The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1929-02-11
DEMANDS FACTS
ON ARMORY BONDS
Slipped Through Without
o. K. by Securities
Commission.

Senator Alonzo H. Lindley, King
man, today sent special messenger
TO the Peoples State bank with a re-
quest personally addressed to PreSi-
dent Felix M McWhirter asking him
to submit complete data regarding
the sale of tax exempt armory bonds
which financed the building of ar
mories under the state armory board
during the last four years.
The bonds were issued by ''trus-
tees or holding companies, turned
over to the OStrom Realty and Con-
struction Company, which built all
the buildings, and then handled by
the Peoples State bank, parent in
Stitution of the construction COM
pany.
The entire matter Is now under
investigation by a special senate
committee headed by Lindley.
The bonds were never approved by
the state securities commission, The
Indianapolis Times learned today.
Saturday The Times told of how
these bonds, all handled by the
Peoples State bank, were made tax
exempt on authority of an infor-
NAL letter sent to the bank officials
by John j. Brown, then chairman
of the state tax commission.
Discount Made Up?
Brown, who is now secretary to
Governor Harry G. Leslie, called
McWhirter regarding the letter
and then stated that it was full OF
qualifications which would make
the bonds tax exempt only If the
buildings we're state owned.
Lindley also announced that he
will ask aid of the state board OF
accounts in checking all financing
connected with the scheme.
The subcommittee of the lnvestt-
eating committee will Investigate a
report that bonds were sold at
80 or less and that the discount
was made up by adding it to the
contract prices. All construction
work was done by the Ostrom Realty
and Construction Company.
The company took their payment
in private holding corporation
bonds, which were then turned over
to the People State bank, according
to volutary report made to the
senate committee by Adjutant-
General William H. Kershner.
Sold as Tax Exempt
Whether or not the bonds were
turned over by the construction
company below par, they we're ad-
vertised in circulars for sale by the
bank above par on the grounds that
they we're tax exempt and backed by
the state, according to prospective
customers who received the circu-
lars.
Had the securities commission
been called upon to pass upon their
speculative value it would have been
necessary to point out that should
the present legislature, or any other
within the next fifteen years, re-
fuse to make the appropriations for
rentals" the holding companies
would be holding the armorieS.
Senator Carl M. Gray, Petersburg,
member of the subcommittee has
already announced that he will op-
pose the $35O,O0O appropriation
asked by the adiutant general for
continuance of the present armory
building program.
i
Work on Report
Gray and Senator French Glenn
ents, Evansville, the other member
of the subcommittee, we're working
today on a preliminary report to be
made TO the senate this afternoon
or Tuesday. Gray said. He intimated
that the report will contain some
startling disclosures.
Senator Thurman A. GottSchlak,
Berne, member of the budget COM
mittee, who introduced the investi-
cation resolution, may take the floor
in the senate and relate some things
that he knows regarding the con-
duct of the armory building plan.
He feels that Kershner's charges
that the investigation was launched
by ''pacifistS, disciplined national
guard officers and disappointed con-
tractors" is a direct affront.