Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-24
'S951,ODO NOTES OUT
ON THE BROADMOOR
$1,100,000 Trust Placed
After Release of One for ST.
100000, Rheem Testifies.

The financing by Swartzell, Rheem g.
! Hensey Co. of the Broadmoor Apart
ment project, in which the mortgage
banking house sustained $150000 loss,
was examined yesterday at a meeting
Of creditors of the bankrupt concern.
Edmund D. Rheem, executive head
of the bankrupt mortgage house, said
virtually all CT the notes under the
original 81 ,250,000 first trust on the
was brought out that approximately
! 1881 900 of these notes are still out
standing and unpaid.
Questioned by Attorney E. Hilton
jackson, Rheem testified a trust for
81 100 900 was placed on the property
after the original trust had been re-
leased. 1t was brought out that at
the time Of the placing of the latter
trust, February, 1880, the company
lacked about s239,00o of the sum needed
to pay off the $l,25o,0 900 trust.
Second Trust Placed.
Part of this deficit, it was testified,
was met by placing a second trust for
$3.50 900 on the property. Rheem said
this note was bought by Swartzell,
Rheem and Hensey Co. from the
Broadmoor Corporation in journal
transaction"
Rheem testified part Of the money
to pay the original first trust, check
for $1,011 900, came in February ID
and was cleared through the District
Title Co. This check. it was said, was
deposited at the Riggs Bank.
Rheem said he was out OF town at
the time and that he didn't know
which, if any, of the notes were paid.
Attorney jackson brought out that
the original trust was to run for five
years and that it was paid before ma
turity. The trust agreement contained
a clause that note purchasers would
receive a bonus of l per cent II the
trust should be released before it ma
tured.
Bonus Advantage Questioned.
What was the advantage to the COM
pany of paying a bonus OF $l2,500 Tor
the privilege of releasing a flve-year
trust in advance Of maturity" jackson
asked,
Rheem replied he believed the money
could be reinvested more profltably.
Attorney George E. Sullivan Their
took up the examination with regard
to the Westchester project on Cathedral
avenue. Rheem said there were two
buildings on this property, one carrying
a first trust of $500, 900 and the other
first trust of 100000.
Negotiations for the financing of the
WeStchester were carried out between
his Office and Gustave Ring and Har-
vey Warick, representing the Westches-
ter Corporation. he declared
All but about 100000 Of the notes
under this joint first trust Of $3.50, 900
were sold to the public, Rheem said, his
company holding the balance in its own
name Some of the 100000, he said,
was pledged rs security for loans.
Rheem said the sale was arranged
September Is 1890 and that the project
was refinancec in November, 1890.
Anxious TO Refinance.
Under the sale agreement, he said,
Swartzel, Rheem e. Hensey Co. was
obligated to lend the Westchester Cor
poration up to 100000 for building
purposes without interest.
II was anxious to reflnance in No
vember," Rheem declared, so we might
be relieved of the obligation of advanc
ing the Balance of $l,65o,ooo without
interest"
Turning to the schedule Of assets and
liabilities. Sullivan asked Rheem II they
were accurate Rheem declined to
answer on the ground that to do so
might ;ubject him to a criminal pros
ecution. He stated, however. that the
desired information could be obtained
from an examination of the company's
records.
Referee Fred ]. Eden interrupted to
suggest the ACCESSIBILITY of limiting
discussion en- this point TO keep down
the length of the official record. This
testimony has already consumed 400
pages of record at 6212 cents q page"
he said, land the payment has to come
out of the assets of the estate"
Assembled Information Declined.
Sullivan replied that in a bank
ruptcy case Of such magnitude, ex-
pensss of a minor nature should not
be permitted to bar a full examination
by the creditors
He asked Rheem II he would assem-
BILE the desired information indepen-
dent of the meeting and the latter,
on advice Of his attorney, Leon To-
briner, declined.
Sullivan asked Rheem II certain
bookkeeping entries had been made to
confuse the auditors. Rheem replied
in the negative.
Rheem refused to answer a question
as to how the money for payment Of
the first trust notes was d'sbursed
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