Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-10
IoWan Calls on Senate to
Investigate Real Estate
Financing Operations Here.
F. H. SMITH CO. NAMED
IN PROBE RESOLUTION
Pitts, Accused of False Statements
in Bankruptcy Proceedings,
Posts Bond.

A sweeping investigation by the Sen
ate of real estate financing operations
in the District of Columbia was pro-
posed by Senator Brookhart, Republican
of Iowa, in a resolution introduced in
the Senate this afternoon. in which he
made charges against the F. H. Smith
Co. by name. The resolution was re-
ferred to a committee for consideration
and report.
The resolution declares that whereas
many millions of dollars of real estate
mortgage notes and bonds have been
sold throughout the United States for a
period of many years by real estate and
finance operators in the District of Co
Iumbia through the medium of alluring
advertisements in magazines and the
newspapers. for which many hundreds
of thousands Of dollars have been eX-
pended; and
Fraud Is Alleged.
Whereas. by reason of the fact that
the City of Washington is the Capital
of the Nation, it is of the most vital
interest to all sections of the country
to show whether or not the sales OF
real estate bonds and mortgage notes
by real estate and finance operators IN
the City of washington are honest and
conservative and free from fraud and
misrepresentation and
whereas, it has been alleged that
the Commonwealth Finance Corpora
ton of the City and State of New York,
with many thousands of stockholders,
has been defrauded of more than
S5,000,00O of its assets by reason OF
fraudulent Misrepresentation as to real
estate values in the District OF Colum-
bia; and
Whereas, it has been alleged that
some of the real estate and finance OPP
orators in the District of Columbia, and
particularly the F. H. Smith Co. and its
subsidiaries, have been debarred from
selling bonds sponsored by them in the
States of Pennsylvania and Ohio, ana
that the said F. H. Smith Co., has been
denied membership in the Real Estate
Board of the District of Columbia be-
cause of alleged irregular practices con-
siSting of pyramiding of values for the
purpose of securing excessive loans, OF
having irregular and excessive apprais-
ais made bv favored and partial agents
and of publishing or causing TO be pup
lished advertisements intended to de-
ceive the public as to the real value OF
the properties securing said mortgage
notes or bonds; and
Claims Misrepresentation.
Whereas, it has been alleged that
many of the bonds sold through the
mails by virtue of newspaper and mag
azine advertisement by said F. H. Smith
Co. or its subsidiaries are not flrst
mortgage bonds as claimed in SAID
advertisement, but are merely so-called
first and refunding mortgage bonds;
and
whereas, it is alleged that in many
cases where such first and refundlng
mortgage bonds have been issued the
pre-existing first mortgage remains an
outstanding liability to the full extent
of said original issue and that the pur-
chasers of the said So-called hrSt ana
refunding mortgage bonds have bought
said bonds believing that they were frst
mortgage bonds ON real estate; and
Whereas, it is alleged that in many
cases the said F. H. Smith Co. and its
subsidiaries, including certain banks
controlled by the officers of the F. H.
Smith Co., have not only sold So-called
first mortgage bonds and first and re-
funding mortgage bonds, but also gen.
eral mortgage bonds on various apart
ment houses in the cities of Washing
ton, Pittburgh, Buffalo and Philadelphia
under such circumstances as have lee
thepurchaSers to believe that such bonds
were first mortgage or first lien bonds
when in fact they were second or third
liens on said properties; and
Tax Evasion Charged.
whereas, it has been alleged that
prominent political and financial per-
sonages have been employed or retained
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