The sun. [volume] (New York [N.Y.]) 1833-1916, 1877-01-16
THE SECURITY LIES CASE.
THE INVEsTTG dTION AND REPORT
OF DEPUTY M'CILL.
Deliberate Perjury Cha rged-Asscts Mis-
stated aud False Returns of Incomc-Prc-
MUM Note nud Foley Holders Dupcd.

MUM NOte nud fOttcy nO'dcrs Dupcn.
ALBANY, Jan. 15.-The Official examna-
tion Of the Security Life Insurance and Annuity
Company OF New York shows available assets
amounting to 5000, ,0j9s sj, and liabilities amount
Ing to $i,05i'S'35. a deficiency as regards policy
holders OF $2,O53,s2i5O. Deputy Superintendent
Mccall in his report, says:
j regret tho necessity which compeis me TO
relate at length the causes OF the company's in-
soyency. but the last sworn statement Of Its
officials OF Dec. 81, 1875, showing a surplus OF
f5l5,0N In comparison with the present deA-
cheney OF $2,053, i.5O, makes IL plain duty to
place on the records OF the department a state
ment OF the chicanery and fraud that character
ize tho previous exhibits OF the company.
Commencing with the arst item In their report
OF assets In tho last statement made by them, |
find real estate return d AZ n cost value over and
above encumbrances OF si6O,s75. This amount
covers two pieces OF property in the city OF New
York, one being the companys building. Nos.
81 and 80 Pine street. the other a 63-l0J acros Of
land at wiliamsbrdee, and forming part Of
the territory recently annexed TO New York
county. The first mentioned piece was pur-
chased in 1875 for $4,000. $4,000 being paid In
cash and the balance remaining as a mortgage.
Tho second piece was acquired In 1888 by certain
officials OF tho company out OF their private
funde. and given by them az a eratuity 10 their
institution In December 1874 to enable II to
make a showing Of acceptable assets, on account
Of the disallo vance In that category by the de-
partmett Of agents balances and commuted
commissions to the amount Of S2lso00.
One hundred and ten thousand dollars (SllO,-
000 Of these uuadmitted assets were closed out
70 this item OF real estate. making the apparent
total cost OF the same $1,000, instead OF s45s-
SO, as sworn 70 by the officers. In relation to
the last named property desire to state that
the deed to tho company. although properly ex-
ocuted. had never been placed on record In the
Clerks Office until after my examination had
been commenced, and at my suggestion. q, the
sum that was paid by these officials In their
private cauacty on the orsinal purchase Of the
property find tnat a portion was obtained from
The company on certain MORTGAGES, aud that
said mortgages were realized and DISCHARGED of
record during my investigation without pay
ment TO the company OF the principal sums.
These facts | have made known to the re-
ceiver, the Hon. W. II. wickham, now In pos-
session, who Will undoubtedly take proper ac-
tioon "a 90 the legality Of the transactions.
Regarding the value Of these two items OF real
estate given hereafter. | return the conn lny's
building at its cost value In lsi5, of Ssl00 over
the xltH.tlD encumhfance. aud the Williams
bridge property at S3l,24l, as reported 10y the de-
partment appraisers. The nexl principal item
Is that designated as stocks and bonds owned
by tue COMPANY" and reported in Deoem er,
ls,5, at $1,000 par value, aud now ascer-
tain-d to be Sle5ijO. | hnd tue discrepancy Of
Of the bond, were sold ant tho proceeds IN
vested in mortg ges $1,000 were disposed Of,
or rather returned u Francis /. walker Co. Of
New York, from whom II Is alleged they were
bought; but II bought. we're never paid for. and
tue balance OF Sl3s2JD was conyer ed into cash
TO pay tho losses aud expenses Of the year over
and above the income, tue recein's being $780,
Uyj ", ana the disbursements soj3Ol623.
TIE bonds held by Walker 4 Co., the senior
member being director In tue Security COM
pany. and Chairman Of the Finance Committee,
| Ia AtNT ia "a llN = nfta ..tta
but held by the firm mentioned as collateral for
ths nnnaid pdrchase money, seven per cent.
creolted with the interest that the securi-
ties produced, which was never more
case OF tie District Of Columbia bonus,
but $50 per cent. Tho bonds purchased
ia tnls way were reported as being abso-
lutey the properly Of the company, but no
statement was .ce I'm the liabilities OF the
borrowed money. That contingentiy placed
them as assets IN the sworn report OF tue PTesl-
cent aud Secretary.
Iho next item where my examination revealed
a discre epancy between tue statement as made
to the department ana the facts a. found them
was the return Of cash In bank aud uiiice No
7OS is. At no time during 1875 DID any such
balance exist as an asset II the company, nor
hos II existed A. such since, By inoiudlng the
receipts up 50 tue -Oth of January. 1870. the
books were made to show a balance OF st5-
iUc6s, but a. matter Of flct II l. doubtful II az
any time during the perlod mentioned there
WAS one.tenth VI that sum subject ~ ths check
OF the officers.
10 the 10 ced exhibit above described $4,000
was added 10 give good appearance to tue
statement, although the crcat had no founds-
ton In iact, anu involved deliberate perjury on
the part OF tue comp-nys officials in swearing
to It,
A. 70 the item OF uncollccted ond deferred
premiums. s,,OlsO. ! have no doubt that the
sum MS IN excess OF the proper amount by at
lenst s6-r,VO. | come to the conclusion. alter
nscertlil ing from the schedules giving these
Items In e'aii, and PREPARED during the exam
ination, that ~ the Present time $ljs5l0 Is all
that Is now outstanding. and that ON Dec. 81,
ls,5. Si5oO would be d generous estimate II tue
same, considering the cOmpany's method Of
cancellation, It's annual returns showing large
number Of revived policies.
In the four items given above are described
fraudulent assets or the com Iany, the exhibit
OF premium notes and loans being nearer cor
rect than any other OF the prlncipal sums COM
prsine the statements heretofore made.
Misstating the Assets In the niaurrr detliled
necessiiate false return Of the income and
expenditures, and accordingly a fictitious c-odit
Of premium receipts to the amount Il Ss,1DOO
was made and sworn L! lsely 10 cover
the incorrect returns Of real estate and
est pad borrowed monoy was re-
turncd NJ cash dividends paid policy holders
TO avoid answering the inqulfies that true ex-
hiblt would baNe rendered necessary. and con
siderable pOrtion OF the salaries and advertising
expenses vas also returned as pad for surren-
doged policies TO prevent the criticism tlat a
proper showing OF expenses would have pro-
nnd also that the mortality ofthe company
WAS excessive and to conceal the fact lirga
amounts expended Tor death losscs were ear
rled annually INTO the expenses as paid furio,-
NUNS, 10 and note schedules and tue data
for yaiuaion of uuIices devniyed on Mes-rs
Ballard, Holmes and Cross, whom you detule 10
assist me IN the ex animation. On account of
the fraudulent condition Of the Artuary ) books
the gentlemen we!e Obliged 10 check each
policy from the agency registers which
required five weeks Of careful and ardu-
Gus labor. Nine hundred and eighty
three policies with reserve OF
fjii.cD were fDInd unrecorded on the valuation
books, Vnicn had been annually prepared Uy
the ActuHry oi tuc company, Il. l.. Case, Jr.,
and affirmed by his nlldyit 10 COutun IN the
policies IN force, with the necessary datl Tor the
valuation OF the same.
DdIug the yer 1913 sche ne was set on foot
by the D. I'll ors to induce tha parties holding
policies iTum the ilier Noff- OF the campny'a
existence, aud attached to winch were large fe-
serves, to reilnquish the me aud receive in OK
change similar puItcies having new dates Of
issue. Ihe latter were returned To the depaft-
ment Wi hout any stst.ment of tacir b.ing con
tina tions ot old contacts, several hundreds OF
thousanI. Of doh ~ beng thus cancelled each
year since tho dite mentioned. Ihis
method II relUcipg tho liabilities be rame
so practicable IN tue minds OF tho oiii .ers
that e.ch De enter they would cause to
he written l.rgH nut. OF these substitute
ppuCie-; report them "a jar. as actually ln
force, marking oH tue nd, and send them out
IN the ensuing year to take their CHANCES OF 6c-
Ccpt iucs or rttufn
Premium no,e aud loan policy holders have
been duped Tor several years by The form of re-
cent given when their premiums were paid, as