Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-06-01
MAYFLOWER HOTEL
MILLIONS JUGGLED,
RECEIVERS CHARGE
Refinancing 100000 Debt
and 100000 Increase
in Bonds Played.

Charges of mishandling OF funds and
Misrepresentation in connection with
| the sale of bonds were made by the
| temporary receivers for the Mayhower
Hotel today In their preliminary report
to the District Supreme Court.
The more serious charges pertain to
| the manner in which the American
Bond g. Mortgage Co., now under in
vestigation by the Department OF JUS
tice, and the Mayfower Hotel Co., al
! legedly juegied assets of the hotel. so
that the investing public lost many
| thousands of dollars which cannot now
| be accounted for.
Vouchers authorizing charges against
the property aggrega,!ng '-iany mil
lions of dollars" have disappeared, the
report says and could not be found by
the receivers. These vouchers are es
sential if the legitimacy Of these
charges is to be established, the report
states.
Refinancing Played.
The report criticizes in strong Ian
guage the ref1nancing OF the hotel prop
erty in 1928
Just prior to this rehnancing." the
report says. the books indicate the
Mayfower Hotel Co. owed the Amer
lean Bond & Mortgage Co. more than
100000. The books also show the
| 50, 100000 approximately $4,000 per
day. at this time. and your receivers
can find no justification for those in
charge Of the property increasing the
bonded indebtedness by nearly 100000
1T must have been very obvious to
the American Bond g. Mortgage Co. and
its officers that there was little chance
of collecting the 100000 unless this
obligation could be, by them, transferred
to the general investing public"
The report was submitted to Justice
Oscar r. Luhring by Thomas P. Little
page and Joshua Evans. jr, receivers,
and their attorney. Mrs. Mabel Walker
Willebrandt. Justice Luhring appointed
! the receivers to act in a temporary
| capacity last week after Mrs. Vile
brandt had filed a petition in behalf OF
some Of the second mortgage bond
holders asking that such action be
| taken.
! The report makes a distinction be-
| tween the Mayflower Hotel Co., the
! holding or owning company, and the
! Mayflower Hotels Corporation OF Amer
| lea. the operating company. The re-
! ceivers were appointed for the former.
! Daniel J. O'Brien, however, Is presi-
dent of both.
Under the original financing in 1925,
the report sets forth. first-mortgage
bonds in the sum of s4,2o0,000 and sec
ond-mortgage bonds in the sum Of
$2,000,000 were issued.
| In this connection. the report charges
that for every $3.50 expended for con-
struction on the building an additional
81 was spent for financing and carrying
| charges.
Claims Held Unverified.
The land upon which the hotel stands.
according to the report. was appraised
! for original bond sales purposes at
Sl,500,000. However" the report con-
tinues, 1.-The stock representing this land
| was acquired by the American Bond e.
Mortgage Co.. or its subsidiaries, for not
more than $75.000."
1t is charged that tie c. C. Mitchell
Co., subsidiary of the Bond &, Mort
! gage Co.. acquired assets Of $2,925,100
! for the assumption of certain unveri-
| fed claims which are stated as aggre-
! eating $l,582,455.23, but for all OF
which the supporting vouchers are abb
sent fr- m the records turned over to
! the receivers.
These supporting vouchers are abb
| soluteiy vital for verification. They
| have been demanded. but not produced.
| and the receivers request the assistance
of the court in obtaining them"
Land Value liked 81 100000.
The property, the report states was
refinanced on March 81, 1928. The
| $4,000, 900 OF old bonds were called in
and new first and second mortgage
bonds in the sum Of $9,90o,ooo were
| fioated. r.
The bonded Indebtedness was jim
creased In this amount, the report
charges, despite the fact that ON the
! date of refinancing the net operating
/ loss aggregated $2.011 ,663.14.
I'm an attempt to. counterfeit this
| deficit the report continues, 1.-THE esti-
mated value of the land was increased
| from 81 500 600 to S2,664, 997.50, a total
increased estimated valuation Of more
than 81 .0000 00."
It is also alleged that certain financing
costs aggregating $2,129,l47.6S were
placed in the building account as part
of the building cost. These entries,
| the report says, could result only in
an improper increase in the cost of the
! building and in the prevention of proper
! future charges against income"
THE holding company" the report
continues. already overloaded with
| fixed charges. found itself, after the
! refinancing, as having its bonded in
debtedness increased by 5000,
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