Evening star., 1931-06-23
Ground Trusts on Building
Released Months After
Sale, He Reveals.
MAIL FRAUD TRIAL DUE
TO BE OVER TOMORROW
Cross-Examination Brings Out Bor.
rowings and Refusal of New
Bank Loans.

he Government crOSS-eNamlneu
Jacob B, Shapiro today in its effort
to prove that he did not conduct his
realty and construction business here
on an ethical plane.
The defendant was croSs-eXamined
for several hours by Assistant United
States Attorney John W. Fihelly during
the morning session CT District Supreme
Court after the direct examination.
which started Thursday, had been
brought to a close by Alvin l.. New
myer OF defense counsel.
Shapiro is on trial charged with mail
fraud growing out of selling property
incumbered by trust of which the
Government alleges property owners had
no knowledge. The case is expected to
go to the jury of eight men and four
women late tomorrow.
Admits Borrowings.
On direct examination Shapiro said
he was a wholesale builder of homes.
AT one time his steam shovelS were
leveling off hills and his dirt trucks
were filling in daleS so that he could
meet the great demand for houses here.
He admitted buying land with borrowed
money and paying off this loan with
borrowed money. giving blanket trust
on the properties and paying this off
when each piece OF property was sold.
He testified money poured into his
eompany's treasury as his organization
spread from a one-clerk affair to one
of 500 or more employees At the age
of 25 he was the builder of 1000 homes,
and one year later he said he took stock
and found himself with a net fortune of
$2000,000. Previous to this phase of
his recital, he told the jury he had
started on his career at 10 with a
George Washington University diploma
and a $1,000 loan as his assets.
Original Plans Dropped.
On direct examination as he testified
how he conceived ideas to build. he
said all his plans were original. includ-
ing $15,000,000 project to be known
as the Hampshire Gardens. This, he
testified, was his answer to President
Hoovers appeal for better housing con-
ditions for Government employees here,
He said Mr.. Hoover was then Secretary
of Commerce and that he had urged
some housing facilities be created at
cost not to exceed $3.50 a room on
. monthly rental basis.
Shapiro said the original plans were
not carried out as to the creation of
business and recreational centers in the
apartment scheme, but that people did
pay him from $500 to $500 as down
payments on apartments costing So, 1000
ton was laid, the building was COM
pleted and so to 10 per cent of the
apartments were sold.
The defendant previously had testi-
fed that because of the def1ation in the
Washington realty market his personal
fortune had dwindled to $500, 900.
Apartment buyers had started moving
in. and in answer to a question by Mr..
Newnyer Shapiro said: I'VE were very
HH.Nov b.
coming in fast from the sale of these
apartments. I paid of bank obliga-
ton, a very large one. with the hopes
of borrowing again from the same inSti-
tuition"
Then the stock market crashed" he
told the jury. land the president os the
bank told me to come back within 60
days. when the stock market would be
readjusted. as he had hoped. and at
that time he could lend me the money.
The bank loaned me AS much as $780,
600, and at the time paid off the loan
I owed only $4,000 That meaat that
I still had credit that could borrow
on of $1,000. went to borrow 1t and
couldn't get It,"
Pressed by his creditors and unable
to get funds with which to release prop
critics, including those involved in this
case, so that he could turn them into
a ready money market, the witness said
he was unable to get the $4,000 or
more due him on Hampshire Gardens.
He said he then stopped taking settle
mentS on the cooperative apartments
because there might be some me-
chanicS liens"
Wanted Ground Trust Secret.
Therefore, according to his testimony,
Shapiro celebrated his twenty-ninth
hfFfhH0U a r,,S1t 4.
many blanket mortgages outstanding
and a senatorial investigation looming
into his business.
On crosS-examination the witness ex-
planned as to the Hampshire Gardens
he was in financial difficulties, but as
to the 20 pieces of property involved in
this case he said he could release the
ground trust on them whenever he saw
fit. and did so.
know that ground trust was on their
property" Fihelly asked.
NO." Shapiro replied.
Trusts Released After Sale.
The witness admitted the purchasers
did not know of this trust until they
were notified by the mortgage house,
but Mr.. Fihelly drew from him that he
had been notified by the mortgage
a month before the stock market crash
that the property owners would be no
tified unless he made payments upon
the trusts.
Each case was taken up by Mr.. |
Fihelly to show the ground trusts were
not released by Shapiro until six
months to three years after he had
sold the properties. Many CT these
trusts were not released, the prosecutor ,,
brought out, until shortly Before the
senatorial investigation last July.
The prosecutor also developed that so
tenants moved into the Hampshire Gar
dens and did net have sewerage, heat
ing, lights or water. Shapiro said this
situation temporarily was beyond his
control, but that he, made every effort
to remedy 1t.