by Pebbla Wallace, LACHS Board Member
A Courtroom Murder. On July 14, 1930, Frank Keaton entered Department 39 in a downtown Los Angeles courtroom for a civil case between The First National Bank, and Hollywood film producer David O. Selznick. On the stand was banker Motley Flint. Keaton listened in the spectator’s section to Motley’s testimony, and once he finished and stepped down from the witness stand, Keaton shot him three times with his .38 Smith & Wesson – Flint fell dead! What angered Mr. Keaton, and brought him so far to the edge that he would shoot Motley Flint dead? The Answer is “The Julian Pete Swindle”.
C.C. Julian
Photo: Los Angeles Public Library Collection
C. C. Julian. Before there was the Bernie Madoff fraud, and the Bear Stearns debacle, there was the Julian Petroleum Swindle (aka Julian Pete) – one of the biggest swindles in U.S. History. It all began with Courtney Chauncey Julian (aka C.C. Julian), an oil rigger who arrived in Los Angeles from Canada at the height of the California oil boom of the 1920s. This was also a time when many get-rich schemers came to Los Angeles to make their fortune. When C.C. saw George Getty strike it rich with oil in Santa Fe Springs, C.C. decided he also wanted to become an oil entrepreneur. One problem though –- C.C. didn’t have a penny to his name. So, he did what every good huckster does – He advertised!
To obtain capital and secure a lease to drill on five acres in Santa Fe Springs, he promoted and placed daily ads in local newspapers requesting investors (see below). These ads became a daily LA institution and had a folksy flare that drew investors in by the hundreds. One of his ads said, “walk in and shoot me if I ever betray your confidence”, and “May buzzards pick my bones and the wind whistle Star-Spangled Banner through my ribs if I betray you”. After the first day of ads, Julian had a line of people waiting outside his office wanting to invest in his oil stock. After several months, he had sold almost 5 million dollars worth of stock.
Swindle #1 – Cooking the Books. C.C. claimed that his oil company had discovered the deepest of wells and produced millions of dollars in profits for its investors. But in reality, the company’s profits were based on an illegal Ponzi scheme in which the company introduced nearly five million illegal shares into the marketplace, churning out worthless stock.
In the meantime, C.C. prospered and lived the high life in the City of Angels. He incorporated Julian Petroleum, opened a chain of gas stations, owned a fleet of expensive lavish cars, and bought a large mansion in Los Feliz. He was seen in the high-society pages of newspapers socializing with starlets and the most beautiful women. There even was an incident in the papers where he punched Charlie Chaplin in a restaurant.
His success was short-lived, and by 1925 his oil operation began to unravel. Prosecutors started to suspect that he was cooking his books and watering his stock. The LA Times refused to continue to print his ads, and Julian dodged three bullets fired into his home (didn’t he say shoot me if I ever betray you?). So, in late 1925, he sold his interest in Julian Petroleum to Texas oil men S.C. Lewis and Jack Bermanfor one million dollars. These two characters already had indictments in several states looming over their heads.
Swindle #2 – The Million Dollar Pool. Banker Motley Flint loaned Lewis and Berman 10 million dollars, and together the three organized the “Million Dollar Pool” backed by Julian Pete’s stock to inflate prices and attract investors. This is how the Million Dollar Pool worked – those with big bank accounts and/or big names got into the pool first (some of the big names included Hollywood luminaries Cecil B. DeMille and Louis B. Mayer). They made money because of the contributions of the thousands of little no-name investors who followed them.
In the meantime, Motley formed more stock pools and loan schemes to manipulate share prices. Within weeks, everyone wanted aboard this money train. As more stock pools began to open, more over-issued stocks poured out.
But on May 7, 1927, like all good Ponzi schemes, the bubble burst to leave 40,000 investors holding the bag – many losing their entire life savings, including Frank Keaton (who shot Motley Flint in Department 39). The final fraud exceeded 150 million dollars. But the big guys bailed out before the crash, making them huge profits.
Julian, Motley, Lewis, Berman, and other key figures were indicted on charges of conspiracy to obtain money under false pretenses, conspiracy to violate securities laws, conspiracy to violate state usury acts, forgery, and embezzlement. C.C. Julian faced charges in both California and Oklahoma, but he jumped bail and fled to Shanghai, China.
The Trial – Bribery and Jury Tampering. Lewis and Berman were the first to be tried in 1928. After a four- month trial, they were acquitted by a jury, and several other defendants’ cases were dismissed by a motion by the D.A. The public was stunned and outraged. However, a reporter later obtained a diary that showed the bribes to three jurors and District Attorney Asa Keyes. The diary showed payoffs of money totaling over $100,000; golf clubs; several watches; two automobiles; $16,000 to a juror for a house; and $5,000 in cash to another. The diary included dates, a place, and times of the bribes.
Attorneys & Defendants in the Julian Pete Case, 1930
Photo: Los Angeles Public Library Collection
According to the San Bernardino Sun, on October 31, 1928, Keyes was charged with accepting $100,000 and a gold watch valued at $630 from Jack Berman, with an agreement from Keyes to obtain a dismissal, or failing that, an acquittal. Keyes was accused of holding “surreptitious and secret meetings” as often as three times a week with Berman and another defendant, for the purpose of obtaining their dismissal or acquittal. The indictment indicated he controlled the acts of his prosecutors and would direct them in a way that resulted in the defendants’ discharge without conviction.
CONCLUSIONS – Karma doesn’t pay! No one was ever convicted for the Julian Petroleum Swindle, and Motley Flint was shot two days before his trial. However, most people would say that the fate of those involved with this swindle was Karma. For example:
District Attorney Asa Keyes was found guilty of accepting a bribe and sentenced to five years in prison. He was pardoned by the governor after serving 18 months. However, he lost his law license and was unable to find work. A year later he died of a stroke.
C. C. Julian fled to Shanghai China. According to several sources, after spending all his money, he either committed suicide or was poisoned by someone else’s hands.
Before Motley Flint was shot, his brother Frank Flint (the city in which La Cañada Flintridge is named), was so distraught by the case, that he suffered a nervous breakdown. He went on a cruise to recover and died in his sleep.
Berman and Lewis were never charged with bribery or jury tampering due to a technicality, but were both indicted on an unrelated swindle in which they were convicted on 15 counts of mail fraud, and were sentenced to seven years in prison. Lewis committed suicide shortly after his release from prison.
Frank Keaton, 1930. San Quentin State Prison
Photo: Public Domain
Frank Keaton who murdered Motley Flint in Department 39, was sentenced to death by hanging (which was California’s death penalty at the time). However, while in prison awaiting execution, the warden had him analyzed, and he was determined to be insane, and a judge concurred. He was then sent to the state hospital for the criminally insane. According to the Oakland Tribune, “Under the law, he must be kept at the state hospital, and if pronounced cured at any future date, he must be returned to prison for execution”. In March 1940, he was declared sane and was returned to prison for execution, but the governor commuted his sentence to life in prison, where he finally died in 1955.
A year after this scandal, the Stock Market Crashed, which led to the greatest worldwide economic disaster in history – The Great Depression.