New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-04-10
UPHOLD Mr.. CARMODY
Bio Realty Men Commend View
as to Fake Companies.
HOPE TO STAMP THEM OUT
Cav Much Good Would Result if
Banking Department
Got Supervision.

,,r,,-i0ert real estate men and representa-
80 ~ some Of the large title guarantee
-,,,ri.s were enthusiastic Yesterday in
.,.,srdattou ~ the recent opinion Of At
-. General Carmodv that the banking
"a, ea,a the mower 20 the state Superin-
,.,dent Of Banks TO examine and super
lee the so-called real estate companies
.t.h offer Investments I'm bonds supposed
- 10 secured by equities in improved le-
,rv n was the general opinion that any
r,rt.iir,ont ~ the operations Of these com
..,ies would he blessing TO the COM
,,rit, and increase the business Of legiti-
,,at. dealers in such investments.
Nan, prospective investors in real estate
-.ortsagee and bonds have been led to put
,tsir money into the paper Of these so
Lied real estate companies through the
,.6pc,ive literature they issue broadcast
a. saetirc business. only TO find that the
al. NJ interest guaranteed on their in
,as,mert was not forthcoming and that
,herc was uc equity i'm the property On
which the bonds were secured. Even the
ls,terpclJs of some OF THESE companies
we're printed ~ correspond as nearly as
,,ssible 10 those OF the large title and
Guarantee companies II was said, in or
der In secure prestige with the investor.
Tho postofice authorities have recently
,oyestigatcd several cases where bonds
ware offered for sale. alleged 20 be secured
nv equities in real estate. and found that
No such equities really existed. The federal
authorities have begun prosecutions In
some cases or the ground that the mails
oil hN ~
ment companies.
There was some doubt expressed how
ever. as to whether the Attorney General s
Interpretation of the banking law would
hold in bringing such companies under the
jurisdiction Of the Banking Department.
An officer of one of the large title guarantee
companies was of the opinion mat the
ATTORNEY General had stretched the point
In Interpreting the banking law and that
his decision was likely 10 be reversed IN
the courts. 1t was all a matter # con-
STRUNG the definition of a mortgage, loan
or investment company, as set forth in
Section > of the banking law. this man said,
and in his opinion the companies which
we're sought to be controlled by the Bank
ing Department did not come within the
definition. He said. however that il would
he a good thing if the assets of such com
panies had to come under the scrutiny of
the Banking Department.
In many instances all you have = show
for the bonds issued by these companies,
he said. lis a more or less visionary claim
against an alleged equity. II il turns out
that the Banking Department has the
authority TO examine the assets Of these
companies there is no doubt that hundreds
Of them will be put out Of business
A fayorite method Of operation of the
so-cailed real estate companies, it was ex-
planned was to buy property hold 1t for
a year and then issue bonds against an
estimated increase in the value Of the
property. The increase in value" Usually
was entirely unwarranted and purely fc-
titious, it was said.