Los Angeles herald., 1909-12-07
INSURANCE co.
CHARGED WITH
IRREGULARITIES
PHOENIX CONCERNS SURPLUS
IS IMPAIRED
PRESIDENT ACCUSED OF OVER
DRAWING SALARY
Head of Fire Protection Enterprise
Said to Have Loaned Funds of
Company to the Members
of State Department
ASSOCIATED Pressl

ASSOCIATED Pressl
NEW YORK, Dec. 6.-Fhe Phoenix
Insurance company of Brooklyn is un-
der investigation for Irregularities.
which are believed to have impaired
its surplus at least $1,000,000 and to
have resulted in grounds for possible
criminal action. superintendent Hotch-
kiss of the state department today
laid the matter before the district at
torney.
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 $
assets as collateral to secure his own
private speculative accounts. Nor do
the directors escape censure
In a formal statement issued tonight
superintendent Hotchkiss says he does
not believe the capital of the company
is impaired and thus far there is no
evidence that its securities are not in
tact, but he admits the present inves-
tigation is still uncompleted.
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 Phenix since 1887. and
it is charged that under his admin
istration annual reports of the COM
pany made to the insurance depart
ment during ten years and probably
longer, are false in more than one par
ticular.
Not Legally Examined
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 so that insurance companies
OIL ning he
amined at least once every five years.
Mr.. Hotchkiss says the Phenix COM
pany, which is a fire concern, had not
been examined for nearly twenty-five
years.
The insprance department alleges 1t
finds the questionable securities orig
inally sold to the company by Mr. Shell
don have. year after year, passed
through wash" sales and by this
method have been concealed in the
annual report. Speculative accounts
have been maintained by President
Sheldon, according to Mr.. Hotchkiss,
in at least one brokerage house and the
assets of the PhenlX have been put
up as collateral to cover his opera
tions 1t is charged that for several
years the presidents salary account
has been overdrawn and now is paid
up in full to October 1, 1910.
In the last seventeen years, 1t is al
legged, members of the state insurance
department whose duty 1t was to super
wise the company have accepted col
lateral loans from it made to them
by President Sheldon in amounts vary
ing from 100000 to 100000.
Does Fire Insurance Business
The Phoenix Insurance company of
Brooklyn does a fire risk business, is
incorporated for S,50OOO0 and is credit
ed with, a surplus of $l,10l,45 The
directors are George p. Sheldon, Frank
J. Logan, William J. Logan, John Cart
ledge George NJ. Hard, Edward e. Con-
verse. George Ingraham, Benedict L.
Greenhut and Charles II. Coster.
Mr.. Hotchkiss says in the judgment
of the insurance department directors
who have permitted President Sheldon
to do as he has done are equally re-
sponsible.
1t might be said that the Phoenix In
surance company was really George
P. Sheldon to all appearances, and that
the directors have seemingly never OBJ |
jected to his operations.
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, |
$500.
To Isaac Vanderpool in the period he |
was chief examiner of insurance COM
paines loans aggregating 100000.
To Robert II. Hunter in the period |
he was first deputy superintendent of
insurance, loans aggregating $60,040.
To william II. Buckley In the period |
he was third deputy superintendent of |
insurance, loans aggregating $61,000.
1t was announced tonight that at a |
meeting of the board of directors to- |
day President Sheldon was removed |
from Office and that w. r. Gray, for
merly auditor of the Continental In
surance company, was elected presi-
dent