The Paducah evening sun. [volume] (Paducah, Ky.) 1906-1929, 1909-12-07
NBW SCANDAL
In INSURANCE
COMPANY'S ASSETS USED TO SE-
CURE OWN SPECULATION.
Insurance Superintendent Hotchkiss
Declares President Has Over
drawn His salary.
HOLDS DOUBTFUL SECURITIES

New York. Dec. THE Phoeni,
Insurance company, of Brooklyn, II
under investigation for irregulari
dies, which, II is believed, have i'm.
paired its surplus at least $1,000.
GOO. A statement concerning the
conditions was laid by Superintend.
ent Hotchkiss of the state insurance
department, before the district attor-
ney today for possible criminal ac-
ton. IL Is charged that the presi-
dent has oyerdrawn his salary. thH
he has uploadcd doubtful securities
on the company and that he has used
the companys assets as collateral to
secure his own personal specializing
accounts. The directors come in for
share OF consure.
In a formal statement issued last
night, Mr.. iIotchkiss says he does
not believe the capital OF the com
pany is Impaired. and that thus far
there Is no evidence that its securi-
ties are not intact. but he admits
that the presen investigation is I'M
finished.
George p. Sheldon. member of
many clubs. and who, as chairman
OF the laws and legal committee OF
the national board of FIRE underwrit-
ers. is recognized as one of the best
known Insurance men In the coun-
try, has been president of the Phoe-
nix Insurance company since 1887.
II is charged that under his adj
ministration the annual reports OF
the company made to the insurance
department during at least the last
ten years, and probably longer. are
false In more than one particular.
Under the law the insurance de-
partment IL required to examine into
the condition of all life insurance
companies at least once In every
three years, but IL has not been ex-
amined for nearly twenty-five years.
or since Mr.. sheldon became presi-
dent.
The Insurance department alleges
that II finds that questionable Sc
curities originally sold TO the com
pany by Mr.. sheldon. have. year by
year, passed through wash sales. 9"
aud by this method have been con-
ccaled In the annual report specu-
iauve accounts have been maintained
by President Sheldon. according to
Mr.. Hotghkiss. In at least one brok-
orago house. and the assets of the
Phoenix have been put up as collat-
eral to cover his operations. II Is
charged also that for several years
the presidents salary account has
been Overdrawn. and now Is paid up
IN full to October /. 1910.
Takes Fire Risks.
During the past seventeen years II
~ alleged that members of the state
insurance department. whose duty Il
was to supervise the company. have
accepted collateral loans from il.
made TO them by President sheldon.
In amounts varying from $4,000 to
sl0O. 600.
The Phoenix Insurance company
ofiBrooklyn does n fire risk business.
Is Incorporated for S1.5O0,O0O, and
Is credited with a surplus of SI,1OI,-
453. The directors are George p.
Sheldon, Frank J. Logan, WIN. J.
Logan, John Cartlodge. George NJ.
Bard, Edward c. Converse. George
ingraham, Benedict l.. Greenhut and
Charles s. Coster
Mr.. Hotchkss says that In the
judgment OF the insurance depart
ment, the directors, who have per-
mitted him president Sheldon) to
do as he has done, are equally re-
sponsible to the public for the acts
committed. II might be said that the
Phoenix Insurance company was re-
ally George r. Sheldon and that the
directors have seemingly never OBJ
tccted to his operations"
Loans Are Specified.
Among the loans 20 officers OF the
Insurance department, specified are
the following:
To James +. Pierce. while he was
state superintendent of insurance,
loans of S39,5OO.
To Isaac Vanderpool, while he was
chief examiner of insurance compa-
MES. loans of 100000.
To Robert IL Hunter, while first
deputy superintendent of insurance,
loans of S6O.0f0.77.
To William II. Buckley, while
third deputy superintendent of in
surance. loans aggregating 1000.
II was announced last night that
at a meeting of the board of direct
ors held yesterday. President Shell
don was removed from office and
thHt in his stead. Il. w. T. Gray. for
merly auditor OF the Continental In
surance company was elected presl-
dent.
Hob0es Refuge In City Hall.