New-York tribune., 1905-12-23
STOCK GAINS HIDDEN.
uITTU4L'S DOUBLE BOOKS.
Many More OUersights by Insurance
Department Sho1cn.

evidences Of apparent lack of vigilance the
part OF the department 1t also had brief visit
rom a former superintendent Lou Payn who
promised 10 return and testify Wednesday.
when the committee meets again. Mr.. Payn wiT
he asked whether he received $4,000 for permitting
G beneficial change In the report of his examiner
on the Mutual Reserve, a has charged. He
will also be asked about the activity under his
regime OF William II. Buckley. the missing legis-
iative agent OF insurance companies. Mr.. Payns
testimony is believed 10 promise many surprising
statenents
The most amazing disclosure OF yesterday was
that affecting the methods employed by the Mu-
tual Life 10 conceal gains in stock and security
specuations. The same method also concealed its
losses. BY a system Of Juggling. which in case.
ct least, bore the authorization of mo Pt'-that
IS McCurdy, President-a system of bookkeeping
was employed which submitted to the State
department and false. while the company had fits
own secret method The department failed to in
teTfere with the false method. although 1t seems
that at times, as Chief Examiner vanderpoel tes-
tiled officials including himself. recognized its
istence.
There were other curious oversights and under
sights Of the department In 1898 there
plain suppression of recommendation OF the ex-
srniner in the of the Mutual Reserve which
was explained beyond the admission Of
Deputy Superintendent Appleton that had there
been no change there would have been Mutual
Reserve" There a curious deal in the stock
Of the Lawyers Title Insurance Company. for the
benefit of various officers of the Mutual. that
created surprise. An officer of this company testi
fed 1000 shares OF this security had been made
TO him at ground floor prices. and apportioned
among the officers J. n. Jarvie A D. JuillarG G.
6. Haven. R. A Grannis. A Iselin, Frederic Cron-
well. and of course. President McCurdy. were
served with helpings from this pudding"
JUGGLING OF ACCOUNTS.
The Juggling in real estate and security accounts
was the most striking example of life insurance
bookkeeping that has yet been adduced- The last
rrestidigtation involving $5oOo0o, was made after
the insurance agitation had begun late last June.
& few weeks before the committee was appointed
and WAS clearly attempt to cast an anchor 10
tie windward- The method employed in all these
adjustments" simple in the extreme 1t con-
sisted In marking down real estate values through
the medium of ina gnary depreciations, and charg-
ing the depreciation the profit and loss account
nQuidating the actual gains In sales of secur1
ties Then & report made TO the State Super1n-
tsndent that there had been gain from sale OF
securities.
Every year, after the security account had been
made out, the auditor of the Mutual would bring
the result to President McCurdy. who would direct
the reduction Of the value of real estate by this
amount would be charged of on profit and loss,
and thus the real value OF the property and the
gain in sales of securities both concealed
There had been aggregate gain OF sl250,on from
security sales in the last ten years which had not
been reported. but merely charged of, through
adjustment The profits for security sales in
the present year had been s2,000000, but this
tate which g 10000 had been taken off the New
York City property nearly s1.0o0.0o0 from the
Philadelphia property. The effect OF these adjust
merits of securities wiped
out and the amount carried TO the credit OF real
estate.
Having established these interesting facts, Mr.
Hughes put Mr.. vanderpoel the stand and
forced him TO admit that he of these pro
ceedings, had neither reported them insisted
upon a revelation of them He admitted he had
for-= So The
balances reported were correct. he said he had
not troubled with further investigation.
Turning to the New-York Life Mr. Hughes
minded Mr. Vanderpoel of similar situation in
this company which had supplied Mr.. Perkins
with the $4,000 paid to Andrew Hamilton by J. P.
Morgan & Co. MI Vanderpoel familiar with
the that the profit in the sale Of the New-York
Security and Trust Company stock had not been
reported, but did not find the payment to Andrew
Hamilton He went tc Paris and checked the
books there. but satisfied when he found the
balance there was the as the local report
showed
MUTUAL RESERVE REPORT
The elimination OF a recommendation by Mr..
vanderpoel in his report on the Mutual Reserve
interested Mr.. Hughes, but, despite the serious
charges against this company, the department had
not taken any stringent means of probing Deputy
Hunter had received the charges and wrote letter
IN reply. The department refused to go behind the
books which he examined The payment of SlO9"9
cigar dealer. friend Of Nj Burnham, presi-
dent of the Mutual Reserve, was not discovered
A similar disposition seemed to have been made OF
The charges of extravaganza and msmanagement
made by Thomas H. Bowles against the Mutual
The examination conducted thereafter was. by d.
rection. merely for solvency-
Edward W Coggesha1l, president OF the Lawyers
Title Insurance Company. testified to the issue OF
stock and the sale Of $500 shares the under
standing that 100 to go to the Mutual life
Richard A McCeIrdy conducted the transaction and
agreed 70 accept the the allotment. The stock was
issued to N B. Putnam jr. and allotted to individ-
whose names have been mentioned above The
people IN this deal. the witness agreed. Were let
shares went to the Equitable, again officers in
dyidually, although intended for the company An
increase of stock later on was shared by tne
( D Putnam jr. bond clerk of the Guarantee
] 900 Mutual shares. which we're made out In his
name and paid for by is e0mPany onndny CON
frmed the George H. Squire TRANSACTION, deG@larlng @
bsf ven ent to te Eaxitabie and the remainder was
divided J. ". Alexander Louis Fitzgerald, L ~
shsres epece eed n 4 Mefntyre Annie m yGe and
Mary Jordan. 80 apiece; ]. H Latham, 80; X Al.
when on the stand svore ne never received any:
This is another of the interesting contradictions or
put in to show he received more shares on the in
crease. After much juggling the eHoehce 1 llui- a
Gated this sold to the Equitable at large az
Mr. APPLETON ON STAND.
Henry D. Appieton second deputy superintendent
Of the Insurance Department, was the next wit
ness He admitted that he had been with the de-
partnent since 1888 and that subject TO the Su-
perintendent ne was in charge of the Office he
testified 10 no great purpose for some time ana
dually declared that the New-York office worked
IN harmony with the Albany ofhce' the answer re-
lating to an examination Of the Washington Life
IN this instance" commented Mr.. Hughes.
haru