Evening star., 1930-12-12
Accounting Expert Refutes
EmbezzIement Charges
in 80 Instances.
OTHER ACCOUNTANTS
ARE TO BE SUMMONED
Attorney Cites Authority Granted
Officials to Be Financially Inter
ested in Subsidiary Corporations.

The defense in the F. H. Smith Co.
conspiracy trial, now under way in Dis
trict Supreme Court, today laid the
groundwork for its contention that
G Bryan Pitts was entitled to surplus
money in the treasures of various SUBJ
sidiary corporations of the company.
The defendants-Pitts c. Elbert An
adale and John H. Edwards, jr., all
former officers of the Smith company
are accused of embezzling the corpora
tion's funds and of destroying its
records.
Reads From Company Charter.
Frank G. Raichle of defense counsel
read to the jury portions of the Smith
charter which accords to officials of the
company the privilege of being f1nan-
cially interested in subsidiary corpora
tions. This Is forbidden by the char
ters of many corporations and Defense
Attorney Wilton j. Lambert told the
jury Wednesday the defense would
prove that part Of the money allegedly
embezzled by Pitts was, in fact, due
him from surpluses in the treasures Of
certain Smith Co. subsidiaries.
The reading of the charter to the
Jury was designed to clear the way fof
introduction of evidence supporting the
claim that Pitts did rightfully receive
money from these corporations.
Defense Expert Testifies.
Most Of the morning was taken up
with testimony from H. o. Hart, de-
fense accounting expert.
The bulk Of the prosecutions ev1-
dence has been designed to support the
charges that Pitts and his co-defend-
ants in 05 instances embezzled money
belonging to the Smith company.
Charles T. Malone, Department of Jus
tice accountant, took up the separate
items while on the stand and testified
that in his opinion they represented
embezzlement.
The defense has met this by having
its own accountant take up certain Of
the money involved was not embezzled.
According to the Government, the en1-
bezzl. ments were committed through
misappropriatio Of the proceeds de-
rived from the cashing of approximately
ESQ checks Of the Smith Co., involving
81 100, 900. When court adjourned at
noon, Mr. Hart had testified that, ac-
cording to Smith Co. records, In ct
least 80 instances citsd by the Govern
ment the money involved was not
embezzled. His testimony covered In
all approximately 100000.
Found Petty Cash All Right.
Hart also said that from his examipa-
ton of the records, he was convinced
there was nothing wrong" with the
petty cash account of the Smith Co.
The instances which Hart discussed
in detail involved for the most part
money paid Pitts in dividends on the
preferred stock of the Smith Co. which
he owned. It was brought out that he
owned 1879 shares of this stock, of
which there is a total outstanding of
100000 shares.
Frank @. Cunningham, clerk Of the
court, was called TO the stand to intro
duce certain records relating to hotel
bankruptcy proceedings, which the de-
fense will use later in the trial.
Hart Is expected to conclude his di-
rect testimony this afternoon, when he
will be subjected to cross-examination
by Nugent Dodds, special assistant TO
the Attorney General, and Neil Burkin-
shaw, assistant United States attorney.
His roSs-eXamination is expected to be
lengthy, and probably will occupy all
OF the halliday session tomorrow. After
Hart is through, the defense announced,
other accountants viii be brought to
the stand All Of the 95 embezzlements
charged by the Government are to be
taken up in an effort to refute them, 1t
Is promised
Pitts is expected to take the stand in
his own. defense early next week. He
probably will be followed by the other
defendants.