Evening star., 1932-10-18
bONDH0LDER GROUP
REQUESTING DELAY
IN WARDMAN SALE
Fear Control of Properties
Would Go to Indicted Hal
sey-Stuart Official.
D. c. COURT Intervention
ASKED IN AUCTION OCT. Fl
Reorganization Plan Worked Out
in 1881 Is Termed Fraud Against
Security Owners.

Security OWners.
Alleging that control Of the local
Wardman properties now in receiver
ship would pass to Leonard L. Stanley,
named in an indictment returned re-
Gently against several Halsey. Stuart Co.
officials if the buildings are sold at
auction october 81 as contemplated,
representatives of minority group Of
bondholders interested in the properties
today asked the District Supreme Court
to postpone the sale pending an inves-
tigation of a proposed plan Of re-
organization.
The properties involved are the De-
partment of Justice Building and a
number of hotels and apartments con-
stituting the security for S13.500. 900 of
first and refunding mortgage bonds sold
through Halsey. Stuart Co. Approx
mately $2,000,000 worth of debenture
bonds issued by the Wardman Real Es-
tate Properties. Inc, record owner OF
the properties. we're offered for sale at
a later date, and it was this transaction
which led recently to the return OF an
eral Halsey, Stuart officials with illegal
use of the mails.
Control Would Go to Stanley.
The petition fled today by W. Bis
sell Thomas representing a minority
group of holders of the first and re-
funding mortgage bonds. alleges on in
formation and belief that control of
the properties viii pass TO Stanley
through a reorganization plan worked
out in 1881
THE eo-called plan of reorganiza-
ton" the petition says in part, lis on
its face a fraud en- all bonoholders
and is to be put into effect by Stanley
as reorganization manager. and who
is now under Indictment charged with
being a common cheat and swindler
because of his connection with the sale
and disposal of certain bonds OF one
of the defendant Wardman companies,
and that he Is a person wholly unit to
represent the interest of any bond
holder in any capacity"
Fraud Is Alleged.
The petition further alleged that the
prJ. isicnS of the proposed reorganlza-
ton plan pertaining to the issue OF the
stock of the proposed new owning COM
EanV Is a lIduu uPOll dtA iioANNAo -
first and refunding bonds in that 1t
provides for the issuance Of majority
cf the stock to the holders of the de-
bentures, thereby placing control OF the
new company in the hands OF the mold
ers of these junior securities. to the
detriment of the first and refunolng
bond owners.
It was further asserted that the mort.
gagged property could not possibly s2ll
for enough to meet the Indebtedness
represented by the first and retundlng
bonds and that. therefore. the debenture
holders could have no substantial IN
terests in the properties.
Own Many Debentures.
The petition alleged, on information
and belief. that Halsey, Stuart q Co.,
or its stockholders and executives. IN
Guiding Stanley are the owners OF a
substantial amount of the debenture
bonds and that they are now seeking
to profit through control OF the fore
closure suit, the so-called Protective
Committee and the receivers ct the eX-
pense of the first and refundlng bond
holders
provision of the reorganization plan
that all of the stock of the proposed
new company may be issued by two re-
organization managers to three voting
trustees, to be designated by the Pro-
tective Committee for period OF 10
years, and that the voting trustees be
authorized to act without restriction IN
any matter affecting stockholders, Is oe-
scribed as "a brazen and nefarious at
tempt on the part of Halsey, Stuart &
Co., Stanley, the Protective Committee
and the trustees under the mortgage to
control fraudulently all of the proper
ties"
Denies Delays Due to Market.
The petition denied that several prior
postponements of scheduled sales o.
these properties were due to market
conditions, declaring the real reason
was to enable Halsey Stuart & Co., the
protective committee, the mortgage
trustees and the present receivers TO
perfect a certain nefariouS plan OF re-
organization or adjustment under which
all of the above named parties are seek
ing to protect themselves from their
past misfeasances and to further take
advantage of bondholders, who, because
of their widely scattered condition and
for other reasons are wholly dependent
upon the action of the court in shlelo-
ing their interests
The removal of the present receivers
Julius 1. Peyser, Joseph P. Tumulty
and Thomas D. Carson-was asked on
the allegation that certain facts which
would have rendered them unfit to
serve were withheld from Justice
James M. Proctor at the time OF their
appointment
The petition stated that at the time
of their appointment as receivers .Pey-
ser and Tumulty were members OF the
sham and fraudulent so-called Bond
fao tho O =
Carson was an emp1oye OF HalSey
Stuart e. Co., and that all of the re-
ceivers were and are committed to
the purposes and schemes of the said
company in protecting itself and Its
members from the consequences OF It's
misdeeds and in assisting in further
mulcting the bondholders Of their
rights"
Sought 10 Save Self"
1t is alleged that Halsey Stuart &
Co. formed the Bondholders' Protective
Committee "in ALI attempt to save itself
and its individual members from being
held liable, civilly and criminally, for
its many misfeasances, malfeasances
neglects and omissions with respect to
the sale of bonds and management OF
the Wardman companies involved"
The petitioner asked that the Central
Hanover Balm o. Aiuot W. VIC lc-
ouired to file with the clerk Of court a
list of names and addresses of bond
holders who have deposited with the
Protective Committee; that the present
receivers be enjoined from carrying out
the plan of reorganization.
Justice Oscar r. Luhring issued a
rule on the Central Hanover Bank q
Trust Co. and Frank Wolfe, trustees
under the mortgage, and the Wardmar
Real Estate Properties, Inc, to show
cause October 21 why the sale should
not be postponed.
Attorney William B. .O'Connen ap-
pears as counsel with Thomas.