Deseret evening news. [volume] (Great Salt Lake City [Utah]) 1867-1920, 1909-12-07
Investigation for Irregularities
May Show impairment of Sur
plus to Amount of a Million.
PRIEST. SHELDON INVOLVED.
said TO Have ovcrtrawn His Salary
And UnIoadcd Doubtful Securl-
ties on the Concern.

View York, Dec. 6.-Thc Phenix In
surance company of Brooklyn Is under
investigation for Irregularities. which
arc believed to have impaired its sur
plus at least 81 100000 and to have re-
suited in grounds for possible criminal
action.
Supt. Hotchlkiss OF the state depart
mcnt today laid the matter before the
district attorney.
1t is charged the president has over
drawn his salary; that he has unloaded
doubtful securities on the company,
and that he has used the company's
assets as collateral to secure his own
private speculative accounts. Nor do
the directors escape censure.
In a formal statement issued tonight
Supt Hotchkiss does not believe the
capital of the company is impaired,
and thus far there is no evidence that
its securities are not intact, but he
admits that the present investigation
is still uncomplcted.
George P. Sheldon, a member of
many clubs and chairman of the laws
and legal committee of the National
Board of Fire Underwriters, has been
president of the PhcniX since 1887.
and it is charged that under his admin
istration annual reports Of the COM
pany made to the insurance depart
ment in 10 years. and probably longer,
are false in more than one particular.
NO EXAMINATIONS.
Under the law the insurance depart
ment is required to examine all life
insurance companies at least once in
every three years. Mr.. Hotchkiss ad-
vocates an increase in the examining
force. that insurance companies other
than life insurance companies may be
examined at least once every five years
Mr. Hotchkiss says the PheniN COM
pany, which Is a fire concern, had not
been examined for nearly % years.
The insurance department alleges
that 1t finds the questionable securities
originally sold to the company by Mr..
Sheldon have, year after year. passed
through wash sales, and, by this
method, have been concealed in the an
nual report Speculative accounts have
been maintained by President Sheldon
according to Mr.. Hotchklss. in at least
one brokerage house, and the assets
of the PheniX have been put up as coll
lateral to cover his operations. 1t Is
charged, also, that for several years
the presidents salary account has been
oYerdrawn. and now Is paid up in full
10 Oct. l, 1910.
In the last IL years, it Is alleged,
members of the state insurance depart
ment whose duty it was to supervise
the company have accepted collateral
loans from 1t, made to them by Presi-
dent Sheldon. in amounts varying from
$4,000 to $4,000.
The Phcnix Insurance company of
Brooklyn does a fire risk business, is
Incorporated for $1,500.000 and is cred
tied with surplus of S1,O10.453 Di-
rectors arc George 2. Sheldon, Frank
j. Logan. William ]. Logan, joan
Cartledge. George NJ. Hard. Edward c.
Converse. George Ingraham, Benedict
l.. Greenhul and Charles F. Coster.
DIRECTORS RESPONSIBLE.
Mr.. Hotchlxiss says that, in the judg-
ment Of the insurance department. d.
rectors who have permitted President
Sheldon to do as he has done arc
equally responsible to the public 1t
might be said that the Phenix Insur-
ance company was really George P.
Sheldon, and that the directors have
seemingly never objected to his opera
tions
Among the loans to officers of the IN
surance department specified are the
following:
To James Pierce. In the period he was
state superintendent of insurance, loans
aggregating s3s, 500.