Evening star., 1931-12-13
HURLEY EXPLAINS
DEAL FOR BUILDING
Shoreham Purchase Made in
Good Faith, Court Told
by Secretary.

Patrick ] Hurley, Secretary of War,
yesterday described in detail the part
he played in the purchase Of the Shore
hsm Office Building from Swartzell,
Rheem g. Hensey Co. six months prior
to the failure of the mortgage banking
house.
Appearing as a witness before Justice
r. D. Let's in District Supreme Court
In suit to reinstate S2,250, 900 trust
on the property, Secretary Hurley de-
clared he acted in entire good faith in
purchasing the building.
He said the purchase was made in
the name of the Shoreham Investment
Co. The stock of this corporation, he
said, is owned by himself and Joseph l.
Cromwell Of Oklahoma, each holding
one half.
Mr.. Hurley declared he purchased
the building in the belief that all of
the noteholders had been or would be
paid In accordance with the terms of
the deed of trust
Edmund D. Rheem, now serving a
penitentiary sentence, and Luther H.
Swartzell were trustees of the deed of
trust for S2,250,000 on the property.
The trust was released by them in ac-
cordance with a provision that such ac-
ton would be taken upon payment in
full at the offices Of Swartzell, Rheem
& Hensey Co.
Cash Payments Disputed.
At recent bankruptcy hearings. testi-
mony was introduced to the effect that
a number Of the noteholderS under the
deed Of trust never received payment in
cash. Rheem said they we're paid
through retnvestments to their credit.
The property was purchased, accord
! ing to Secretary Hurley's testimony, by
Cromwell and himself. He said the
deal involved the trade of the Hurley
Wright Building, in which he had a.
! $4,000 equity and cash considera-
! tion.
1t was also brought out that the
Shoreham Investment Co. advanced
| S150,000 in connection with the ref
nancing Of the property at the time
of the sale.
was secured through the District Title
g. Insurance Co., which indicated that
the property was free of all liens.
| He said Rheem told him he had ar
ranged to secure all the money neces-
sary for the payment Of the original
mortgage on the property with ali ac-
crued costs. He said he did not CUES
| ton Rheem as to how or where this
money was coming from.
Repayment of Loan.
! 1t is alleged in suit now on file that
Rheem borrowed this money from the
Riggs National Bank and repaid it i'm
| properly.
AT the time of this transaction,
| Secretary Hurley said II had no rea-
son to believe there was ANYTHING
| irregular about it. I would not have
gone through with the deal had
known otherwise"
After he had concluded his testimony
Secretary Hurley told the court he had
nothing to conceal in this transaction
I'D like to say" he stated. chat
the Shoreham Investment Co. has na
secrets in connection with this mat
| ter. Its books are open and any frr-
ther information the court wants Ia
available"
! MIR. Cromwell succeeded Mr.. Hurley
on the stand and told practically the
same story as the Secretary. He said
! he was present at the july IS confer
! enCe. He declared it did not occur IN
! HON to ask Rhsem where he obo
| tanned the money intended for use in
| paying off the notes. He testified the
| Shoreham Investment Co. spent more
tnan S30,OOO to complete construction
| OF the Shoreham Ofhce Building die
! TO the failure of Swartzell Rheem a.
Hensey GO. TO carry out its contract