” instead of “Brunn.”
None of these points raised the good inspector’s eyebrows because he was sure the messages came from Mildred – after all, she owned a portable typewriter. Plus there was the turkey farm shoutout which absolutely no one else could have known because no person has ever shared a family anecdote with a friend. “If you take the negative approach,” Coffman later told the PD, “you come to one conclusion. If you take the affirmative approach, you come to a different conclusion.” John Coffman: Zen detective.
Eva (and probably Ralph) moved back to the Blue Bonnet for six weeks as workmen made repairs at the El Sombrero – she told the Dodges she could not “stand filth,” presumably meaning construction debris. During that interlude and before, the Dodges came to know Eva better than anyone besides Ralph. They recognized her lies and fabulations for what they were, keeping Mildred’s sisters abreast of her doings and what was (not) happening in the sheriff’s investigation. Mildred’s family credited them – along with the Press Democrat – for cracking the case.
Uncredited 1962 snapshot of Iva and Ralph Kroeger taken by a friend of the Dodge family. Photo enhanced using HotPot AI)
Later after Eva became a murder suspect, the Dodges readily gave interviews to the PD and other media. Remarks to the Oakland Tribune described how Eva was rarely alone because she used her wiles to build an entourage “promising fabulous rewards to transients and down-and-outers to do her bidding.” Sometimes she paid them generously – but more often they were just gratified by being able to help the poor, sweet lady who had suffered so much. Two months before the missing Arnesons became big news, an item in the PD illustrated how the world turned in Eva’s universe.
She hired a tradesman named Herbert Willsmore to install an expensive water softener as part of the motel renovations and also borrowed money from him, said to be around $2,500. (What, you don’t hit up plumbers and other contractors for loans?) Asked why he gave her money, Willsmore explained Eva had an “ability to draw you in, to engender trust.” But when it came time to repay the loan and make good on his bill which came to a total $4,900, she claimed to lack the ability to do either.
In late May she finally agreed to pay him if he came by the motel. When he arrived, he found her with a Mrs. Harrington and a Mr. Phelps. He also found her holding a .22 automatic pistol. Mrs. Harrington told the PD she was with Eva all day and she “kept repeating that she was going to get a gun and use it on Herb.”
Eva demanded he sit at her dining room table and write a statement that she owed him nothing. Then per the PD story, “the episode was interrupted and Mr. Willsmore was allowed to leave unharmed when Mrs. Willsmore got tired of waiting outside for her husband and knocked on the door to find out what was keeping him.”
Willsmore immediately reported this bizarre incident to the sheriff’s office. Meanwhile, Eva handed the gun to Mr. Phelps and told him to hide it in the attic – and I am gobsmacked to reveal he did exactly that. Admitted it to the PD reporter, even.
Deputy sheriffs arrived the following day with a search warrant and found the gun in the attic (fully loaded) but no Eva. She had skipped town just ahead of their arrival, taking along all photos of herself and leaving behind a doleful Ralph. An arrest warrant was issued charging assault with a deadly weapon.
Boldly committing a crime in front of two witnesses – plus roping one of them into hiding the weapon – says much about Eva’s incredible power of persuasion. Or how crazy she was, or deeply evil. Or maybe all of these things.
But maybe the most remarkable aspect of that incident was the lack of any mention in the paper about the recent disappearance of the Arnesons from the same motel, or that the now-fugitive Eva Long was the prime suspect. We probably shouldn’t really be surprised – the PD reporter was getting all his information from clue-blind Inspector Coffman.
The situation was about to change quickly, however. A lawyer for Mildred’s family came here and tried to explain to Coffman why the letter and telegram supposedly written by Mildred were so suspicious. He presumably also met the Dodges and heard the remarkable bits of information they had collected.
And then her sisters returned to Santa Rosa at the end of June, meeting with the Press Democrat. Within days, the game was afoot. Where were the Arnesons? Where was the suspicious woman with all the secrets? It was all anybody could talk about as the mystery unfurled. The Big Show was about to begin.
His name was James Dalzell Brown. Should you dig up your great-grandparents (and please do not do so simply on my account) and asked them who the “bank wrecker” was, they would not have hesitated to spit out his name. Had they lived in Petaluma around 1910, there might have been some cussing along with actual spit.
Before plunging forward, a short prologue and apology: This is part II of the previous article, “DREAMS OF AN EMPIRE OF OIL” which covered Petaluma’s ill-fated oil and gas boom through part of 1910. Players introduced there are discussed in greater depth below, so Gentle Reader might wish to review it before continuing (the article’s not that long).
This article, however, is very long and I do apologize for that. But this is an incredible story which has never been told, even though Brown was a criminal with plans extraordinaire. (Honestly, I don’t understand why there hasn’t been a book, movie or documentary mini-series about this guy and his gang of pirates.) To make this easier to read in more than one sitting there’s an option of hopping past the Petaluma oil saga and going directly to the part about Brown’s crazy schemes.
The takeaway from this story should be that Petaluma was lucky it didn’t become the West Coast hub for oil and natural gas in 1909. Undoubtedly Brown and his boys would have exploited the town and anyone who mistakenly trusted them – and we know they would’ve done so because a pair of them did manage to scam a few Petaluma residents, as you’ll discover at the end of this article.
So let’s now pick up where part I ended: In 1910 Petaluma’s elation over striking oil began to crumple in September after the town’s papers printed a letter from the State Mining Bureau. Cassius Webb, acting as the attorney for Ramona Oil, asked them how much the oil field was worth so Consolidated Oil could start paying dividends within a couple of months.
The Bureau’s response was brutal. First, it was their view there was “little or no chance” of hitting large quantities of oil. Some of the company’s expectations were “entirely ridiculous” and “it would require considerable time to put the property in paying condition.” Webb’s claims seemed “intended to deceive the most ignorant” and it was the Bureau’s opinion the project had “all the earmarks of deliberate fraud.”
Needless to say, the letter “created a great sensation” in Petaluma, according to the Argus. It was “about the worst blow yet delivered at the men who have staked their reputations and their money on finding oil in paying quantities in this vicinity.”
General Manager John Frank told the newspaper everything was going according to plan. “The English stockholders have every confidence in the success of our development work” because he was a bonafide oil expert; Consolidated Oil respected him so much he was given the pick of any oil fields around the state and he chose the one near Petaluma as having the best prospects. The state Bureau had not visited the site and didn’t know what they were talking about.
As for the stockholders in the Ramona and Bonita Oil companies, not to worry: Their old shares were to be traded in one-for-one with stock in Consolidated Oil, which was then listed at $2.50 per share (over eighty bucks today). Everything was going to work out just fine.
Everything did not work out just fine.
About four months later, John Frank published an extraordinary open letter to Ramona stockholders. The big reveal: All work was shut down. He and the drilling supervisor were no longer allowed on the premises. Stockholders had probably lost their entire investment. And the man secretly behind the curtain the whole time was the infamous J. Dalzell Brown. At that news, you can bet a squawk of horror resounded throughout the Petaluma valley.
THE RISE AND FALL OF PETALUMA’S 1908-1910 OIL BOOM
We’ll begin by looking at John W. Frank, who was considerably less than he claimed to be. Born in 1865, he stated on the 1910 census he was an “oil locator;” ten years before that, he was simply a miner. He made a big splash in Bay Area papers in 1905 by announcing he had invented a device that could find shipwrecks which was patented (it couldn’t and it wasn’t).
Over the next few years Mr. Frank can be spotted in newspapers and trade magazines posing as an expert in finding oil. He boasted of finding oil in Nevada, Washington, California, Texas and Canada. To investors in Colorado Springs he promised his track record was perfect – all of his finds had resulted in productive wells. Oddly, he never named any specific examples.
In 1907 Frank became acquainted with Dalzell Brown and his cronies: Norton C. Wells, Charles Gregg and Dalzell’s son, Thomas.1 (More about this group in the following section.) Gregg had been contacted by the penny-ante Petaluma Oil and Development Company which had an oil lease on the Ducker ranch that looked promising, but was unable to raise capital to do actual drilling.
Together Frank, Brown, Wells and Gregg formed the Ramona Oil Company although Brown’s name was not made public. They made a deal with Petaluma O&D which still held the Ducker lease; Ramona would take over the prospecting work and any profits would be split evenly between the companies.
Dalzell Brown was expected to underwrite the operation even though officially he was broke, with a conga line of prosecutors and plaintiffs queued up to sue him for various financial misdeeds. Brown told his partners he would dip into $30,000 in securities which were kept under his wife’s name. It’s unclear how much money he actually put in to support day-to-day operations, and wording in Frank’s letter to shareholders suggests it was little or even nothing at all. But through a separate company set up by Brown and his son, he owned all the equipment including the very expensive drilling rig and the mighty one horsepower (!) motor that powered everything.
(RIGHT: J. Dalzell Brown 1908 San Quentin mug shots)
The other tiny little difficulty – just an annoyance, really – was that Brown was in San Quentin at the time for embezzlement. Frank was the conduit between the Ramona partners and prisoner #22849, both via prison visits and correspondence. A letter to him was later used as evidence in a lawsuit: “On my release it is my intention to devote my entire time and energy to the oil business, and I join with you in the wish and hope that we may make lots of ‘easy clean money’ together. J. D. B.”
Brown soon discovered there would be no “easy clean money” flowing from the Petaluma oilfield. Soon after constructing the Ramona well derrick they were already running out of funds. Brown agreed to keep work going by directly investing $5,000 in exchange for another 100,000 shares of stock. Brown was now the major stockholder with 200k shares, as he already had 100,000 in “promotion stock”.2
Prospects began to look up in 1909. John Frank was selling lots of stock (which was likely his true forté instead of finding oil) and the Ramona well hit a strong pocket of natural gas, which made folks in Petaluma giddy because it was assumed the gas would be piped to town and lead to expansive growth. They began drilling the Bonita well and formed the Bonita Oil Co. which meant a million more stock shares for Frank to peddle.
The Bonita well also struck natural gas but soon caved in, and the Ramona well likewise collapsed.3 Dalzell Brown was now released from prison and living in Los Angeles, where he summoned Frank to discuss what was to be done. Brown wanted to close the companies down and walk away.
“What do you intend to do with our stockholders who have put up their money in good faith?” Frank asked, according to his open letter to Ramona stockholders. He replied, “they can as well afford to lose their money as I can lose mine” (paraphrased by Frank) and wished somebody would buy him out.
Frank revealed he had the power to sign contracts on behalf of an English syndicate (a couple of years earlier, he had looked over some land in West Virginia for Consolidated Oil). Brown asked, “Well, why don’t you get them to take it over?”
Over the following months Frank worked out a deal between his partners and Consolidated, which was already planning to invest $30M in California oil projects (about a billion dollars in today’s value).4 Frank and the others would continue working at the site.
It was agreed Ramona and Bonita company stockholders would swap their shares for the equivalent number of Consolidated Oil Fields of California shares, which were then being sold in London for ten shillings, about 10x the value of the old Ramona and Bonita stock.5 Quite a payday! To protect those investors – particularly since there was still no proof the oilfield would be productive and it was unclear if the gas wells could be brought back online – all the partners also agreed to return their enormous stash of promotion stock.
Less than four months after that deal was made a new well struck oil. As described in part I, in Petaluma limitless joy abounded. Even a skeptical report from the State Mining Bureau couldn’t dampen everyone’s high spirits.
Enter chaos agent J. Dalzell Brown.
Brown went back on his word to return those 100,000 promotion shares, which put him first in line to receive Consolidated stock worth nearly a quarter million dollars. According to Frank’s letter to stockholders, Brown was paid in full. (Don’t forget he still had those additional 100k shares of regular stock mentioned above).
Recall, too, he had a side business that actually owned the drilling equipment. Once Consolidated entered the picture he agreed to let the company use his gear for three months free, but after that he wanted $15/day rent or them to buy it for $4,500. After the oil was found Frank received an urgent telegram from Consolidated: Brown had shown up in London and demanded full payment for the rig – what should they do? Frank told them not to pay Brown, that the valuable drill would be returned to Brown’s company.
At about the same time, an item appeared in a widely-read UK petroleum newsletter that “created dissension” among English stockholders according to Frank, but no further details can be found. Later a trade magazine commented there were “…damaging reports that have been published concerning the properties of the company and the statements that have been made about them…in order to allay the fears of the stockholders an extraordinary general meeting was held at the office in London…”
We can guess at two possible reasons for such a kerfuffle: It was discovered that A) an internationally known criminal was at the center of the deal, or B) there were viable rumors that Frank or someone else had “salted” the well which appeared to strike oil. Frank acknowledged there were whispers in an interview with the Argus: “Some people have gone so far as to express the belief that we salted this well…” True or no, the suspicion became part of the common view, and ten years later the Ansonia Oil Co. brought it up during a public meeting in Petaluma to assuage concerns about their honesty.
Then at the beginning of 1911, the Ramona Oil Co. sued Consolidated Oil Fields of California along with several individuals, including Frank. (At that point Ramona directors were down to just Brown, his son and Norton C. Wells.) As the suit was filed in England I’m unable to find the complaint; it doesn’t appear to be described in any newspaper or journal available on the internet, but presumably it must not have been much more than a nuisance suit to the huge British firm. At the same time Frank and the others were locked out of the oilfield.
And thus endeth Petaluma’s first oil venture. After that squirmy meeting with stockholders Consolidated never mentioned the project again. Frank headed to British Columbia (about which more will be told in the next chapter) but came back here to testify against Brown in bank fraud prosecutions in San Francisco.
The rest of 1911 was consumed with legal actions against Brown to sell off his equipment at sheriff’s auctions for debts. Superintendent K. V. McDonald hadn’t been paid for months and wanted over $1,000 for labor. Frank said he was owed $600 in commissions for selling stock. A delivery man named H. H. Kercheval filed for $167. More attachments were claimed for the pumps, the horsepower engine, pipes and boilers. Brown did not contest any of that; at the time he was reportedly running a cemetery association somewhere in Los Angeles.
Superintendent McDonald ended up buying the fabled Ducker oil lease for all of $90.
Petalumans of a vintage age might recall there were indeed productive oil wells operated by Shell Oil east of Petaluma. Those projects began several years after the events described here and did not involve any of the same companies or people. Researchers interested in exploring that history should seek out references to the Ansonia Oil Co. between 1921 and 1928.
THE NOTORIOUS MR. BROWN AND HIS DEN OF THIEVES
Until late in 1907, J. Dalzell Brown had it all…and then some.
He didn’t see himself as a grifter. He thought of himself as a savvy businessman who recognized great risk can yield great rewards. Nor did his accomplices view themselves as cheats, liars or dupes; they thought they were smart guys who would enrich themselves by following his road to riches. And he certainly didn’t set out to screw over Petaluma in particular. To him, Petaluma and Santa Rosa were just podunk farm towns he passed through while he and his wife were being chauffeured farther up north.
Brown was born in Scotland in 1864, met his wife Harriet Skimmings in Halifax and the two moved to San Francisco in 1886. Four years later, he’s named as the manager and treasurer of the California Safe Deposit & Trust Co. There he brushed elbows with Isaac G. Wickersham, a company director and famed Petaluma banker – the first of many from Sonoma County who would cross his path.
Around the turn of the century he was a founder of two short railroad lines.6 In 1903 both were acquired by a brand-new company called the Western Pacific Railway with Brown as the treasurer. It soon became clear that railroad was intended to be part of a transcontinental line.
Gentle Reader may be thinking right now, “gosh, ol’ Dalzell sure had a lot on his plate, being the treasurer of a railroad with big ambitions as well as the VP/manager of a major San Francisco bank!” Welp, sir, the fun’s just getting started. J. Dalzell Brown wanted to turn Latin America into his personal fiefdom – or something like it.
“Brown had visions of vast South American estates with himself as the greatest grandee of the western hemisphere,” reported the San Francisco Call in a widely reprinted feature story. “[H]e had persuaded many leaders in the Central and South American countries to deposit their money in his bank. He succeeded in gaining their friendship, and among the names of the depositors will be found those of several hundred Latin Americans.”
Counted among them was John Moisant, an American who owned a coffee plantation in El Salvador. His profile is worth a detour; Moisant tried to overthrow the country’s junta and learned to fly so he could attack Salvadoran troops by air. He returned to this country and became a major aviation pioneer around 1910, nearly as famous as the Wright brothers.
Comparisons to King Leopold and the Congo were easily made as Brown considered buying Moisant’s plantation for his base of operations to monopolize rubber, banana and timber interests. He convinced San Francisco investors to buy stock in some of these plantations and gained credibility by being appointed Uruguay’s consul for San Francisco.
Was he seriously planning to swoop into South America and take over whole sections of its economy? Hard to say, yet it’s very believable he wanted to be the U.S. banker for wealthy South Americans and their governments. But he never traveled further than Mexico in his life, so he didn’t build the personal relationships to pull off such a stunt. And besides, at the same time he was busy building an empire of another sort in Lake County.
As discussed here some time ago, Lake county was then promoted as the “Switzerland of America” with tens of thousands of visitors drawn to its mineral spring resorts and spending weeks there every summer. Boosters were certain the place had unlimited potential if there only were some way to easily reach it; as it was, the only way to get there was via teeth-rattling roads. A series of proposals were floated to construct a railroad or even an electric trolley from Santa Rosa but none advanced very far.
Brown owned about three miles of Clear Lake frontage, riding on the coattails of a developer who had bought up 35,000 acres around the lake. The plan was that hotel resorts would dot the shoreline, visitors would step off that future train/trolley at Lower Lake or Lakeport and take a water taxi to wherever they were staying. They also intended to construct an 84 mile boulevard around the entire lake and reforest the area by having the state forester plant 200,000 native and ornamental trees (they ended up with several hundred blue gum eucalyptus).
J. Dalzell Brown’s Clear Lake mansion c. 1930
As an early investor Brown also bought the Lakeport hotel and gave it a first-class remodeling, all the better to convince other investors to build those resorts. Brown built a luxurious concrete mansion on his property in the Spanish Colonial Revival style. Although he didn’t finish it before he went broke, it was quite the showcase and the town of Nice grew up around it in 1920s. It still exists and today is an upscale hotel.
The Clear Lake project began in 1906, which was Brown’s halcyon year. In the wake of the 1906 earthquake the mayor of San Francisco appointed him to the Committee of Fifty, which was supposed to guide the city through the crisis – a clear signal the movers ‘n’ shakers considered him a trustworthy man of good judgement. Also that year his bank acquired the Union National Bank on behalf of the Western Pacific Railway to handle all their financial needs. This was an old and highly esteemed bank with a reputation for being cautious.
In his mid-forties, J. Dalzell Brown might have coasted into the footnotes of history books as a distinguished banking tycoon – the vice president of two major banks, treasurer of a railroad expected of great things, a land developer with 3,000 acres of prime real estate, plus whatever he was up to in South America. Life was sweet. Then came the 1907 bank panic.
Read that two-part series for background if desired (don’t miss the part where a U.S. Senator believed someone was trying to kill him while on the Senate floor) but in brief, the banking system truly was on the edge of collapse. Most of the crisis took place in the middle of October and was contained to the East Coast and Wall Street; by the time California was impacted there were measures in place to shore up the system. Still, the governor declared a “bank holiday” for most of November and the state legislature stretched it to Christmas, all on a day-to-day basis. Few financial institutions in the Bay Area took advantage of the optional closures, preferring to stay open as a sign of confidence and solvency.
Two financial institution that did pause operations were Brown’s California Safe Deposit and Trust Company (let’s shorten that to CSD&T from here out) and Union National Bank. Nearly every day that November a San Francisco reporter would ask about the status and he always said things were going swell, that a big deposit was on its way from New York, that his staff was collecting on loans, not to worry.
Come December, all was not going so well. State Bank Commissioners demanded a clear statement of CSD&T’s status. The board at Union National announced they would need to reorganize the bank; Brown was out as VP, and they were taking back his shares. After articles began to appear about CSD&T possibly raiding a famous trust fund, there were rumors he might be planning to leave the country.
On Dec. 8, he and the bank’s attorney/fellow VP Walter J. Bartnett were arrested for embezzlement of the $205,000 Colton estate. Longtime readers might recall the trial over the Colton money was an important part of Santa Rosa history.7
CSD&T would not be reopening. For the rest of the year and into 1908, the Dalzell Brown scandal(s) dominated San Francisco newspapers – entire pages were devoted to new news, old news, quotes from victims, lawyers, banking experts and politicians. The story took off, in part, because the bank had billed itself as a place for customers with small accounts; blue collar laborers and office workers. There were over twelve thousand account holders and a third were women.
Much was also made of the legal gunfighters they hired: Brown’s lawyer was famed criminal defense attorney Hiram Johnson, who would become California governor in 1911. The attorney for co-defendant Bartnett was Santa Rosa’s Thomas Geary. But what really had newspapers flying off the racks was the reveal that Brown and other bank executives had been making investment decisions based on the advice of psychics.
When that angle of the story surfaced, CSD&T President David F. Walker and the other executives vehemently denied it was true, but later they admitted in Grand Jury testimony that yes, they had been holding seances together at their homes (they still insisted no banking advice was taken) and individually at the parlors of spiritualists Mrs. J. J. Whitney and Molly Smith.
Carrie Whitney was the grand doyenne of San Francisco’s clairvoyants, having advertised herself as a medium in classified ads since 1884.8 The San Francisco Examiner sent a reporter to ask about her dealings with the bankers, although her voluble parrot, Polly, was quoted almost as much as the woman being interviewed:
“…As long ago as last May my spirit control warned me that something was wrong with the California Safe Deposit and Trust Company…”
“Put me to bed and cover me up!” muttered Poll.
“For months Mr. Brown has been greatly worried” –
“One!” exclaimed Polly.
“for he knew the end was in sight” –
“Two, three!” counted Poll with uncanny correctness.
“and that the reckless misuse he and Mr. Walker and Mr. Bartnett had made of depositors’ funds would wreck the bank. Oh, it is easy to ride in automobiles and build mansions on an island with other folks money! Three true believers in spiritualism, such as they are, knew that punishment was certain if they failed to follow honest advice from friends in the spirit land…”
As the reporter left, the newspaper gave Polly the last word: “‘Ha! ha!’ came from the window, with unholy mirth. ‘Good-bye, good-bye, you lobster!'” The Examiner accompanied the piece with a funny cartoon of Brown standing on tippy-toes feeding a coin into a slot on the parrot’s cage as if it were a vending machine or Mechanical Turk.
(RIGHT: Illustration from the December 10, 1907 San Francisco Examiner)
Brown insisted he took not one dollar for himself, and that’s literally true – but he was a bank robber just the same. Without crawling too deeply into the weeds, he handed out “loans” that were, in essence, gifts; he swapped worthless CSD&T or Western Pacific stock for cash, or used it as collateral for real loans from other banks; he recorded fake loans to shell companies to coverup “overdrafts” which were really stolen funds; he had the books cooked to hide millions of dollars that were missing.
These were staggering financial crimes. Other CSD&T directors had not been as discreet as Brown and over $2,000,000 in 1907 dollars went to executives. Bank President Walker gave himself loans worth $750k ($24M in modern dollars) and the Treadwell brothers funneled even more than that into stock trades in companies controlled by Brown.
Here’s a few of my favorite examples of other deals:
Much – or maybe all – of the ambitious Lake County project was financed through Brown’s bank. He gave the company, and the developer personally, unsecured loans worth over $3.5M today
The state bank commissioner who examined and approved the CSD&T books at the end of 1906 walked away with a loan equivalent now to three-quarters of a million dollars
Former San Francisco Supervisor Charles Wesley Reed getting a $30k (now $1M) loan using four hundred mules as collateral. One editor quipped the mules must be compounding quarterly
Brown and his band of financial pirates knew full well this was a Ponzi Scheme and spent much effort to keep CSD&T afloat. Union National Bank was in trouble because its VP (Brown) had paid cash for lots of CSD&T stock from its vice president (Brown). Bartnett took the securities from the Colton estate to New York City and sold them at a discount, all to prop up CSD&T. While he was on the East Coast illegally peddling these stocks he communicated with Brown and the others via telegrams written in a code they dreamed up before he left. I’m sure honest bankers do this sort of thing all the time.
The scandal stayed on the front pages because no one was quite sure how much money had been stolen. The accounting was a joke; some entries were made fraudulent by crude means, such as adding a “1” to the left side of a number or changing a “3” into an “8”. Some debts and liabilities weren’t recorded at all.
Prosecutors began negotiating with Brown to turn state’s witness against his old chum, Walter Bartnett. In exchange he pleaded guilty to only embezzling $65k from a public utility and received an 18 month sentence, of which he served fifteen. (Once at San Quentin, he was given the apt prison monicker “Razzle Dazzle.”)
His Grand Jury testimony didn’t amount to much, and he divulged no treasure maps. It was reported he gave Bartnett control “at the command of the syndicate of astral bankers” and explained the codes Bartnett used in the telegrams. The press was mostly captivated that he was brought to court from prison with his “shaven head hidden under a luxurious brown wig.”
San Francisco Examiner, December 9, 1907
So here’s the Executive Summary: J. Dalzell Brown was a crime boss. He assembled a team of rogues who obediently followed him through five companies (three railroad, two banking) where Brown was always the treasurer. As directors the only stockholders they cared about were themselves, allowing Brown to plunder those companies of assets – some of which were used to enrich themselves with gifts of fortunes disguised as “loans.”
From 1898 to 1908 Brown’s gang was mainly Walter J. Bartnett and Treadwell brothers John and James. Bartnett was usually the front man for the companies, acting as president; the Treadwells were heirs to a famous Alaskan gold mine and their stock shares were often used as securities when Brown got involved with a new company. The three of them undoubtedly would have reprised those roles for the Ramona and Bonita oil companies, had not they been under indictment at the time for acts of fraud committed while they were directors of the banks controlled by Brown.9
In their place, Brown tapped new players to be the public face of the Petaluma oil ventures: Norton C. Wells, Charles Gregg and Cassius Webb, who were introduced in part I. None of them were who they said to be.
Gregg replaced Bartnett as Brown’s front man, named president for Ramona and Bonita and VP for another Petaluma oil operation. Although the Petaluma Argus had reported “it is an open secret that Mr. Gregg…is in reality the chief of the fuel department of the Western Pacific Railway Company” he had no connection with the railroad. It later came out that Gregg was a San Francisco crony of Brown, who had transferred to him 1,000 shares of the railroad’s stock as he was about to begin his prison sentence – stock, which by the way, actually belonged to Brown’s wife, Harriet.10
Norton C. Wells was the other man named as an owner of the Bonita and Ramona oil companies, as well as both project manager and a “heavy stockholder.” He was directly involved in the California Safe Deposit & Trust fraud as branch manager of the Fillmore office, which is where many of the phony loans were issued. The San Francisco papers noted prosecutors briefly considered indicting him alongside Bartnett and the Treadwells.
Of all the characters involved in the Petaluma oil saga, Cassius M. Webb was the only one who had any actual experience in the business. Yet it’s a mystery why he told our local newspapers he was the lawyer for Ramona and Bonita Oil, since no evidence can be found that he was an attorney at all. Elsewhere he was called a “promoter,” “western mining expert,” and that great catchall for any fellow who didn’t have a real job, a “capitalist.” In the 1900 and 1910 census reports he identified himself as a mining engineer. He apparently was brought into the Petaluma oil because he was a “lifelong friend” of Gregg.
Yes, we were lucky that Brown and his slippery trio didn’t hit oil here and use it to start another stock scam, but that doesn’t mean Petaluma came away unharmed.
At the exact same time the Consolidated deal was in a nose dive, Webb and Gregg were being sued in Kern county for fraud, having sold an oilfield that was later discovered to have been obviously salted. The suit was dropped, apparently because the company didn’t want to risk looking like idiots – bad publicity and a stockholder backlash would likely follow should it become widely known they were so easily swindled. The Petaluma Argus remarked the news about the suit caused “a genuine sensation” because the Webbs lived in town and “quite a number of local people have purchased the stock in question.”11 Soon thereafter Webb and his wife moved to the East Coast.
1 John W. Frank testimony reported in the Petaluma Daily Courier, December 22, 1911
2 “Promotion stock” was a term back then for shares awarded to company principals and key employees in lieu of salary or other payment. It was notoriously misused in oil company scams because the shares could be flipped immediately, leading many businesses that were seeking to appear legitimate to prominently advertise they had “no promotion stock.”
3 In his letter to Ramona stockholders, John Frank said he and superintendent McDonald were later able to reactivate the Ramona well to its original capacity.
4 Petaluma Argus, April 28 1910
5 In 1910, ten shillings was worth $2.43. Par value of Ramona and Bonita stock was 25¢ at the time. (Converting from 1910 to today’s values, 10s would now be worth the equivalent of about $70, and 25¢ would be worth over eight dollars.)
6 The Alameda & San Joaquin Railroad was incorporated in 1898 and the Stockton & Beckwith Pass Railroad, 1902.
7As detailed here previously, a high-profile court case brought by Ellen Colton, the widow of a railroad exec, was such a political hot potato no court in San Francisco would touch it. The bench trial was moved here and lasted almost two years between 1883-4, bringing so much cash into town it spurred a downtown building boom. The Athenaeum, which was the second largest theater in the state, and new 2-3 story brick buildings on Fourth Street made us look like a proper Victorian America town, although most of those masonry buildings would crumble in the Great Earthquake.
6 At the time of Brown’s thievery, all papers had a classified ad section for clairvoyants, spiritualists, palm readers, etc. My personal favorites from 1907 were “Ora the Wonder” and “Byron Stanley, A Man of Strange Power.”
9 Bartnett was found guilty in 1908 of misappropriation and embezzlement of securities; he was sentenced to ten years but his conviction was overturned on appeal. James Treadwell was indicted on multiple charges of complicity with Brown and Bartnett but was acquitted in 1909 by a jury.
11 Petaluma Argus, December 24 and December 28 1910
Title image: The oil derrick shown is unidentified, but it’s probably the Ramona well. Photo courtesy Petaluma Historical Library & Museum
I am returning you herewith papers in the matter of the Consolidated Oil Fields of California, Limited.
I am sorry that I cannot tell you more as to the actual value of this property, but our work has not, so far, taken us into this district, and the writer is not personally familiar with the ground. A Bureau representative, however, who is thoroughly familiar with the field, says that while the territory shows some indications of oil, the geological structure is very much broken, and there is little or no chance for any extended field or large production.
Some of the statements made in the report of Cassius M. Webb appear to be true; others are entirely ridiculous. I believe that the possible output of the Ramona gas well is greatly exaggerated, and doubt whether it has any commercial value. As to the producing power of the Bonita well, we have no information, but I can see no reason why this well should not be pumping if actually a producer. As to the land being proven, this of course, is absurd. The value of any part of this territory is highly doubtful.
It is a fact that the property is well located, and if it should prove to be oil land would be of considerable value, but at present is a rank wild-cat, and as such is greatly overcapitalized. Such statements as that of Mr. Webb that the property could be put on a dividend paying basis in sixty days, if it were possible to secure a drilling rig, can be intended to deceive the most ignorant. Complete rigs can at any time be had on telegraphic order at four points in the state, and even if every well they drill should prove successful, it would require considerable time to put the property in paying condition. The statement made in both the report and the advertisement bear all the earmarks of deliberate fraud. Very truly yours, PAUL W. PRUTZMAN, Field Assistant California State Mining Bureau.
– Petaluma Argus, September 10 1910
ENGLISHMEN COMING HERE
The publication exclusively in the Argus on Saturday of the article from the San Francisco News Letter relative to the local Oil Fields, in which the last named publication branded the local fields as valueless and the Consolidated Oil Fields of California as a “rank scheme” created a great sensation in this city. There had been much speculation and so many rumors in circulation as to the authenticity of the oil strike that the article in question, having the backing of the State Mining bureau, proved to be about the worst blow yet delivered at the men who have staked their reputations and their money on finding oil in paying quantities in this vicinity.
General Manager Frank of the Consolidated Oil Fields of California, Limited, was in the city on Sunday and sought an interview with the Argus. Mr. Frank was not in the least perturbed by the publication of the article in the News Letter. His only regret was that the author of the article did not seek definite information, such as could have been secured by a visit to the local fields, before branding his company a “wild cat” scheme and the local oil fields as barren in so far as oil in quantities is concerned.
Both Mr. Gardner and Mr. Prutzman, the former declaring that “this is about the rankest fraud yet,” are without definite information upon which to base their conclusions. Neither has visited the local fields and they appear to have “jumped” at their conclusions.
Mr. Frank informed the Argus that, regardless of the criticism of the people and the press, the work of exploiting the local fields will continue. He was one of the first experts to visit this field and has from the first been convinced that oil of high grade would be found here. He is now more than ever convinced that such is the case by reason of the strike in the present well and expresses the belief that before many days his opinion will be further substantiated by the development of the well.
Opinions of scientists differ as to the nature of the local fields. Some of the state mining bureau experts declare that the field is so broken that it is not possible for large deposits of oil to exist in it. Others declare that the contrary is true and that the indications are more favorable here than in any other part of the state for finding oil in large quantities. Mr. Frank is of the latter class and is backing his judgement.
At the time the English Syndicate was formed the officers of the company gave Mr. Frank his choice of fields, either in northern or central California. Mr. Frank chose the local fields for development by English capital because he believed the prospects here were better than anywhere else. The result is that the company has undertaken to develop the local fields and will continue to do so until oil in paying quantities is found in other wells than the one now being drilled and which is already in oil.
“Some people have gone so far,” said Mr. Frank, “as to express the belief that we salted this well – that we poured the oil down the pipe. Why, I would like to know, should we do such a thing? Our company has no stock for sale. We are not selling stock either here or in London. We have nothing to unload. The English stockholders have every confidence in the success of our development work. There is no reason under the Heavens why we should resort to any tricks in the prosecution of the work of developing the Petaluma fields and we have not done so.”
The stock of the Consolidated Oil Fields of California, Limited, is listed on the London Stock Market at par, $2.50 per share. It is thereby given a standing with other and similar stocks that speaks well for the standing, of the promoters over on the other side of the pond. The president of the company is now enroute to California and, with Major West, will probably visit this city during the present month. By that time Mr. Frank hopes to have the new well on the pump and producing at the least several hundred barrels dally. All the holders of Ramona and Bonita stock have been protected by the new company. Mr. Frank has issued $206,000 of stock in the English syndicate in exchange for an equal amount of stock in the old companies. Additional proof of the genuineness of the oil strike here is shown by the fact that Mr. M’Donald and Mr. Travis just recently refused to dispose of their lease of the Miller ranch for a large sum of money. These men are in a position to know the value of the local fields. During the past few days a number of leases in the local fields have been sold to local people who every confidence in the future of this section as an oil producer.
[..]
– Petaluma Argus, September 12 1910
WESTERN PACIFIC STOCK IS DIVIDED
Startling Testimony Is Given Against Directors of Defunct Bank.
SAN FRANCISCO, Dec, 23. J. W. Frank, an oil expert of Oakland, made a startling disclosure yesterday at the examination being conducted by Attorney Samuel Rosenheim in the suit for accounting brought by the depositors of the wrecked California Safe Deposit and Trust company against the directors of that institution. Frank gave direct evidence of the division of 50,000 shares of Western Pacific stock among four of the bank directors.
This information, which Rosenheim only recently learned of, came as a complete surprise to Attorneys James A. Cooper and Frank H. Powers, representing several of the directors.
This was shown on the cross-examination where Cooper, who is the attorney representing Defendant Bartnett in this action, asked Frank if Brown had told him how many shares Hiram Johnson had received of the Western Pacific in the division of those securities. The witness replied that he had not been told by any one that Johnson had been given any shares.
Continuing his testimony, Frank said that on the trip to Mexico, which concerned an oil venture at Mazatlan, J. Dalzell Brown said that for the terminal facilities at Oakland the Western Pacific put up 50,000 shares of stock. This stock was divided into four equal portions of 12,500 shares, and Bartnett. Dalzell Brown, James Treadwell and John Treadwell shared it among themselves.
RELATES DEALINGS.
Frank related his dealings with C. W. Gregg in trying to negotiate a loan on 1000 shares of Western Pacific stock to get funds to develop oil properties in Petaluma and Pleasanton. Frank was in Denver at the time, and letters and telegrams that passed were read. Finally Frank went to Red Bluff, where the 1000 shares of Western Pacific stock reached him by express. The stock was then worth about $25,000 or $30,000. Frank tried to get a loan of $15,000 from W. R. Cahoone of the Bank of Tehama at Red Bluff. After considering the proposition. Cahoone finally declined to make the loan, on the ground that the stock was not listed on the Stock Exchange. The stock he offered for a loan, witness testified, belonged to Brown.
Subsequently a letter was received from J. Dalzell Brown saying that Mrs. Brown had put up securities to the value of $30,000 to promote the oil schemes. In a postscript to this typewritten letter Brown, who was then under sentence of imprisonment, in a hand which bore evidence of writers’ cramp, had written with the pen: “On my release it is my intention to devote my entire time and energy to the oil business, and I join with you in the wish and hope that we may make lots of ‘easy clean money’ together. J. D. B.”
– Oakland Tribune, December 23, 1911
BANK WRECKER WOULD BE KING
Aim of Dalzell Brown Alleged to Be Rulership of Opera Bouffe Principality.
Secret of His Desire to Be Consul for Uruguay Explained – Frenzied financier Sought Station as Grandee of Latin America
San Francisco – Last week the Republic of Uruguay appointed as its consul in San Francisco Dalzell Brown the frenzied financier who is supposed to be responsible for the wrecking of the California Safe Deposit and Trust Company. The secret of Brown’s desire to represent Uruguay in San Francisco was explained when a former associate of the banker asserted that Brown had visions of vast South American estates with himself as the greatest grandee of the western hemisphere. In fact, Brown already had made some progress toward the realization of his dream for he had persuaded many leaders in the Central and South American countries to deposit their money in his bank. He succeeded in gaining their friendship, and among the names of the depositors will be found those of several hundred Latin Americans. Among them was Juan Moisant, the well-known plantation owner of Salvador, who between the Central American government and Dalzell Brown has lost during the past six months the greater part of his immense fortune.
Brown sent alluring notices to all the representatives of the Central and South American countries in San Francisco and through them had gained many clients for his bank. Brown finally conceived the idea that he could achieve better results if he himself were duly accredited as the consul for Uruguay at this port. Uruguay is small and not very particular, and Brown got the job. He didn’t get it soon enough, however, to put it to any use in furthering his plans for the vast empire of which he dreamed.
Brown gained most of his knowledge of South and Central America from the comic operas where gracious promoters merge a couple of republics, purchase the army, double the capital stock and float the concern in Wall street. Brown had planned an empire of the sort that King Leopold of Belgium created in the Congo. He had figured it all out – how the rubber, the bananas and timber interests would yield him a revenue which would make possible a mansion that would make the Lakeport residence look like a porter’s lodge.
Brown showed great interest in the Moisant plantations at Santa Emilia, and had given some consideration to their purchase. With this as a base he proposed to extend his holdings until they formed a domain without rival on the globe.
In his office Brown kept a number of maps of the tropical countries, and these were among the effects seized by the corps of detectives who forced his desk at the bank building. One of them was of a rubber plantation which has secured a number of stockholders in San Francisco.
Some of literature dealt with sugar plantations but no matter what the enterprise Brown was always sure, as was Colonel Sellers, that there were “millions in it.”
– San Francisco Call, December 26 1907
The Central Counties Land Company Bubble
Of all the paper projects and promotion schemes which had after repeated failures made Lake county water development and railroads a byword, probably the most sensational was that of the Central Counties Land Company, which absorbed the county’s interest in 1906 and 1907. This was one of the activities of J. Dalzell Brown, who was sentenced in April, 1908, to San Quentin penitentiary for eighteen months for his part in wrecking the California Safe Deposit and Trust Co. Lake county people received much of the money of the depositors in that wrecked institution.
The most widely advertised part of the Central Counties Land Company’s project was the construction of a boulevard entirely around the circumference of Clear lake, a distance of eighty miles. One unit of this, a 2000-foot wooden trestle bridge across an arm of the northern end of the lake, was completed in September, 1907, at a cost of $12,000. Brown had a splendid concrete mansion built on the northeast shore at a cost of $60,000. The Hotel Benvenue in Lakeport was bought and luxuriously furnished, principally for the use of Brown and his associates when in the town. Underlying these frills was the plan to acquire the lake waters for power and irrigation purposes…
– History of Mendocino and Lake Counties, California, 1914, pg. 148
COMMISSIONER BLAMED FOR BANK FAILURE
Prosecution in Brown-Dalzell Case Flays Book Inspector.
CARELESSNESS IS ALLEGED
Commissioner Dunsmoor Could Have Averted Crash.
DID NOT REQUIRE THE OATH
New Developments in Failure of California Safe Deposit and Trust Co.
Hearst News Service
SAN FRANCISCO, Jan. 8. — Former Bank Commissioner Charles Dunsmoor was flayed today by Prosecutor Cook and Herman Silver, president of the bank commission, who declared that the failure of the California Safe Deposit and Trust Company might have been averted if he had performed his duty when he made an examination of the books of the wrecked bank with Commissioner Currier in December, 1906.
According to Prosecutor Cook, the carelessness of Dunsmoor is alone responsible for the failure of the District Attorney’s office to have indicted for perjury John Dalzell Robertson [foster brother of J. Dalzell Brown], secretary of the bank, who fled from the city immediately after the failure.
“When Dunsmoor made his examination of the bank with Commissioner Currier he made no effort to have Robertson swear that the entries which appeared on the books were authentic,” said Cook. “Dunsmoor and Currier counted the cash in the bank on the afternoon of December 3. The books were falsified over night and Dunsmoor and Currier drew up their report on the following day. They dated their report December 4 and made no effort to put the customary oath to Robertson until December 6. Robertson then swore that he was willing to answer truthfully any questions that would be put to him. No questions were put, for the report had been already drawn up and signed by Dunsmoor. The whole thing was farcical. Robertson should have been sworn before the examination of the bank began. As it is, the carelessness of Dunsmoor. who was in charge of the examination, will prevent us from indicting Robertson for perjury.”
The customary oath administered to officers when a bank is examined pledges them to answer all questions concerning the character and value of its assets and the amount of its liabilities.
“I will in no respect misrepresent or conceal anything relative to the true condition of the bank” part of the oath reads.
As Robertson did not take this oath until after the examination of the bank was completed however, its entire value was negated.
Prior to sending his resignation as president of the bank commission to Governor Gillett, Silver called on Prosecutor Cook and declared that the report on the condition of the bank signed by Dunsmoor in 1906 showed that the attention of the Governor should have been immediately attracted to it.
With deposits aggregating $7,765,000, the report showed that the bank had only $169,174.06 of cash on hand.
“This showing was enough to indicate that the persons associated in the management of the bank were treading on very dangerous ground,” said Silver. “I cannot understand why the Governor’s attention was not called to the bank at this time. The carelessness of Dunsmoor appears inexcusable.”
Cook’s examination of the accounts of the hank disclose the fact that over $2,000,000 of the depositors’ money was personally loaned to Bartnett, Brown, Treadwell and other executive officers of the company on mythical security.
The Carnegie Brick and Pottery Company is listed for a loan of $150,000 on October 28. The El Dorado Lumber Company has a loan of $250,000 entered against its name on the same date. Another loan of $200,000 is represented on the books of the bank as having been advanced to the San Francisco and San Joaquin Coal Company.
“None of this money ever left the bank,” said Prosecutor Cook. “The loans were fictitious so far as the companies were concerned and were entered on the books of the bank merely to cover up overdrafts of the executive officers.”
Brown, Bartnett and Treadwell appeared before Superior Judge Dunne this morning to answer the indictments returned against them by the Grand Jury. The proceedings took up half an hour, which was given almost entirely to the reading of the bills. By the consent of the prosecution and the defense the cases of Brown and Bartnett were continued until January 16 for argument and that of Treadwell until January 15.
When the history of Prohibition in Sonoma County is written, one name will appear more than any other: John W. Pemberton, County Detective – the nemesis of bootleggers and rum-runners and the scourge of anyone with a blind pig or backroom speakeasy.
Technically the County Detective was the investigator for the District Attorney but “Jock” Pemberton was like our resident G-man, on hand whenever federal Prohibition Agents conducted local raids (in the photo above Pemberton is the man on the right next to the feds). He also was often alongside the sheriff or Santa Rosa police chief during harrowing moments while they were trying to apprehend the most dangerous criminals.
Yet the most important moment of his career happened after his retirement, when he gave crucial testimony showing the California Attorney General was so corrupt he was running a protection racket out of his office.
In 1926, the peak year of Prohibition here, Pemberton was appointed County Detective although he seemed an unlikely prospect for the job. He was 49 when he took the position, with no background in investigating crime; his only experience in law enforcement being a dozen years as Santa Rosa constable, ending in 1923. He had the gregarious personality of a salesman, which is what he was before and after being constable (real estate, then autos). Jock held high rank in both the Elks and Eagles; he and wife Maude were constantly mentioned in the society columns for attending or hosting parties and whatnot.
(RIGHT: Duck hunter in a three-piece suit. 1923 photo courtesy Sonoma County Library)
Not long after being hired, though, he showed his worth. A 27 year-old man named Jasper Parkins was found dead in his bedroom with a bullet wound to his right temple. The sheriff pegged it as an obvious suicide, even though the dead guy didn’t seem troubled and was about to take a walk along the railroad tracks with his brother and niece. Pemberton argued Parkins had his little target pistol in hand when he bent over to pick something up from the floor and bumped his elbow against the edge of the bed. The coroner’s jury ruled it an accidental death.
A few weeks later came the bust of the most famous bootlegging operation in county history. In March 1927 Pemberton led a raid on the old Kawana Springs resort where he and the sheriff’s department found the long-closed hotel had been retrofitted for a three-story copper still that produced 1,400 gallons of pure alcohol/day. The booze was then trucked to San Francisco and LA where it was processed and bottled as “genuine Gordon gin.”
And that wasn’t all. There were two other stills with 250/150 gallon daily capacity, all fed by mash held in seven 2,000 gallon tanks. The big still had a steam boiler weighing two tons; that and the smaller boilers for the auxillary stills were fueled by gravity-fed oil tanks. It was a massive – and ingenious – operation.
The Press Democrat reported, “Pemberton had had the place under surveillance for some time, and had spent several nights in the vicinity of the resort to make certain of its use before the raid was made.”
The only person arrested was a San Francisco steamfitter named George Darnell, who insisted he was only hired to dismantle the equipment (everything had been drained from the tanks and stills). And no, he didn’t know who had hired him. Darnell was held for a few days and released after paying a $500 fine.
Not resting on his laurels, the same week Pemberton arrested a farmer from Cloverdale hauling thirty gallons of “jackass brandy” – a day after busting bootlegger Joe Garayalde near Sebastopol with 800 gallons of “jack” and three stills.
And that set the pace for the following years. It was a rare week when readers of the PD didn’t see at least one story about Pemberton making a liquor arrest, and it was not infrequent for there to be two or three. Just as he once was a familiar name on the society backpages, he was now a regular on page one. As County Detective he investigated other crimes as well and judging from news coverage, Gentle Reader would be forgiven for mistaking him as being the top lawman in the area.
Pemberton had an uncanny knack for discovering hiding places. He found liquor hidden behind false walls in closets and in secret panels that popped open when a button or push latch was pressed. In one restaurant kitchen, a yank on a roller towel opened a cabinet with cases of whiskey.
He also used his nose to find stills, as fermenting mash has a strong, distinctive odor. In a barn near the Shiloh cemetery in Windsor he found one even larger than the monster at Kawana Springs, and this one was still operating (although not producing as much alcohol). Other places where it was hoped strong smells would mask the stink were chicken coops and old outhouses, sometimes further disguised with open buckets of sheep dip or creosote.
Most of the items about him and the sheriff busting up stills and arresting people aren’t so interesting – unless, of course, you knew the bootlegger, which would have been true for many people in small, rural Sonoma County. Here are a few vignettes from those years that appeared in the PD:
Dolly Allen of El Verano is a fortune teller. But she failed to see far enough into the future to know that she was going to be raided last night…a party was in progress in Dolly’s place when County Detective John W. Pemberton and Deputy Sheriff W. A. Shulte burst in and seized wine, “jackass” and gin as evidence and confiscated three slot machines. Dolly said afterwards that she had had a “hunch” the raiders were coming, but, according to officers, she apparently didn’t believe enough in her own forecasting power to dump the evidence. (1927)
“Readin’, ‘Ritin,’ ‘Rithmetic, Rum” – “pupils of a little rural school two miles east of Petaluma carried word to their parents that liquor was being made near the school, and that the odors crept through the windows during class hours, and that one might, if one was careful, sneak up to the windows, of the adjoining house and see forbidden juices dripping from the coil of a little still. County Detective John W. Pemberton and Deputy Sheriff Phil Varner, to whom the children’s tales eventually drifted investigated yesterday and found, they reported, a 50-gallon still, boiling merrily, and about 20 gallons of hard liquor…” (1928)
Mrs. A. Garayalde, living on the Guerneville highway, yesterday came to the sheriff’s office here to claim an automobile truck picked up Wednesday when it was found abandoned on a roadside near Windsor, loaded with 390 gallons of wine. She asserted that the machine had been stolen from her garage and that she knew nothing about its wine cargo. (1929 – remember the Garayaldes from above, and Joe would be charged again for having a still in 1932)
(As far as I can tell, neither Pemberton nor District Attorney Carl Barnard were temperance zealots or had any moral objections to drinking. Their aggressive number of arrests, however, brought in a substantial amount of money to the county treasury. Fines generally were in the $100-500 range and in 1927, $100 was the equivalent of about $1,600 today.)
As the 1920s wained the adventures of Jock Pemberton began to look less thrilling. There were fewer busts of even middling-size bootlegging operations; what jackass stills he found were usually small and amateurish. Finding a stash of a few hundred gallons of ordinary wine in a farmer’s shed was now considered a big deal. By end of 1929 Pemberton was arresting drinkers caught with a jug (or even a pint) of moonshine and mainly searching the cars and homes of those he knew as repeat offenders, also busting hotel restaurant owners who likewise had been caught before.
His run as County Detective paused for about eight months in early 1931 as a new District Attorney took office and appointed someone else. In that time Pemberton opened a private detective agency out of his house at 435 (West) College Ave. After that D.A. died in a car crash the new prosecutor brought Pemberton back to his old job, where he resumed knocking over little stills and re-arresting The Usual Suspects over petty (but lucrative) quantities of wine or hootch.
The last hurrah of bootlegging here was the 1932 discovery of a 1,000 gallon rum still near Fulton. His final liquor bust was at the end of that year, when 70 year-old Emil Gerhman, a rancher near Healdsburg, was arrested after three five-gallon cans of jack were found in his cellar. He was fined $100.
Once FDR was elected president, Congress easily passed a bill to repeal the 18th Amendment. Pemberton was 55 when Prohibition officially ended in December 1933.
As tempting as it might be to view him as merely a local “Revenuer,” Pemberton packed a gun and acted like any member of law enforcement at the time. During the Prohibition years he and a deputy pumped four bullets into a car with two bootleggers fleeing the site of a still, shattering the rear window and nearly killing one of them. (The County Treasurer was surely grateful he missed.)
In February 1933 two brothers held up the gas station at the Santa Rosa Municipal Airport, getting away with all of $27.75. Knowing the pair were ex-cons who lived near Cloverdale, the police chief from there and Deputy Sheriff Harry Patteson joined Pemberton in his “heavy sedan” to search for them. The culprits were spotted in a car on a gravel road and Pemberton gave chase, the officers and the robbers locked in a running gunfight. After the suspect’s auto was hit by five bullets they ditched the car and ran into the brush, pursued by the three lawmen as the shooting continued on foot. After one of the brothers was killed the other surrendered, with Pemberton handling the arrest and taking him to county jail.
As Prohibition was winding down in 1933, the county decided to eliminate the County Detective position – but at the same time create a post for a deputy sheriff charged with criminal investigations. “It was generally understood that Pemberton would be transferred to the sheriff’s staff when his present position was wiped out,” reported the PD. In February 1935 he was appointed investigator for Sheriff Harry L. Patteson, who earlier as a deputy had been something of a partner to him during all those bootlegging arrests.
(LEFT: Chief Deputy Melvin Flohr, James Charles and John Pemberton, left to right. Photo Santa Rosa Republican, March 17, 1936)
Pemberton was well suited for the investigations he made over the next few years, but it wasn’t exciting work. He found out who was passing bad checks, stealing cars and burglarizing houses; he looked into suicides and a couple cases of bigamy. He served warrants on suspects wanted for crimes elsewhere and often was the guard who transported them back to whence they came.
The most notable event in those years was when he obtained a full confession from James Charles, who had murdered his brother with an axe. (Pemberton got him to talk only by assuring the 28 year-old he wouldn’t be hanged.) An insanity trial was held a week later and after the jury deliberated for ten minutes, Charles was committed to the Mendocino State Hospital for the Insane. The reason for the killing, BTW, was that the brother didn’t come home on time that Sunday and Charles was very upset that dinner was late.
The last chapter in his career began in 1943, when he was rehired as a deputy sheriff. John and Maude had gone into semi-retirement four years earlier when there was a surprise election upset and Sheriff Patteson lost to a forest ranger. The Pembertons rented their Santa Rosa home and went to live at their ranch on route 128 near Kellogg, where they intended to start a large rabbit farm. Once Patteson was elected again they were back in Santa Rosa and life resumed as before. Sort of.
John was almost 65 and his dangerous days of running gun battles were over. Now he was mainly a court bailiff and sometimes a deputy jailer; he apparently took care of the Sheriff’s Office mascot, a black cat named “Black Bart” (yuk, yuk). He retired without fanfare in mid-1948, around the time he turned 70.
And here’s where his story gets really interesting.
Another of Pemberton’s duties in those final years was serving as an escort and driver for visiting law officers, so it wasn’t unusual when a special agent from the Attorney General’s office showed up on October 9, 1947. Agent Charles Hoy wanted a ride to specific places in Occidental and between Santa Rosa-Petaluma he had on a list. All (or nearly all?) were taverns.
After each stop, Hoy returned to the car with an armful of punchboards. Pemberton noted the agent seemed interested in nothing else but those things, so when he couldn’t find a place on the list and popped in to an inn to ask directions, he told the agent, “if it is punchboards you want, they got plenty of them in there.” Hoy replied, “I don’t want them.” Pemberton later said Hoy “showed no interest” in places not on his list. After they had hit all the locations, Hoy dropped the punchboards on Sheriff Patteson’s desk saying, “you can have them now,” and left.1
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WHAT’S A PUNCHBOARD?
Punchboards were a common form of gambling in the first half of the 20th century, found in taverns, cigar stores, pool halls, even barbershops and lunch counters across America.
They were like primitive versions of today’s lottery scratchers; a colorful sheet – often with a cheesecake picture or sports theme – was glued on a piece of wood. Punchboards bought by Young had titles including: Big Hit, Win Er Bust, Nice Curves, High Bidder and Gold Bucket.
On each were many tiny holes stuffed with slips of paper. A gambler used a little stylus to punch through the top sheet and hopefully find a winning number. There were myriad variations; sometimes there were few holes but a higher cost to play, or a great many holes to punch very cheaply. But always the odds favored the owner of the board; on the example seen here, the chances of winning anything on a brand-new board was 1 in 50.
The “branding” described here was a crude way to establish a monopoly and says nothing about whether the punchboards were rigged by the manufacturer. Few (or even none) of the winning numbers might be on the punchboard, or they might be sold together with a key to which holes had winners so the gambler could pay extra for a tip as to where to punch.
In California punchboards were illegal “lottery devices” – but as in many states, using them was only a misdemeanor not rigorously enforced. Some owners tried to skirt the law by offering payouts in cigarettes, candy, glasses of beer or trinkets instead of cash. Vintage punchboard, courtesy S. David O’Shea/Pinterest
What Pemberton and the sheriff didn’t realize at the time was they had witnessed part of a criminal conspiracy that reached to the top of the state Department of Justice.
Attorney General Fred N. Howser (the “N” stood for Napoleon!) entered office in 1947 vowing to keep organized crime out of California. More likely he wanted to keep other foxes out of his henhouse; he had a long history of corruption involving gaming interests. Knowing this, Governor Earl Warren set up the “Special Crime Study Commission on Organized Crime.” The final 1950 report has an entire chapter on the “state-wide plan for racket protection under the cloak of the Attorney General’s Office” which is quite jaw-dropping to read.2
Exactly a week before Pemberton was chauffeuring agent Hoy around Sonoma County, a man named Thompson Norman Young was making a deal in San Francisco to obtain a monopoly on punchboards up in the Marysville area. Later he would testify being told at that meeting they were part of a syndicate which gave Howser $50,000 in exchange for a virtual statewide monopoly on punchboards.
Young would also testify how the racket worked. After a dealer bought punchboards from the syndicate, they would be “branded” – meaning a serial number would be burned into the back of the board with an electric woodburning tool. This was for “protection;” should a local sheriff or police chief bust the dealer, the Attorney General wouldn’t prosecute. And as an extra incentive, a special agent from the A.G.’s office would first sweep through the territory confiscating all other punchboards so the dealer would have a monopoly. One of those former agents testified that indeed happened in Marysville, under orders from Howser’s chief enforcement officer.
Besides the cost of the punchboards, Young was told he would have to pay protection money on each. According to him, the sales pitch was, “…it costs you around a dollar and a half for the brand. That is around seven dollars; you can make forty dollars on a board. You can put five or six boards in each location. Each location should bring you a hundred or two hundred dollars a week.”3
After Young agreed to sign up, he drove the syndicate men to Sonoma County. Their destination was the Buckhorn saloon; besides being the first watering hole in Petaluma a thirsty driver encountered, it was where the punchboards were being branded. (The Buckhorn tavern is still there at 615 Petaluma Blvd South. Virtually unchanged since that time and with its walls covered in old photos, stop by for a taste of Petaluma’s colorful history you won’t find on a tour of the West Side’s elegant Victorian neighborhoods.)
All of this came out because Young turned informant on the syndicate after he contacted the Crime Commission, then became the first witness to testify to the Sonoma County Grand Jury in February, 1950. That ended up with indictments of four men on criminal conspiracy, including Mervyn McCoy, owner of the Buckhorn.
On the day of the indictments, Superior Court Judge Hilliard Comstock signed a search and seizure warrant on the Buckhorn, and the surprise raid netted five tons of branded punchboards from a backroom of the bar – so many the county had to rent a moving van to haul them away. They also found a large stash of “winnings” that could be given away to lucky gamblers, including watches, rings and novelty statuettes. “Among the latter was one of a shapely sea-island hula girl, with electrically operated hips,” the Press Democrat gamely reported.
What appears here only barely skims the surface of a complex and gripping crime story that dominated local news almost daily for five months in 1950. All credit to the PD for its excellent coverage of the case – they even printed every word of the Grand Jury transcript on the front page.4
The punchboard investigations and prosecution in Sonoma County also drew widespread statewide and national attention because Howser’s corruption had become household news. After popular muckraking broadcaster Drew Pearson revealed the Attorney General had taken a bribe, Howser sued him for $300,000 damages in libel (Howser would lose the suit).5
Howser also didn’t have the sense to keep his mouth shut and kept drawing attention to the upcoming trial in Sonoma County. He insisted the charges were trumped up and an attempt to “smear” him during an election year, running a full-page ad in the PD denouncing District Attorney McGoldrick for “foul political calumny.”
(RIGHT: Political ad from Attorney General Fred Howser that appeared in the Press Democrat, March 30, 1950)
Nor did it escape attention that Howser was desperately trying to get one of his boys in to “interview” Young without any other witnesses present. D.A. McGoldrick responded by assigning a 24-hour guard for his star witness. Pause for a minute to let that sink in: The District Attorney in little Sonoma County is protecting a prosecution witness from being – bribed? threatened? harmed? – by the Attorney General of the state of California.
The trial lasted exactly a month, spanning June-July 1950. In the dock sat Merv McCoy of the Buckhorn, charged with being a punchboard distributor. Another distributor from Los Angeles was also there, along with an ex-LA cop who worked for him. The fourth defendant was the Chicago punchboard manufacturer who was supposedly the ringleader and the man who gave Howser the $50k bribe.
The prosecution’s case closely followed what had been heard earlier by the Grand Jury, including Pemberton’s testimony of driving agent Hoy around the county to confiscate punchboards at specific places. Items about his testimony appeared in papers across the state, although the UP newswire screwed up badly and implied he was working for the syndicate. “ExDeputy Sheriff Admits Picking Up Punchboards,” read the headline in the Fresno Bee.
The surprise witness was Thomas Judge, an undercover investigator for the Crime Commission who met with McCoy while posing as someone who wanted to get in on the branded punchboard racket. McCoy sold him some punchboards and allegedly said their operation was safe because Howser was “getting a cut out of the scheme.” When Judge scoffed that Howser was personally involved, McCoy told him Howser would send a letter on the Attorney General’s stationery to anyone he wanted – and that McCoy had indeed provided the name of a friend who received such a letter.
It seemed an open-and-shut case, particularly since the defense apparently had no strategy other than sowing confusion. Jurors were told District Attorney McGoldrick and Assistant District Attorney Dennis Keegan would be called as hostile witnesses (they weren’t). That Thomas Judge was completely drunk when he met with McCoy (he wasn’t). That Young was in cahoots with Drew Pearson, who had “nurtured” Young’s story (which the lawyers said he had completely made up). And there was an uproar when a defense lawyer tossed out an odd remark that a witness had a striking resemblance to Pearson, implying the famed journalist was testifying under a fake name.
And then it was verdict time: After debating five hours, the jury announced they were “hopelessly deadlocked,” 10-2 in favor of acquittal.
Comments by Judge Don Geary and D.A. McGoldrick both politely expressed shock at the decision. But the jury foreman told the PD that jurors “didn’t show much interest” in the testimony of either Young or Thomas Judge and “didn’t believe part of Young’s testimony.” In deliberation “very, very little of Judge’s testimony came up.”6
And so it was all over. Howser’s hopes to continue his corrupt career had actually ended a week before the trial began, when he came in a distant second in the Republican primary. His involvement in punchboard and slot machine rackets were part of the Senate hearings on organized crime the following year, but he was never indicted.
Pemberton lived another ten years. The PD ran a nice photo of Maude and John on their Sept. 20, 1953 golden wedding anniversary. His name occasionally appeared in the “this day in history” newspaper columns. Johnson Watson Marvin Pemberton died on June 23, 1961 and is buried in the Odd Fellows’ Cemetery.
1 Pemberton testimony to Grand Jury as reported in the Press Democrat, March 25, 1950
2 Howser shamelessly used his staff to support and coverup criminal activity. One outrageous example from the Commission report noted another of Howser’s agents was convicted of attempting to bribe the Mendocino County sheriff to allow slot machines in Ukiah. Before the trial Howser sent more than a dozen investigators there to dig up information helpful for his agent’s defense, evidence which was not shared with prosecutors.
3 Thompson Norman Young testimony to Grand Jury as reported in the Press Democrat, March 26, 1950
4 Only the testimony of ex-agent Charles Hoy was not made public for reasons unexplained, but his attorney commented to the press “he did what his superiors told him to do.”
(RIGHT: Mildred Arneson c. 1950. Photo enhanced using HotPot AI)
