New-York tribune., 1922-12-09
.KardOs Fails to
Explain Entries
OF $2,OOO,OOO
Stock Broker, in Bankruptcy
With u. S. Ex-Treasurer,
Says Five Big Accounts
We're Not Known 10 Him
Advanced Cash TO Firm
Declares Money He With
drew From c o nj p any
Was in Payment for Loans


Louis Montgomery Kardos jr., who.
with John Burke. formerly Treasurer
Of the United States, formed tho stock
brokerage firm o. Kardos & Burke,
now in bankruptcy. was examined AZ
length yesterday before Referee Peter
p. olney jr. Kardos explained IN detail
advances he had made 70 the firm from
time 10 time, amounting 10 s3l5,s2s,
bat could throw no light on Eve ac-
counts on the books amounting, accord.
ing TO the accountant. 10 s2,O0O.0OO.
Before the taking OF testimony began
there was creditors meeting that
reached high pitch OF excitement
near the close George ?. Owen. rep
resenting Chicago creditors. made a
long statement in which he said there
Was much dissatisfsetion with "the way
things arc going He said that shortly
after the failure Ksrdos & Burke had
promised TO resume business on a 100
per cent ohatef NHaN Ahitc Httha
examination Of the books had shown
that the assets we're 81 i,s30,0oo and the
liabilities sl,475.0oo. leaving $33S,3OO
with which TO wind up the business,
and that a statement TO this effect had
beer sent out By Arthur Leonard Ross,
attorney, under date Of March II last.
Later. the creditors were informed.
Mr.. owen said, that the assets had
dwindled TO s25s,0Oo and that the liza
bilitics had jumped TO s2,i5o,oOO. He
demanded 10 know where this money
had gone.
Mr. Ross hcatedly denied making
any false statement, but refused 10
answer as 70 whether the first state
ment was a true one. Several Of the
nfty-odd creditors present began
shouting questions at Mr Ross, and
others demanded that he sit down and
keep quiet.
when the meeting had quieted
down .Kardos took the stand. With
I the preliminary report furnished BY
| Charles n. Lobell, the accountant who
has been examining the books for the
creditors committee, David II. Kuhn,
attorney for Richard p. Stephenson,
trustee. questioned Kardos as TO n
debit item OF S584.909 that had not
previously been discovered. This was
an account In the name OF Max
/ Goodney.
Kardos said he knew nothing about
the account. He knew Goodney slightly
as a trader, but no one had ever re-
ported 10 him, he testified, that Good
ney owed Kardos & Burke more than
/ half a million dollars. He said the
margin clerks might know about IT,
and offered 10 obtain their names for
Mr.. Kahn from "the higher en-
ployees," including Marcus Heim' the
general manager
Kardos insistcntly denied that the
| Goodney account, which carried the
number 700. had been used either by
| Burke or himself as trading account
| for themselves Neither Of them ever
} had a house account, he said.
Wouldn't you know OF an account
| that ran UP TO half a million dollars
on the debit sidei" Mr.. Kahn asked.
"No." Kardos replied.
when did you first hear Of the ae-
count"
"Just now" Kardos said
lie further explained that the Good
/ ney account was not listed in the orig
/ inal schedule filed with the trustee be-
cause he had not verified the figures
/ handed 10 him By his employees.
Mr.. Lobell declared that the Good
! nev account had started with the name
/ and address and had later become
/ "number account" There we're five Of
these. ne said, amounting to about
Us Z possible." Mr. Owen interjeeted,
chat YOU have been trustee all these
months and have never known OF these
III is not only possible, but IL is a
/ fact" Mr. Kahn answered. Il am not
an accountant
Tells Of Advances 10 Firm
Kardos then went into his advances
~ the firm. He produced n pile Of
rbeeks and a list Of the amounts. He
aid he had borrowed $4,000 on
Treasury notes he owned for his first
contributlon 20 the firm. but that Burke
had not contributed anything Both
he and Burke drew $500 a week salary
he said, He explained various with
drawals by saying the firm paid him
| hsrk from time 20 time, but not always
sbe even amount He denied that he
had Withdrawn S5oo.Ooo in 1921 or that
! hiS loan account would show payments
~ 500 .OOO for 1921 and 1922. lie de-
eIared these figures were much too
large and offered TO check up his per-
sonsl account with the accountant:
Kardos said he did not know the firm
vss insolyent until the petition was
6led. although he had conferred with
Ne attorney on the firms financial
standing. He denied that he simseI ,is..i
handed a statement 70. the Consolidated
c4oct ETehange saying the firms eapi-
tsi tai Of 81, 100000 was intact in October
1921. ,,.a r,.;i
next FRIDAY.