New-York tribune., 1922-05-17
saws Dier & Co.
.Spent2RMillion
liCients'Funds
H,ys Declares Books of
Defunct Concern Show
Lavish Use of Custom.
ers' Money to Keep Going
$4,000 for Luncheons
Members Drew $4,000.
He Asserts. While Busi-
ness Was Only S492,824

TIE hrst dip into the accounts Of
=. defunc, stock brokerage firm of
n der & Co, the books Of which
court injunction has barred the Dis
..;,. Attorney from examining until
,.s receiver shall have finished with
.,.n was taken at the bankruptcy
,.,riss yesterday. 1t showed, accord
:, 70 Arthur Garfield Hays. attorney
D., the receiver. that the firm had
.,.,, s2.5Oo.o0o of its customers
,,a,,y 10 keep itself going during the
,s,r that ended with its'tinancial crash.
I.x ,e;usi business in commissions and
;,,rs:. charges was only $492s2a
Alter half hours question of tho
accountant who made the examination
& The firms books MI. Hays announced
.s,t several Stock Exchange firms
.,o,e books had been subp9naed for
the hearing had agreed to permit the
,ru..ee in bankruptcy to make an ex-
animation Of their accounts, and asked
sor an adjournment, which was granted.
Spent Money Lavishly
Mr.. Hays's statement that DER &
q, had spent its customers money
lsvishly was founded upon the testi.
nony and reports of the accountant.
Bernard T. Rice. This accounted for
All but a million or so of the entire
snoun; involved in the failure. vhicA
j, less than s4000.o0o. With an income
Of less than $500 900 from commissions
and interest, the firm spent from Jan
vary, 1921, until it went down in jan
vary, 1922, nearly 100000 in salaries,
withdrawals by der and the other
partners and general expenses alone.
Mr.. Rice testified that the books
taowed that the total receipts for the
yesr 1921 from commissions and in
tsrest charges were S492,S24 The ac-
tsal net profit on this business was
taly about $50 GOO, as more than s47O.-
ae0 out OF the S4a2,S24 was paid to
cher firms in commissions.
The biggest items quoted by the
7tness were those Of s1,600.oo0 for
administration expenses, about 100000
ier general expenses and $400,0
snort term contracts.
When the witness was examined as
10 the details of these general head
;ngs, be said that about 100000 was
spent in the year on the branch Offices
Of the firm in other cities. Salaries
,.,nsented $465,0oo. der and other
MEMBERS of the firm drew out cash
dsHng the year amounting to $4,000.
and there was one unitemized entry of
$4,000 for general administration
txaenses." Entertainment for Gus
toners in the form of luncheons rep
resented $4,000.
Had to Credit Dividends
The witness continued that so long
Is the securities of the firms custom
eu were supposed to be safely tucked
swsy in the vaults or deposited for
loans the dividends had to be credited.
In view Of the fact, however. that the
firm sold about all Of these securities,
Il was forced. when called upon. to make
PAYMENTS to customers out of its funds
on nand. Ihere was net loss OF aluo,-
900 under this head.
Nh Rice followed with the "errors
and defalcations" account. This, he
aid, represented loss of S210.2S7, and
t appeared that stocks and bonds had
'een credited to it, but that they could
ot be found. There had been one de-
alcation in the uptown Office of the
rm. amounting to S7022. Mr.. Rice said.
This total Of s2,5o0,O00, the witness
xplsined, does not include the spccu-
alive losses of the firm. nor payments
, stock exchange firms through whom
le concern bought stocks for its Gus
'mers.
The gold mine In Mexico that Dier
.ferred to elowingly as an asset out
which could be dug enough gold to
,eer the Arm through all of it's
oubles, was bought for only s134,O0O
ie accounts showed