Julian Petroleum Corporation

Julian Petroleum Corporation, commonly nicknamed “Julian Pete,” was a Los Angeles-based oil enterprise associated with the speculative investment culture of 1920s California. It was founded in 1923 by Courtney Chauncey Julian, who had attracted attention after successful oil drilling at Santa Fe Springs, California, the previous year. The company presented itself to investors as an opportunity to participate in the region’s oil boom, using highly theatrical promotional language to encourage purchases of its shares. One advertisement reportedly warned that the investment was not suitable for widows and orphans while simultaneously appealing to people who could afford to take a chance. The approach reflected the period’s combination of genuine petroleum development, intense publicity, and lightly regulated securities promotion. The company’s business model became increasingly dependent on the sale and circulation of stock rather than on clearly documented production results. California authorities began investigating its promotional practices for possible fraud. In 1925, Julian sold his interest in the enterprise for $500,000 to Sheridan C. Lewis and Jacob Berman, who was also known as Jack Bennett. The following year, Julian Petroleum merged with California-Eastern Oil Company. An audit subsequently found that the business had issued approximately 4.2 million shares without authorization. Trading in Julian Petroleum shares was halted by the Los Angeles Stock Exchange on May 5, 1927. The company’s financing structure also involved pools formed with roughly 400 prominent Los Angeles-area businessmen. Participants included entertainment figures such as Cecil B. DeMille and Louis B. Mayer. Money from these arrangements was loaned to Julian Petroleum for short periods at high interest rates. Several participants were charged with violating California usury law, although the charges were later dropped or resulted in acquittals. The collapse reportedly affected approximately 40,000 investors and involved losses described in contemporary and later accounts as exceeding $150 million. Because the company’s failure was intertwined with unauthorized securities, promotional deception, alleged bribery, and the participation of well-connected local figures, the affair became known as a major Los Angeles financial scandal rather than merely an unsuccessful oil venture. The collapse generated criminal proceedings against company officials and people connected with the financing arrangements. Lewis, Berman, and stockbroker Ed Rosenberg were acquitted in May 1928 on charges connected with the Julian Petroleum fraud, but later convictions involving Lewis and Berman concerned the sale of nearly $1 million in gold bonds of Lewis Oil Company. The case also led to the prosecution of Los Angeles County District Attorney Asa Keyes, who was accused of accepting approximately $100,000 in bribes in connection with the treatment of Julian Petroleum defendants. Keyes was convicted in February 1929 and sentenced to one to fourteen years in prison; he served nineteen months before receiving a pardon from Governor James Rolph. Two jurors associated with an earlier acquittal were also convicted of accepting bribes. Courtney C. Julian remained involved in other controversial oil-promotion activities. In 1931, he faced conspiracy-to-defraud charges in Oklahoma involving $3.5 million in alleged investor losses. He jumped bail, fled to Shanghai, China, and died by suicide there in March 1934. The wider scandal continued to cast a shadow over Los Angeles finance. In July 1930, financier Motley H. Flint was shot and killed in a courtroom by Frank D. Keaton, who claimed to have lost $35,000 in Julian Petroleum stock and blamed Flint. Julian Petroleum itself did not survive the 1927 collapse and is now remembered primarily as a case study in speculative finance, securities manipulation, and the weaknesses of investor protection during the 1920s.

Julian Petroleum Corporation emerged from the oil speculation that accompanied the rapid development of Southern California petroleum fields during the early 1920s. Its founder, Courtney Chauncey Julian, gained credibility from a successful 1922 drilling operation at Santa Fe Springs. In 1923 he established Julian Petroleum in Los Angeles and used highly visible advertising to attract investors. The company’s promotional style acknowledged the risks of oil speculation while presenting the venture as an opportunity for people with sufficient financial resources to participate in the boom. This combination of risk warnings and persuasive publicity helped create an image of frankness without resolving the underlying question of whether the company’s securities and operations were sound. California’s Corporations Commission began investigating Julian Petroleum’s sales methods for suspected fraud. The company’s expansion continued, however, and in 1925 Julian sold his interest for $500,000 to Sheridan C. Lewis and Jacob Berman, also known as Jack Bennett. In 1926, Julian Petroleum merged with California-Eastern Oil Company. The company’s subsequent financial examination revealed that it had issued approximately 4.2 million shares without authorization. Rather than representing a straightforward petroleum producer, the enterprise had become part of a complicated system of stock sales, short-term loans, and investor pools. The financing arrangements drew in approximately 400 prominent local businessmen. Among the participants were film-industry figures Cecil B. DeMille and Louis B. Mayer. Funds were loaned to Julian Petroleum for short terms at high interest rates, and some investors were later charged under California’s usury laws. These proceedings generally ended in dropped charges or acquittals, but they demonstrated how closely the company’s activities were connected to established Los Angeles financial and social networks. The crisis became public in 1927. After the unauthorized shares were identified, the Los Angeles Stock Exchange halted trading in Julian Petroleum stock on May 5. The company then collapsed, reportedly leaving approximately 40,000 investors exposed and producing losses described as greater than $150 million. The episode became one of the defining financial scandals of 1920s Los Angeles because it combined oil speculation, securities irregularities, aggressive advertising, prominent investors, and alleged official corruption. The legal aftermath extended well beyond the company’s failure. Lewis, Berman, and stockbroker Ed Rosenberg were acquitted in May 1928 in a case involving the Julian Petroleum fraud. Lewis and Berman were nevertheless convicted later that year on charges involving the sale of almost $1 million in Lewis Oil Company gold bonds and received seven-year sentences. Prosecutors also pursued Los Angeles County District Attorney Asa Keyes, accusing him of accepting about $100,000 in bribes in connection with the handling of Julian Petroleum officials’ cases. Keyes was convicted in February 1929 and sentenced to one to fourteen years. He served nineteen months before Governor James Rolph pardoned him. Two jurors who had voted for an earlier acquittal were also convicted of bribery. Julian continued to face legal trouble after leaving the company. In 1931, Oklahoma authorities charged him with conspiracy to defraud investors of $3.5 million. He jumped bail and escaped to Shanghai, where he died by suicide in March 1934. The scandal also formed part of the background to the July 1930 courtroom killing of financier Motley H. Flint. Frank D. Keaton, who shot Flint, said that he had lost $35,000 in Julian Petroleum stock and held Flint responsible. Julian Petroleum therefore survived in public memory not as a durable energy business but as an emblem of the hazards of unregulated securities promotion and speculative finance in the United States before modern investor-protection regimes were fully developed.

• 1934

  Courtney C. Julian dies in Shanghai

  [1]Julian Petroleum Corporationen.wikipedia.org

  After fleeing the United States while facing Oklahoma fraud charges, Julian died by suicide in Shanghai in March.

• 1929

  Asa Keyes convicted of bribery

  [1]Julian Petroleum Corporationen.wikipedia.org

  The former Los Angeles County district attorney was convicted in a bribery case linked to the treatment of Julian Petroleum defendants.

• 1928

  Criminal proceedings continue

  [1]Julian Petroleum Corporationen.wikipedia.org

  Lewis, Berman, and Ed Rosenberg were acquitted in one Julian Petroleum case, while Lewis and Berman were later convicted in a related Lewis Oil Company bond case.

• 1927

  Trading suspended and company collapses

  [1]Julian Petroleum Corporationen.wikipedia.org

  An audit identified roughly 4.2 million unauthorized shares, and the Los Angeles Stock Exchange halted trading on May 5. The company subsequently collapsed.

• 1926

  Merger with California-Eastern Oil Company

  [1]Julian Petroleum Corporationen.wikipedia.org

  Julian Petroleum merged with California-Eastern Oil Company as its corporate and financing activities expanded.

• 1925

  Julian sells his interest

  [1]Julian Petroleum Corporationen.wikipedia.org

  Courtney C. Julian sold his interest in the company for $500,000 to Sheridan C. Lewis and Jacob Berman.

• 1923

  Julian Petroleum Corporation founded

  [1]Julian Petroleum Corporationen.wikipedia.org

  Courtney Chauncey Julian established the Los Angeles-based oil company during Southern California’s petroleum and investment boom.

• 1922

  Courtney C. Julian gains attention from Santa Fe Springs drilling

  [1]Julian Petroleum Corporationen.wikipedia.org

  Julian’s successful oil drilling activity at Santa Fe Springs helped establish the reputation that he later used when organizing Julian Petroleum.

A speculative California oil investment promoted as an opportunity to participate in the 1920s petroleum boom.

• Oil exploration · 1923

  Petroleum exploration interests

  Julian Petroleum presented itself as an oil enterprise connected to the Southern California petroleum boom. Its background rested partly on Courtney C. Julian’s earlier drilling success at Santa Fe Springs. Available historical accounts focus more heavily on the company’s promotional and securities activities than on documented production volumes, reserves, refining operations, or a branded retail fuel network.

• Investment securities · 1923

  Julian Petroleum shares

  The company’s principal public-facing offering was its stock, promoted through colorful advertising to people seeking exposure to oil speculation. An audit later found that approximately 4.2 million shares had been issued without authorization. Trading in the shares was halted by the Los Angeles Stock Exchange in May 1927.

• 1931

  Oklahoma fraud charges against Courtney C. Julian

  Julian was charged with conspiring to defraud investors of $3.5 million. He jumped bail and fled to Shanghai.

  Source

• 1930

  Killing of Motley H. Flint

  Frank D. Keaton shot financier Motley H. Flint in a courtroom and said he blamed Flint for a $35,000 loss in Julian Petroleum stock.

  Source

• 1929

  Bribery prosecution of Asa Keyes

  Asa Keyes was accused of accepting approximately $100,000 in bribes connected with the treatment of Julian Petroleum officials. He was convicted and imprisoned before receiving a pardon.

  Source

• 1928

  Usury and financial-pool proceedings

  Financial pools involving roughly 400 prominent local businessmen provided short-term, high-interest loans to Julian Petroleum. Some participants faced usury charges, although the cases ended in dismissals or acquittals.

  Source

• 1927

  Unauthorized share issuance and investor collapse

  An audit found approximately 4.2 million unauthorized shares. Trading was suspended, and the resulting collapse reportedly affected about 40,000 investors and involved losses exceeding $150 million.

  Source

Read more

• 1923Risk-forward oil investment advertising

  California, United States

  Julian Petroleum used provocative advertising that acknowledged the speculative nature of the investment while appealing to people who could afford to take a financial risk. The messaging helped distinguish the company in a crowded oil-promotion market.

  Outcome. The campaign attracted a large investor base, but the company’s promotional methods later became part of investigations into fraudulent securities sales.

  Source

• 1927

  Creation and use of investor financing poolsStrategy

  Background

  The company required additional financing while continuing to promote its securities to a broad investor base.

  Action taken

  Pools involving approximately 400 prominent businessmen provided short-term loans to Julian Petroleum at high interest rates.

  Aftermath

  The arrangements prompted usury-related charges and became part of the wider investigation into the company’s financial practices.

  Source

• 1927

  Exchange suspension of Julian Petroleum sharesOther

  Background

  An audit identified approximately 4.2 million shares that had not been authorized.

  Action taken

  The Los Angeles Stock Exchange halted trading in Julian Petroleum stock on May 5, 1927.

  Aftermath

  The trading halt preceded the company’s collapse and the exposure of a major investor fraud.

  Source

• 1926

  Merger with California-Eastern Oil CompanyM&A

  Background

  Julian Petroleum expanded its corporate structure during a period of intense oil speculation and securities promotion.

  Action taken

  The company merged with California-Eastern Oil Company.

  Aftermath

  A later audit exposed the unauthorized issuance of millions of shares, contributing to the 1927 trading suspension and collapse.

  Source

• 1925

  Sale of founder’s interestOther

  Background

  After establishing the company during the Southern California oil boom, Courtney C. Julian transferred his interest to outside principals.

  Action taken

  Julian sold his interest for $500,000 to Sheridan C. Lewis and Jacob Berman.

  Aftermath

  Lewis and Berman became central figures in the company’s subsequent expansion and the litigation that followed its collapse.

  Purchase price for Julian’s interest. $500,000 (1925)

  Source

1. 1Julian Petroleum Corporationen.wikipedia.org
2. 2The Great Los Angeles Swindle: Oil, Stocks, and Scandal During the Roaring Twentiesglobal.oup.com