The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-10-06
$29O,315 MADE
BY TRAVIS BROKER
Judson Did Not Have to Put
Up q Cent Of His Own
Money Either.
JOHN DOE INQUIRY ON
Since 1917 Favored Operator
Sold State $14,854, 900
of Securities.
JOHN DOE INQUIRY ON

The first session yesterday of John
Doe inquiry into the manner In which
; the Office Of Eugene M. Travis, State
! Comptroller. has been buying mu-
| nicipal bonds as an investment for the
State sinking fund disclosed that AL
bert L. Judson, one of the brokers al
| legged to have been favored by the
office and through whom purchases
were made habitually, made profit of
! s290,315.65 on sales to the State of
four lots Of bonds. par value Of which
was $10.55S,000, without having to in
vest cent Of his own money in the
| transaction.
Other sales were mentioned in the
| testimony indicating that since jan
uary, 1917. Judson has sold to the
| State bonds to the par value of S14,-
| $4,000. at a cost to the State slightly
below par. In the four transactions
where the total par value reached $780,
$4,000, the State paid s10.534 .265.26.
testimony disclosed. but the price paid
Judson for tho other bonds has not
yet been brought out. From the testi-
| mony Of several witnesses, however, 1t
developed that Judson bought the $14,-
| $4,000 worth Of bonds just before he
| sold them to the State at approx
mately 100000 less than their par
value.
| Judson, It developed, bought the bonds
| from large organizations, principally ths
bond department of the Guaranty Trust
Company, which Is now the Guaranty
Company of New York. and the National
City Company. He would order so many
1 J11ia te, ~ rtat,, frrv,a
| of municipal bonds to be delivered to
his account at the Metropolitan Trust
Company, 60 Wall street. and as 1t was
more or less understood that he was
acting for the State Comptroller's office
| the Guaranty and National City com :.
pan!es did not demand he make a part
payment of such immense purchases or
put up anything as collatera security
until the complete payment was made.
How Judson Got His Profit.
The trust company would forward a
check for the amount of the purchase to
the bond companies and charge the sum
against Judson's account A few days
later the trust company would receive
State Treasurer's warrant, payable to
Judson's account. In exchange for the
bonds held in Judson's name. The diff
ference between the check sent the bond
companies and the check receivd from
the State Treasurer remained in Jud-
sons account and was his profit.
Charges that the State had been los
ing money by purchasing its bonds In
that fashion were made first last June
by the Brooklyn Times, when faction
of the Republican party in that borough
was opposing the denomination of Travis.
The accusations were brought up again
recently by Democratic opponents of
James A. Wendell, at present Deputy
Comptroller and Republican nominee
for the Office of Comptroller. Acting
upon the reports. District Attorney
Swami, Democrat, brought about the
John Doe inquiry, which Is being con-
Quoted in the Criminal Courts Building
by Chief Justice Frederic Kernochan of
Special Sessions. acting as a Magistrate.
George q. Medalie of counsel for
Comptroller Travis was present during
the first session and commented on the
fair way in which he said Ferdinand
Pecora, Assistant District Attorney, was
presenting the evidence.
I'VE used Judson to buy bonds for the
sinking fund because he is expert at that
sort of thing" Mr.. Medalie said when
the hearing adjourned. He has had
long experience in the stock and bond
market. and has done the same sort OF
thing for other Comptrollers preceding
Mr.. Travis.
II presume Judson watches to see
that the State is In funds then he gets
his blocks of stock together and puts
over a deal. We knew he was g
shrewd buyer. and now it appears he
is a shrewd seller. too. The worst
thing. however. that has developed
against the State Comptrollers office
so far is that there has been possible
overpayment for bonds but certainly
no crime; and crime. as Justice Ker-
nochan said, is what a John Doe In
Quiry seeks to disclose"
Judson lives at tho Hotel Plaza. and
has an office in 30 East Forty-second
street. He Is under subpoena to test-
fy, but Is reported to be Ill at Lake
George.
Gilbert z. Jones. assistant manager
of the Guaranty Company OF New York,
and H. c. Sylvester. Jr., vice-president
of the National City Company. both
| testified from the records of their con-
Germs as to Judson's bond purchase,
which began in January. 1917, from the
Guaranty Company, and November
1919 with the National City Company
Both testified to Judson's repute as q
shrewd bond buyer, and Mr.. sylvester
said he makes his purchases closer
1
gest institutions"
The Guaranty Trusts bond depart.
ment furnished him with s10,175,OOo
worth Of bonds. for which II received
ss.s05,172. and the National City Com
pany supplied 34,67s.0oo worth, foI
which It received s3.sS7.1s4, their testi'
mony showed.
Both testified also that the quotations
of municipal bond sales on the New
York Stock Exchange do not furnish
criterion of market value for the bonds
as fewer than / per cent. OF the trans
actions in municipal bonds take place
on the floor OF the Exchange and are
recorded Hence II would be difficult &c
determine whether the price the state
paid was below or above the market.
as charged Even II there were any
thing that could be looked upon as a
market price, they testified, It Is usually
impossible to sell such large quantities
| OF bonds as were included In Judson'f
purchases without taking shade of
that price.
No Bond buying In Open Market
Most or the bonds they sold Judson,
they testified. were what the companies
themselves owned. In accordance with
provisions OF tho State law requiring
J that a certain amount of their capital