New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1909-12-07
PHENlX ms. co.
HEAD REMOVED
SHELDON VERY ILL.
CH4RGES M4DE.
Million Loss Through Misman-
Ggement, Superintendent
Says-JerOme Told.

In q scathing indictment Of George p.
sheldon. president until yesterday OF the
Phenix Insurance Company OF Brooklyn.
Superintendent Hotchkiss of the State
Insurance Department made public last
nieht a statement OF the affairs Of that
company. together with the declaration
that he had laid the facts before Dis
trict Attorney jerome.
Though the investigation OF the Phenlx
has not been completed. Superintendent
Hotchldss said last night that it had
already shown the existence of such con-
ditions as seemed TO require action by
the criminal authorities.
With an indicated capital Of Sl.5o0.oo0
and a surplus Of Sl.0oo000. Superin-
tendent Hotchkiss said a charge-off OF
about 81 0000o0 probably would be suffi-
cient 20 balance the losses due TO the
transactions and operations of Sheldon.
FALSE REPORTS MADE.
False reports TO the Insurance Depart
meut. wash sales" put through 10 cover
questionable assets at the time of the
annual report. a speculative margin ac-
count maintained 10y President Shel1on
IN the name OF the company, using ths
assets of the company as collateral.
drafts drawn b. him as president and
converted to his own use. and loans
made by the company TO Sheldon and II
charles =. Roster. the secretary. are
few of The definite charges made by SUI
pcrintendeut Hotchkiss.
The directors who have permitted him
tsheldonb To do as he has done" said
Superintendent Hotrhkiss. ARE. in the
Judgment OF the Insurance Department.
equally responsible TO the public for
tho ucts which hc has committed"
Tor twenty-five years the Phenix In
surance Company Of Brooklyn, has not
been examined until the beginning Of
ths present examination. started in Oc-
Jobor. and in connection with this
Superintendent Hotchkiss cited the
names Of four former officials OF the
state Insurance Department whose
names appeared on the books OF the
company as large borrowers.
Comment on the facts concerning
these loans. taken in conjunction with
the twenty-five years Of non-eNamina-
1ion. is unnecessary" said Mr.. Hotch-
Kiss
SHELDON AT DEATHS DOOR.
Meanwhile George p. sheldon. the man
who, Superintendent Hotchkiss says. Is
20 be chiefly blamed for the company's
condition, is lying AT the point Of death
'n his summer home at the Naples,
Greenwich. Conn. lie is delirious, and
for the last week his friends have given
up hope of his recovery. PtOmaine
poisoning. developed into dropsy. is the
cause given. and yesterday three doc
tors were in consultation at his bedside.
in brief, this company. apparently
with the consent Of its directors. past
and present. has been Tor years a one
man institution" says the State Super
iutendeut. in lS93 the books show that
tho directors passed a resolution per
miitiug the president TO pledge the COM
uauy's securities for loans TO the COM
PAM. and though they or their success
scrs must have been made aware that
this power vested in him led, from time
10 time 10 considerable losses, such
resolution was not rescinded until the
brought 90 tho attention Of the present
directors by the Insurance Department"
LOANS WITHOUT AUTHORITY.
without specific authority from the di-
roctors go lend The company's funds. the
statement says. Sheldon made large col
lateral loans. and reported them To the
executive committee only by TIE figures
representing The footings Of the loans.
1hr members Of the committee ou
finance and loans. which alone has the
power TO lend the company's money, did
NOT even know they were on the COM
mttee
The following statements were war
rauted by The discoveries thus far made
IN The examination. said Superintendent
Uoychkias:
Flrst-Tbat each of the annual reports
mace to the New York Insurance Depart
iI'uI during a. least the last ten wears.
sIa probably FOR longer period, H. false
a. more tnan one particular.
winch PRESIDENT sheldon did not wish 10
report because % their uestiunabl- value,
4 particular. certain assris which he orig
lnaIt sold 10 the company. have, year by
t"sr, a. annual statement time-tilat Is,
lecemheT 5l-passec through what H. des
iruatcd hN one of the directors as wash
sales. with the result that, instead of
sucI securities being reported az assets,
other securities Of approximately the same
value as the questionable securities have
appeared therein.
TMHd-That. acting under the authority
az fle resolution above mentioned. Presi-
cent Sheldon has for wears main; aimed in
g. least one brokerage house speculative.
margin account IN the name uf the com
laUE. using the assets - the company as
collateral 10 bis operations in sucl ac-
count.
Fourth-T That drafts on such brokerage
account. drawn by him a. president. have
been converted 20 his own personal use.
fhe aggregate of such drafts being a con-
EidCrabl. amount.
INSURANCE LAW VIOLATED.
FIfth. That section l6 of the insurance
law has been violated by reason of the
fart that loans nave been made by this
company since the amendatory ACT OF 1896
10 both President SHELDON and Secretary
Eoster. Tho aggregate of such loans 20
President Sheldon during the leTi0d is
upwards of SlS6D0, and 10 M. Kosier
40.
al.