Evening star., 1932-10-06

man Securities Sale.
(From the $50 Edition OF Yesterdays Star }
The names Of the six Halsey, Stuart
g. Co. officials, indicted on mail fraud
charges In connection with the sale of
certain so-called Wardman securities,
issued on properties here, were re-
leased for publication in Chicago today
At the same time the company an
nounced that John w. Davis, Demo-
cratic candidate for the presidency in
1924, had been retained to represent
its accused officials.
Those indicted, according to Asso-
ciated Press dispatches, are:
Harold l.. Stuart, president OF the
concern. Charles B. Stuart, vice presi-
dent; E. Hill Leith, general sales man
ager. Daniel Upp, assistant to Leith
Paul M. Strickler and Leonard STAR
ley, officials of the companys New
York purchasing Office.
Based on s2.oo0,oo0 Sales.
1t is understood the indictment is
based primarily on the allegedly frauda-
lent sale of approximately 100000 OF
Wardman debentures in 1880. The
statute of limitations has run against
any prosecution in connection with the
sale of debentures and first and re-
funding mortgage bonds in 1928, when
the properties were reorganized, ac-
cording to officials at the Department
of Justice About $13,500.000 of first
and refunding bonds were issued.
Warrants for the removal of Harold
L. Stuart, Leith and Upp to Milwaukee
Wis, for trial on the indictment were
secured in Chicago today by United
States District Attorney Dwight H
Green.
1t was not known whether warrants
have been issued for the other three
officers, who are IN New York.
Attorney Harold Beacome notified
the district attorney the three Chicago
defendants each would post $4,000
bonds today for appearance for trial
in Milwaukee and said they would moi
fight removal to Wisconsin.
The indictments, each containing
eight counts, charged the company
with falsely representing the value and
earnings of buildings in literature sent
through the mails 70 prospective pur-
chasers of securities Of the Wardmsn
Realty & Construction Co and the
Wardman Real Estate Properties in
Washington
Sentences of five years Imprisonment
and fines of $1,000 could be given or
each of the eight counts Of the indict-
ments in event of conviction.
Two Statements Issued.
Mr.. Davis issued the following state
ment:
Il have been retained in this matter
by Halsey. Stuart g. Co and have gone
into the facts with care. am not In
the habit Of making public statements
concerning cases in which I am en-
ployed, but do not hesitate TO say in
this instance that I think the conf
dence of Halsey. Stuart & Co. in 4
complete vindication is fully justified
There is. in my opinion. no basis
for these indictments"
The following statement was issued
on behalf of Halsey, Stuart &; Co.:
Such information as we have been
able to obtain indicates that the Mil
waukee indictments were based upon an
assumed violation of the Federal mail
fraud act IN connection with sales OF
securities of the Wardman real estate
enterprises Of Washington, D. c. Wis
consin was strangely selected as the
venue Of the proceedings by its Wash.
ington sponsors, although the proper
ties involved, the issuing companies and
the Department of Justice (Which oc-
cupies one of the mortgage Wardman
properties) are all in Washington,
where the properties are well known
and where many of these securities
were sold
Senator Blaine Of Wisconsin was the
chairman of Senate committee which
last year undertook an investigation of
real estate financing in the District OF
Columbia The report Of the Blaine
Committee (Which indicates complete
misunderstanding of the Wardman
financing) was the forerunner Of the
Department Of Justice activities cul-
minating in the Milwaukee proceed
ings.
The Governments representatives
apparently mean to contend that the
bonds secured on these properties are
virtually worthless. Taxes on the mort
the Government on the basis of its own
assessed valuation of approximately
100000. These properties constitute
one of the large hotel situations in the
United States which throughout the de-
preston have earned operating ex-
penses, taxes and before depreciation)
substantial amount applicable to in
terest charges.
More than $50 investment houses
institutions and dealers joined in the
distribution Of these securities through
out the United States. Halsey, Stuart
81 Co.'S good faith in this transaction
is indicated by the fact that they pur-
chased their share of these securities
outright with their own funds. The
facts furnish no basis for these indict-
ments. They could have been founded
only upon wholly prejudiced miscon-
ception of what actually occurred. We
are confident that the ensuing litiga-
tion will result in our complete vindi-
ration -