Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-12-22
NOT AS SHOULD Be
Admission Made in Insurance
Investigation.
THE M UTUAL LIFE
REPORTS NOT ENTIRELY COR
RECT.
Examiner Vanderpoel of New York
Department ON the Stand
Today.

NEW YORK, December 22-Examiner
yanderpo6l of the state insurance depart
ment testifying before The legislative in
vestigatins committee today, said he was
q. aware that the report of the Mutual Life
Insurance Company to the Insurance de-
partnent for 1904 was not entirely correct.
The report showed no profits from the sale
of ledger assets. He knew this to be UNI
true.
Charles F. Preller, auditor of the Mutual,
testified that he received the quarterly re-
ports OF these profits from the treasurer
and said it was the custom to credit profits
and charge losses on securities TO the profit
ard loss account.
1t WAS the custom TO reduce the book
values Of real estate and charge the re-
duction to profit and loss by instruction OF
the president or vice president. The figures
of the net profit were annually submitted
TO the president vice president, VINO
would instruct what adjustment of the ac-
counts should be made and what amounts
Should be debited to the profit and loss ar-
count by reason of the reduction of the
book value of real estate. In 1904 there
was a net profit from the sale of securities
of 81, 03G.4lo. and at the end of the year.
by adjustment, there was charged OF
81 0i7 IDS, so that when the account was
closed there was no profit shown from the
sale of securities, the book value, of real
estate being reduced, so that all. profit was
offset
A number of the reports of net credit to
profit and loss by the sale of securities OF
other years were inquired into by Mr..
Hughes.
Superintendent Hendricks and Chief Ex-
aminer Vanderpoel of the insurance depart
ment testified yesterday that they had never
heard that the profits of the Mutual Life
Were greater than reported, and that the
profits had been used to conceal losses. This
line of inquiry was taken today to bring out
how this manipulation of figures was
rted out.
Results of Entries.
After lengthy analysis of the reports
Mr.. Preller was asked by Mr.. Hughes:
THE net result of these entries and
transactions was that the profits from the
sale of securities was used to keep down
the book value of real estate, wasn't it?''
Yes. SIR" Mr. Preller replied.
Mr.. Vanderpoel resumed the stand to con-
tinue his testimony that was interrupted by
adjournment yesterday. He said he had
examined the profit and loss account of the
Mutual Life and was acquainted with what
Mr.. Preller had testified to.
why did you not report it to the super
intendent?" asked Mr. Hughes.
Il didn't think it necessary to do so,
the witness replied.
You have examined the report of 190i?'
Il have"
And you observe there is profit from
the sale OF ledger assets?
Il do"
And you knew that was untrue, didn't
you?"
Witness asked permission to make a
statement. but upon Mr.. Hughes pressing
the question he answered that he did know
it was untrue. He added that the pro-
cedure of the Mutual Life was conceal
ment of profits and losses. He said the
same procedure was carried on by other
companies, although the practice was not
general He specifically mentioned the
New York Life as one of the companies
which made similar reports.
Agents Balances.
In 1901, Mr. Vanderpoel said, the New
York Life charged off agents balances and
reduced real estate values out of the profits
from the sale of stock of the New York Sc
curity Company.
What did you do about that%' Mr.
Hughes asked.
Nothing" replied the witness.
He said he never went back of the ledgers,
and IL was not his custom to examine the
correspondence in connection with ledger
entries to ascertain il they are correctly en-
tered
In looking over the Hanover Bank &C.
count did you find 100000 paid to Andrew
Hamilton in 1902" asked Mr. Hughes
Il did not
Mr.. Vanderpoel said that in a report on
the Mutual reserve in 1899 ne criticised the
company. The company objected to these
criticisms, and when the report was pub-
lished the Objectionable portion had been
eliminated. Louis F. Payne was superin-
tendent of insurance in 1899
Mr.. Nanderpoel said the superintendent
or insurance has the right to eliminate any
thing from a report, but he did not know
OF another case where any of his reports
had been expunged
Mr. Nanderpoel gave way temporarily to
charles Gretsinger, assistant auditor of
the Mutual Life, who produced the original
instructions for the figures in the reduction
oi the BOOK value of real estate. These
We're signed by Richard A McCurdy, the
former president of the company
according to the instructions produced by
Mr.. Gretsinger, the book value of the real
estate holdings of the Mutual Life in all
cities in the United States and abroad.
amounting to about s33 900 OOo, were re-
auced by the sum of 100000 up to June
80 OF this year.