Evening star., 1931-12-23
Internal Revenue Bureau
Seized Property in Satisfac-
tion of Income Taxes.
F. H. SMITH co. CREDITORS
CHARGE INCONSISTENCY
Point to Presidents Claim That
Money Was Earned Through
Corporation.
The Bureau of Internal Revenue will

The Bureau Of Internal Revenue will
be asked to turn over to defrauded in
vestors in the F. H. Smith Co. approYi-
mately Sl,000000 taken from G. Bryan
Pitts in satisfaction of income tax
claims, it was learned today
The proposal to petition the Govern
ment to return tire money was set forth
in plan for settling claims of bond
holders against the Smith Co. This
plan was sent to all preferred stock
holders today for their approval
Asserting that Pitts. former presi-
dent Of the Smith Co.. owed more than
81 00000 in back income taxes. agents
of the bureau seized all his property
they could find. including jewels be-
longing TO Mrs Pitts
Inconsistency Seen.
Many of the stock and bond holders
who lost their savings in the Smith
Co feel, however. they have a better
claim to this money than the bureau
The Government stands in what the
stockholders describe as curiously in
consistent position in connection with
these income tax claims.
Pitts is in jail, having been convicted
of embezZling large sums from the
Smith Co. His defense was that the
money allegedly embezZled really was
income derived from his operation Of
the Smith Co. or its subsidiaries The
Government. through the Department
of Justice. contended the money was
stolen from the company and was able
TO convict Pitts for contempt of court
for introducing fraudulent evidence in
support of his claim that the money
was really income.
- -
Revenue we're in court. however. when
Pitts testified the money was income
and, largely on the strength of this
testimony. proceeded against him for
not paying tax on it.
Will Present Claim.
The stock and bond holders now feel
the money allegedly stolen by Pitts
really belongs to them as defrauded
creditors of the company and plan to
present their claim to the Internal Reve-
nue. Bureau in the light of this con-
tenticn.
The tentative plan for settling the
claims of the bondholders has been
worked out after months of negotiations
between Attorneys Conrad Syne and
William Warfield Ross for the Smith
Co. and the Roosevelt Committee fer the
Protection Of Bondholders. If the plan
is accepted by the preferred stock
holders it will remove the necessity for
long and expensive litigation and the
consequent dissipation of the ccmpany's
assets.
The s7.5OO.oOO worth of preferred
stock of the company is held by ap-
proXimately 5000 persons, many of
whom are WaShingt0nians 1t gener-
ally has been believed that the stock
would prove worthless. but if the plan
Of settlement goes through, the holders
probably will realize better than 10
cents on dollar, according to unofi-
cial estimate.
The plan groups the assets of the
present Smith company into six classes:
first mortgage bonds 2-first and
refundmg mortgage bonds: 3-collat-
eral trust and general mortgage bonds;
4-miscellaneous: 5-intangible assets
to be realized through litigation: g.
cash.
The company has on hand Sl,627 700
principal amount of first mortgage
bonds A letter to the stockholders
says the company once held better
Continued on Page 2, Column A.