Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-08
RHEEM CASE DATA
SHAPED FOR Jury
ASFACTS DEVELOP
Early Presentation Forecast
After BurkinShaW and
DoddS Confer.
WESTCHESTER FIRM
ASKS FOR PAID NOTES
81 $4,000 Papers Uncanceled and
Kept, Court Is Told-$25,000
Deal Aired.

Early presentation to the grand jury
of the Governments case against
Edmund D. Rheem, vice president of
the bankrupt mortgage firm of Swart-
zel, Rheem g. Hensey, and who is
charged with embezzlement appeared
probable last night following a lengthy
conference yesterday between Assistant
Attorney General Nugent Dodds and
Neil BurkinShaw, assistant United
States attorney assigned to the prose-
cution.
The Federal prosecutors were known
to have made considerable progress in
preparing the evidence to be put before
the grand jury in connection with the
collapse of the widely known invest
ment house.
The evidence has been collected by
special agents of the Bureau of In
vestigation, operating under the super
vision Of j. Edgar Hoover, director of
the bureau Assistant Attorney Gen
eral Dodds has taken personal charge
Of the sensational case.
Firm Asks paid" Notes.
Rheem is at liberty under bond of
$25, 900, following his arrest last week
on a warrant charging him with en-
bezzling $4,000 In mortgage notes
left with him for safekeeping.
The Federal investigation is said to
have uncovered many facts not yet
divulged publicly, but deemed of great
Importance to the grand jury inquiry.
While the Government attorneys
we're getting their case into shape yes
terday, new development in the tangle
Of civil litigation growing out of the
firms crash was presented to the Dis
tr1ct Supreme Court.
The Westchester Development Cor
poration asked the court to prevent re-
ceiVers of the bankrupt company from
surrendering any notes of the corpora
ton which may be found among the
assets of the defunct company and to
require the receivers to turn over all
such notes to the Westminster Corpora
ton.
"Straw Man" Named.
Through Attorneys w. Gwynn Gardi-
ner and Howard Boyd, the WeStchester
Corporation advised the court that in
February, 1880, it borrowed from the in
veStment concern $690,000 and some
600, giving as security a number of
notes payable to John H. Holmead,
designated as a straw man." Both
deeds of trust provided that payment
at the Offices of Swartzell, Rheem g.
Hensey would suffice to release the
trusts.
The corporation told the court that,
relying on this provision, it obtained
new loans, and, through legal title
company, paid at the Swartzell Co.'S
Office in November a sum sufficient to
pay the notes. and that the deeds of
trust were released, as recorded Mo-
vember 81. The notes should have been
marked paid and cancelled" at this
time, the court was told. No notice was
given the maker Of the notes, it was
stated, that any transfer or sale Of
any of them to other persons had been
made, and if any were sold, the maker
was not advised of it.
The court was informed that applica-
ton has been made now to the receivers
by persons claiming to hold some of
the released notes. Unless the court
intervenes, it was stated, the notes may
be surrendered and the interests of the
Westchester Corporation will be adj
versely affected.
First Trust Was Second.
The petition asked the court to re-
quire the receivers to disclose where
the money is that was paid over in
November and to disclose the names of
persons now holding the notes, and the
court Is requested to have the receivers
surrender the notes to the Westchester
Corporation.
Another legal angle yesterday was
a petition to the District Supreme
Court by A. M. Rizik of 1918 F street
asking that foreclosure be ordered of
deed of trust for $25, 900 on the New
Haven Apartments, for which amount
he owns a note deposited for collection
with the Swartzell, Rheem & Hensey
Co. He says the receipt given for the
note describes the trust as first mort
gage. He claims that a prior deed of
trust has been discovered. He asks
that the property be sold, since his
trust has matured and has not been
paid. Attorneys H. Winship Wheatley
and H. Winship Wheatley, jr., repre-