The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1905-09-13
FRAUD ADMITTED
Evidence Showing How Life Insurance
Funds Are Juggled.

New York, Sept. 13.-SeIling $780,
500 in bonds one day and buying them
back the next except one. a holiday
Intervening, in order to keep within
statements made in the New York Life
Insurance company'S report to the
superintendent of insurance, was the
sensational disclosure made at yester-
days session of the legislative insur-
ance investigating committee. The
TACT was drawn from Edmund D. Ran
dolph, treasurer of the New York Life
Insurance company, late in the day,
after Attorney Charles E. Hughes of
counsel to the committee, had labored
for more than an hour to get direct
answer from Mr.. Randolph to a direct
question
The inquiry had dragged through
mass of figures during almost the en-
tire day, but it was not until the hour
Tor ending the session that the Sensa-
EionaI feature was brought out.
Earlier in the day, Mr.. Randolph
had handed Mr.. Hughes a schedule of
syndicate undertakings and transac-
lions of the New York Life for the last
ten years. This statement was to
show, and a foot note to the schedule
50 stated, that the company had par
fioipated in no syndicate transactions
that had been closed out with a loss.
Among these syndicate transactions
was the underwriting of the Navigation
syndicate, or International Mercantile
Marine.
Mr.. Hughes drew from the witness
that there was an aggregate of $4,000,
600 the New York Life paid ]. P. Nor
9an & Co., on this Joint account Mr..
Hughes then took I'D sales item
dated December 81 1903, of $500. 600
OF International Mercantile Marine
stock. Mr.. Randolph, replying to Mr..
Hughes, said this sale was made to ].
p. Morgan & Co. and that a purchase
Of 100000 was made January 2, 1904,
from T Morgan r Co
After failing for some time to get
direct answer Mr.. Hughes finally
asked Mr.. Randolph:
''As a matter of fact, there was a
report to the superintendent of insur-
ance on December 81. 1882"
s'Then, the sole purpose of the
transaction was that you might be
able to tell the superintendent of in
surance you held only $3,2O0,0O0 of
International Mercantile Marine
shares?"
The witness hesitated and tried to
evade a direct answer, but Mr.. Hughes
repeated the question, until finally Mr..
Randolph said:
81 yes
There was a momentary hush, fol-
lowed by a murmur of suppressed eX-
eitement.
Following up the Navigation syndi-
cate transaction, Mr.. Hughes referred
70 an item on the schedule of syndi-
cate transactions under date of De-
-cember 80, 1904, by which 100000 of
bonds were sold to ]. S. Morgan & Co.,
of London. for $72O,0oO- Mr.. Ran
dolph admitted that this was an out
right sale, and the loss of $4,000 was
charged off to the profit and loss ac-
count. Mr.. Hughes left the point and
took up an association known as
s7Tylic' with the New York Life In
surance. He got from the witness the
admission that, on April II, 1904, a
sale of $4,000 stock to "Nylic' was
made.
The usefulness of the New York
Security and Trust company to the
New York Life came out when it was
testified that. while the insurance
company was not taking collateral
loans, it made a practice of lending
ats money to the trust company, which
made the collateral loans.
Mr.. Hughes took up the accounts of
York Security and Trust company in
1909 which was called account No 4.
IL ran from $6,750,000 in May and
Tune up to 1851, 900 in September,
December.
';Now.'' said Mr.. Hughes, ''why did
you reduce the amount deposited with
the New York Security and Trust
and keep it at that even figure to the
end of the year; your balance at the
Beginning Of 1904 was 100000
Mr. Randolph professed Ignorance.
every transaction and interrupted
again and again.
Mr.. Hughes begged the witness to
refrain from general conversation
and repeated the question.
Mr.. Randolph finally said:
There was question at this time
eVhether our relations would continue with
Fhe company. The consolidation of the
New York Security and Trust company
4as taking place at this time
s'9Gow, prior to the end of 1901 the trus-
sses of the New York Security and Trust
Company held 5.005 shares, that is ma
5ority of the 10000 shares?"
..eWeil. in March, 1904, when the tota
S00oO shares, were the holdings of the trus
tees increased?'
No"
Witness was then led through the change
az the name of the trust company and ad
soitted the three accounts with the ole
tth the new one. When the money was
Withdrawn from the New York Security
md Trust company it was deposited witt
40 First National bank. This admission
Is elected from the witness after mucf
esSure.
s7arious banks where the insurance com
pany had deposits, Mr.. Randolph said al
~ the banks paid per cent except the
sank of Montreal, which paid 21z per cent
IN discussing the syndicate to handle the
new Orleans railroad securities which
aoIph referred to a receivership being ap
75olnted, which was unforeseen by the New
ork Life when the securities were takeT
- witness also said that some parties
RI the company who had expected to jon