New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-05-29
Firm Kept No Records of
Final Disposition of
Customers Cash.
STOCK PLEDGED IN
HAPHAZARD WAY
Thousands Melted Away in Few
Months-Partners Got Big
Sums for Expenses.

Two hundred and fifty thousand dol
lars worth of customers money gone
and nobody able to say where it went
to-such is the history. for the past few
months. of the brokerage firm of Stop
mani and Htchkin, of s. Broadway. In
solvent since May Is.
The company books record the receipt
NJ the money. but they don't record
what was done with it. Joseph III. Stop
mani head OF the firm, doesn't know.
Neitb does his partner, Walter Il.
Hotchkin. who Is at present colonel OF
the 22d Engineers, y. G. y. \. And
Frank II. Maloncy. office manager,
cashier and Stoppanis brother-in-law,
saws that though every transaction oil
the firm passed through his hands,
he. too. is ignorant OF what became oil
tho cash.
The customers, however. mean to md
out and attorneys from all over me
state represented them at the investiSa-
zion into the company AFFAIRS, held AT
a Exchange place yesterday. Leon
Iauterstein, who conducted the hearing,
got Stoppani TO admit that 1t was inc
custom OF the firm to pledge the STOCK
Of its customers as security for loans
obtained from the banks. Stoppani
added that he kept no receipts for tho
stock pledged.
This use OF the stock, according to
Stoppani, was made without the con-
sent of the owners-often without their
knowledge about it, He denied any
knowledge Of "bucketing,' either by
himself or anyone connected with the
firm.
Pressed more closely, he admitted that
the members of the firm ran an account
of their own for speculative purposes
but ne couldn't say whether they mad
made or lost money by it. This account
was known as No %. and Maloney, the
cashier. denied all knowledge of i.
stoppani said that he drew from the
firm an average of 5000 year for MS
uersonal use. and Colonel Hotchkin. his
partner. admitted drawing approximate
Is $4,000 a year. Hotchkin testified tnat
he knew little or nothing about the COM
pany books. never examining them and
trusting everything to the senior men,
ber
II invested no money in the firm he
said. my contribution was age and ex-
perience."
In the afternoon session Maloney con-
IA han testified that
he was not familiar with all transactions
Of the firm Every transaction was re-
ferred to Stoppani" he said.
al didn't know stocks were being
nledged for amounts in excess OF those
owed to the firm by the customers. l
felt it was none OF my business"
"You never inquired whether or no they
had given their consent TO such action?
NO"
"What we're the firms expenses?
81 think $500 day; about S125,O0e
year.
Maloney then said that the s25o,Ooo
liabilities represented cash from custom
ers. with which the firm had been eX-
pected to buy stock. but that though nc
had been cashier he could not account
for its disappearance. lie suggested,
however, that the stock owing to custom
ers might not yet have been delivered.
els there no means by which Gus
toner can tell wheer his stoc,, is or where
il was at a particular time?' asked
Lauterstein.
"None that l know Of
Here the witness corroborated stop
mani. regarding collateral pledged with
hanks for loans, the only record being
made was on small slips Of paper which
were later turned over to the banks. lie
thought the banks used the slips only as
temporary memorandum, later TO be de-
stroyed
The assets Of the firm now in posses
sion of the assignee consist Of a batch G
worthless securities, Office furniture with
$500. 500 secured from out-of-town
banks. a membership on the ChcaSo
Board OF Trade, an old automobile and an
/ interest in small piece OF property
They will total less than $4,000.
b Hearing will eb resumed on THURSDAY
at o'clock.
D