Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-05
FILES BOND FRAUD COMPLAINT.
War Veteran Sues Smith Co. and
Properties Investment Grouu.

Properties Investment Group.
| Alleging that he was fraudulently in
| duced to invest $500 In practically
| worthless bonds, II. X. Taylor, 46l p
street, filed suit In the District SUI
preme Court today against the F. H.
Smith Co., the Properties Investment
Corporation and certain officials of both
| concerns.
Those named as defendants with the
two corporations are G. Bryan Pitts,
Samuel j. Henry, G. Ebert Anadale,
| John H. Edwards, jr.; Henry C.. Mad
dux, Representative Frederick N. Zihl-
man, Daniel r. CrisSinger, j. Maynard
| Magruder and Pearce P. Smith.
Through his attorney, Thomas 8.
Settle, Taylor, veteran of the Span
ish-American and World Wars, asks for
recisionSo the contract on the ground
of fraud and for the repayment to him
by the defendants of the purchase price
of the collateral trust sinking fund
gold bonds of the Properties Investment
Corporation" which, he charges, were
sold to him as first mortgage bonds on
the Hamilton, Arlington and Cairo
Hotels.
The bill of complaint says the plain
tiff went to the Smith Co. offices,
cashier, and introduced to Mr.. Ma
gruder, vice president and bond sales
man.
by way of inducement, Defendant
Magruder first told him. the bill says,
that two big men had been added to
the company and we're now helping to
direct its affairs, and that as q result
people were fiocking to the Smith Co.
to buy bonds; that these two men were
Daniel r. Crissinger, former controller
of the currency. and Representative
Frederick N. Zthlman Of Maryland.
Says Magruder Reassured Him.
"Magruder then recommended the
bonds in question showed the plaintiff
pictures of the Hamilton, Arlington and
Cairo Hotels and told the plaintiff that
these were first-mortgage bonds on the
land and buildings of these properties,
and that they were so safe that even
If the hotels were burned down he
would be amply protected by the value
of the land on which they stood.
THE plaintiff then expressed a desire
to purchase some of these bonds, but
on learning they would not mature un-
til 1910 objected that this was too long,
because he would soon want his money
to build home. Defendant Magruder
then assured him that this could De
easily arranged; that the properties
were under the management of Mr..
Maddux; that Maddux was a very pros
porous man and that he received such
large. funds from the operation of his
hotels that he would be unwilling to
pay interest on these bonds for nngKe
than two years. Defendant Smith then
confirmed these statements. and adde's
that If Maddux did not call the bonds
within two years the Smith Co. itself
would redeem them at the expiration CS
that time. The plaintiff then purchased
$4,000 worth Of these bonds.
I'm order to carry out the conspiracy
to defraud the plaintiff and to further
hull him into feeling of false security,
on the evening of April /, 1929, Mr..
Henry, president of the Smith Co.,
drove up to the modest residence of
the plaintiff in a large. luxurious APP
pearing automobile and called for Tay-
lor. He asked him II he had secured
his bonds and Taylor informed him
that he had. President Henry then
told him that he had made a good in
vestment and that he would make
money on the bonds.
First Interest Paid Promptly.
"The first interest due the plaintiff
was paid, but all Of his efforts to collect
the second inStallment when it came
due were fruitleSS. He then became
alarmed as to the safety of his invest
ment and caused an investigation to be
made.
He learned that the Properties In
vestment Corporation was a subsidiary
Of the Smith Co.; that the bonds he
had purchased were not first mortgage
bonds and that they were selling in the
open market at about 5 per cent Of their
par value.
He further learned that although
the defendants still have in their pos
session approximately $3.50, 900 of FIRST
mortgage bonds on the Hamilton Hotel,
they have disposed of much of their
property and are now disposing of their
property with intent to defraud him
and other creditors"