Original Sixteen to One Mine, Inc.
Gold Crown stockholders committee-1959
(The Gold Crown Mining Corporation folded in the mid 1960's as the result of infighting amongst its shareholders. Original Sixteen to One Mine, Inc. now owns the Gold Crown Mine property in Alleghany, but it was bought from subsequent owners in 2005 and there is no relation between the two corporations. The following document was found in some old records)
You will find enclosed with this letter the following:
1. Minority stockholders’ report,
2. Minority stockholders’ financial statement,
3. Information slips to be signed and returned in the enclosed self addressed, stamped, envelope.
We are advised that with proper evidence we may be able to break the stranglehold that the majority stockholder now has on the corporation. We are gathering funds to enable our attorney to bring legal action. The papers are now being prepared and a suit will be filed as soon as it is evident that we have your financial support. We will prosecute this case to the full extent possible, with the money you contribute. The object of this suit is to bring about responsible management and enable the corporation to obtain permits both from the Securities and Exchange Commission of the Federal Government, and the Corporations Commissioner of the state of California, in order that corporation stock may be sold to obtain financing to develop the mine.
We will need your funds before this case can come to trial, and this letter is our appeal to you for contributions. Now is the time to act if you do not wish to lose everything you have invested.
To help you plan on how much you should contribute, the committee believes 5% of your total monetary investment will supply sufficient funds. We know that some stockholders will be unable to contribute that much, and on the other hand others might be able to contribute more. We are asking you to do the best you can, and we will accept contributions or pledges in any amount. As we will not need all the money at once, we will accept pledges for contributions to be made periodically over the next six months period. Any unused funds will be returned if we are successful in our suit and the mine proves to be a highly successful paying venture.
We not only need funds, but we need you proxies and we also can use you clerical help. If you desire to help, fill in the enclosed information slip and mail as soon as possible. If you have questions or can arrange meetings of several stockholders, our committee will be glad to meet with you and discuss the matter fully.
The committee already has spent much time developing evidence that will be needed, conferring with officials of the Commissioner of Corporations and the Securities and Exchange Commission, preparing and sending proxies, answering, and talking to individual stockholders and traveling and meeting with interested groups. We have also attended board of directors and stockholders meetings at our own expense.
Do you want to be informed of our progress?
Do you want to contribute? If so, how much?
Have you given us your proxy?
Kindly answer at once.
If we ever are to obtain management of the corporation and place it is competent hands, we must act together now or lose every dollar invested without knowing if the Gold Crown mine can produce gold in sufficient amounts to return dividends.
(Signed) Clarence H. Gordon
Ivan C. Smith
Your committee has received license to operate from Div. Of Corp. St. of California
REPORT TO MINORITY STOCKHOLDERS OF
GOLD CROWN MINING CORP.
The Minority Stockholders Committee of the Gold Crown Mining Corporation feel you are entitled to a true picture of corporation operation. This report is made to give you the reasons for our concern over all our investments and what we feel can be done to remedy the situation. We have discussed this matter with fully with legal council, officials of the Corporations Commissioner of the State of California, and the Securities Exchange Commission of the Federal Government.
When Mr. Gordon was first elected to the board of directors, he discovered that misrepresentations had been made to him and other stockholders at the time of the purchase of their Gold Crown stock. These misrepresentations were as follows:
1. The indebtedness of the corporation. We had been informed that the only indebtedness was for current operating expenses that would accrue over a thirty-day period, since the mine was operated on a cash basis. We were told that all equipment at the time had been paid for with the exception of some shop equipment that could be paid for by an exchange of stock with the owner whenever a just value could be placed on the equipment and the owner was ready to settle accounts. We found that there was an indebtedness of approximately $271,325.56 on the part of the corporation, plus current bills, and that the majority stockholder held demand notes from the corporation in the sum of approximately $21,325.00 THESE NOTES WOULD ENABLE HER TO MAKE CALL FOR PAYMENT AT ANY TIME and put her in the position to foreclose and take over all assets of the corporation.
2. We were told that the mill at the mine was able to mill ore on a productive basis. We found that in fact it was the wrong type of mill for the mining situation and that to make it profitable it would have to be extensively overhauled or replaced. We found it to be only useful as a pilor or high-grade mill.
3. The mining equipment was supposed to be in order and ready to go. We found that at the winze, tables, and other equipment was improperly installed and the work would have to be re-done at great expense. This showed a lack of knowledge of mine operations on the part of the present management.
4. We found that thousands of dollars were being spent on exploration on the mine instead of developing ore bodies already located. This showed poor judgment and lack of knowledge in the present management.
5. We found that safety regulations of the department of Industrial Safety were not followed and the mine had to be shut down for a long period of time.
6. We found that the program for raising funds for mine operation was in violation of state and federal laws.
7. We found that the board of directors exercised no real power and seemed to exist only for the purpose of “window dressing” and complying with statutes that required a board of directors. We found that the majority stockholder was in complete charge of mining operations and the financial affaires of the corporation, and that the board of directors took no part in these matters, save as “yes men”.
8. We found that no account of the finances of the corporation was made to the board of directors. Mr. Gordon was advised that it was none of his business, and that any members of the board that did not go along with the majority stockholder could and would be replaced. Despite protestations of Mr. Gordon insisting upon a change, nothing was done and Mr. Gordon was not re-elected to the board despite the fact that he held approximately 100,000 proxies. During the year after Mr. Gordon left the board, the following occurred:
(a). The majority stockholder filed a suit to foreclose her note of $21,325.56. This suit was filed in Sierra County on March 7, 1958. No mention was made by her at the stockholders meeting on September 27, 1958, that she had filed such suit.
(b). The mine was run heavily into debt and the creditors threatened to foreclose on the property. Various taxes were left unpaid, and some claims were made therefore.
(c). The Giles brothers presented a large bill for equipment that we had been told had been paid for at the time we invested.
(d). Criminal charges were filed against Mrs. Duke and the Giles brothers for unlawful sale of stock. Convictions resulted, and they are now on probation.
(e). Permission to sell stock was suspended by the Securities and Exchange Commission of the Federal Government, and the Corporations Commissioner of California refuses to give any permit at all for said sale.
(f). The then members of the board of directors voted for and were permitted to buy corporation stock at $1.00 per share, even though it was being offered to the public at $5.00 per share.
At the stockholders meeting on September 27, 1958, we succeeded in getting Mr. C. Gordon and Mr. Ivan Smith elected to the board of directors, and an assurance that the new board would be free of Mrs. Duke’s control. She was not elected to the board, and it appeared that the board would be able to act for the best interest of the corporation. This did not occur. There was a refusal to turn over records of the corporation to the new secretary, despite written and oral demands therefore. Mrs. Duke still continued to reside on the mine property and continued to control the board of directors, with the exception of Mr. Smith and Mr. Gordon. It appears that the new president has been accounted for the firm for many years and is a friend of Mrs. Duke and Mrs. Duke’s personal attorney advises the president on corporate matters. At the board of directors meeting after the stockholders meeting charges were brought before the new board of directors by Mr. Gordon and Mr. Smith, action was urged, but nothing was done.
Mr. Gordon and Mr. Smith have resigned and have obtained a permit to raise funds to bring a legal action.
Clarence H. Gordon
I will contribute $_________ now and pledge $________ additional
I will pay said pledge before ___________ 1959
I have given Mr. Gordon my proxy. Yes______ No______
I want to give Mr. Gordon my proxy. Please mail me the proper form. ____
I want to continue to hear from your committee. Yes____ No_____
I can arrange a meeting of stockholders to meet with your committee on ________
I will contribute my time for clerical work____________
I believe I have evidence that will help you in the prosecution of this case. Yes____No____
I know some one who might be able to help you in your endeavor. Yes____ No_____
GOLD CROWN MINING CORPORATION
© 2018 Original Sixteen to One Mine, Inc.