The Washington times., 1931-01-30
FIRM
FAILURE HINTS
/. HEAVY LOSSES
u. S. investigators Unearth
Evidence of "RefinanCing;;"
Shoreham Receivers Named

Investigating the transactions
of the bankrupt Swartzell, Rheem
and Hensey Company, mortgage
banking house, Department Of
Jutsice agents, working with re-
.ceivers for the firm, has un-
.earthed evidences of "reflnanc-
irg" Of properties which, they
say, may result in heavy losses
to holders OF notes supposed to
be secured by the projects.
The receivers, Major julius I.
Peyser and Henry P. Blair, have
been advised by Investigators that
at least four major properties are
involved in the "refinancing"
operations. These are the Broad
moor Apartments. the Shoreham
Building at Fifteenth and H
Streets northwest; the La Sale
Apartments and the Westchester
property.
Clause Permits Sale
The operations are said to have
been done under authority of
clause in the trust agreements CIV
Ing the financing company Off
cials power to release and recon-
vey the land without the presenta-
tion of cancellation Of the notes"
The clause is so framed that
the same mortgage note assertedly
could be sold" time and again
with the buyer at the time of pur-
chase unaware that his title was
questionable. 4
Holders of these notes, as well
as those owning notes on other
properties, the financing Of which
had been in the hands of the now
defunct company, are being ad-
viSed not to sell, at least for the.
present.
It is probable that a definite
statement regarding the condi-
ton and affairs of the company
will not be made by the receivers
before the early part of next week.
Schedules Delayed
In the meantime the law firm
of Tobriner and Graham, counsel
for officials of the defunct COM
pany, are compelled to wait until
the Government investigators
have finished their task before
they may work on the books.
This is expected to delay filing
of the schedules by the bank
rupt firm within the specified
Today period following the dec
laration of bankruptcy.
The receivers stated today that
as yet they have not come across
any evidences on the books that
substantiate reports of recent
transaction between Harry M.
BraloVe, builder of the Shoreham
Hotel, and the Swartzell, Rheem
& Hensey Company, in which
Mr.. Bralove gave Edmund Rheem
a $65,000 check shortly before
the crash Of the latter.
F! Receivers Named
Receivers for the Shoreham
Hotel, which was originally
financed by the Swartzell, Rheem
& Hensey Company, were ap-
pointed by Justice William Hitz
of the District Supreme Court
this morning. These are Francis
H. Duehay, John E. Laskey and
Spencer Gordon.
Creditors of the hotel asked
the District Court to take this
action yesterday. The petition
was filed by the Walter M. Bal
lard Company, furniture dealers,
1872 Connecticut Ave-, which
claimed 100000 due for furniture.
Claims of, other persons who
furnished equipment for the hotel
are expected to total $250,000
and construction claims total
$5O0,O00.
Workmen engaged in finishing
construction work on the new
hotel, begun a year ago, were
called off the job when the
Swartzel, Rheem and Hensey
Company went into bankruptcy.
It was thought then that, they
would return to the job in a few
days and the men did not go to
the trouble of taking their tools