Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-12-31
Attorney General Takes Ac-
ton Against District Firm.
Receiver Is Asked.
POWER ABUSE AND MISUSE
CHARGED IN COMPLAINT
Three Holders of Brokerage Issues
Are Named Plaintiffs in Bill
Filed at Wilmington.
speeIal Dispatch to The Scar.

Special Dispatch to The Star.
WILMINGTON, Del, December 81
Revocation of the charter of the F.. H.
Smith Co., investment brokerage con-
Germ, formerly having headquarters in
washington, d. c., is sought in a bill
filed in Chancery Court here today by
the attorney general on behalf of four
holders OF the Smith Co. issues, the
complaint alleging abuse and misuse OF
the corporate powers of the concern.
The F. H. Smith Co. is incorporated
under the general corporation laws of
the State of Delaware and has operated
in number of Eastern cities
The action today was brought by
Attorney General Ruben Satterwaite.
lr, under q provision of the corpora
ton code Of Delaware, after having re-
ce1ved preSentments in compliance with
law from Morris A. Stewart, Andrew g.
Caldwell and Grace Caldwell of Wash
ington. Af1davits are to be forwarded
70 washington for the formal signature
Of these investors.
Receiver Is Asked.
The bill seeking revocation of the
charter OF the F. H. Smith Co. also asks
appointment of a receiver for the con-
Germ. The action concerns the method
of financing of real estate operations
handled by the Smith company, which
mas been investigated by the Depart
ment OF Justice and the grand Jury
OF the District of Columbia which re-
Gently returned indictments against
officials Of the concern and the cor
poration, charging use of the mails to
defraud.
The bill recites that "the REALTORS
Cmeaning the Attorney General and the
Tour complainants) allege that the said
oe1endant corporation for at least a
period OF two years has not conducted
under its certificate of INCORPORATION q
legitimate business, but has been en-
gagged solely in defrauding the realtors
and others of its stockholders and the
general public by selling to them worth
less securities and by using the money
SO received Tor fraudulent purposes; that
the corporation acts of the said de-
1endant corporation are against public
policy In violation of the laws of the
state OF Delaware, the laws of other
States of the Union in which
tney have operated, and In violation
OF the laws of the United States:
mat the defendant corporation has
ers and privileges as aforesaid:
Abuse Is Charged.
That the REALTORS further aver that
the said F. H. Smith Co., corporation
created under the general corporation
law of the State of Delaware. has MT
been conducted and is not now being
conducted for the transaction of any
legitimate business, or to promote or
conduct any legitimate objects or pur-
poses within the meaning Of section 1
OF the general corporation law of Della
ware, Dut that, on the contrary, said
r. II. smith Co. has been conducted,
ana Is stu being conducted, for the
transaction OF unlawful business and to
promote and conduct Legitimate OBJ
JectS and purposes, and thereby has
abused and misused the corporation
powers, privileges and franchise vested
IN 1t by virtue Of its incorporation UNI
der the law of Delaware.
Inc new action followed closely upon
the fling December % in the Whining
ton Chancery Court Of a bill asking the
appointment of receiver for the COM
pany. This earlier action was filed in
the name of Morris A. Stewart and
was move to throw the company into
involuntary bankruptcy
Dividends Are Questioned.
In that action. charges were made
that Representative Frederick N. Zihl-
man OF Maryland, chairman of the
House District committee, and Daniel
r. CrisSinger, former chairman of the
Federal Reserve Board, who were di-
rectorS of the F. H. Smith Co., author
Ecu uAia"AuA PdyAnent Oh QlVlQenuS Dy
the Smith concern. In addition to Mr..
Zihlman and Mr.. Crissinger, the earlier
receivership action named as defend
ants G. Bryan Pitts, chairman of the
Smith company board, and Samuel j.
Henry, president.
The complaint in that case alleged
that officials of the Smith company
had promoted the sale of approximately
$50, 100000 of securities, "a great ma
iOritV 0f which still ndinn
unliquidated and unpaid" The bill al
legged that dividends were paid contrary
to the statute with the income from
the sale of bonds instead of from actual
earnings of the property involved. 1t
was charged that these dividends were
authorized by zihlman, Pitts, Crissinger
and Henry.