Evening star., 1932-09-29
Handling of s11,0o0,oO0 Re.
financing Bonds !nvesti.
gated at Milwaukee.
JUSTICE Department
MEN MAP OUT ACTION
Apartments and Hotels in Hands
of Receivers Following Col
lapse of Issue.

Department of Justice representatives
today were preparing to present evil
dence of alleged irregularities in con-
nection with the sale of the so-called
Wardman refinancing bond issue, based
on IL large properties here, TO a Fed
eral grand jury in Milwaukee.
The bend issue aggregated S13.500.-
600, Of which approximately sl1000000
of bonds actually were sold through
Halsey, Steuart & Co. The great ma
jority of these bonds were sold through
the mails and 1t Is expected the Gov
eminent prosecutors will seek a mail
| fraud indictment. 1t was understood
the decision to seek the indictment in
Milwaukee grew out of the fact a large
number of the bonds were sold there.
Forrest A. Harness special Assistant
Attorney General. and E. j. Armbruster,
accountant attached to the Bureau of
Investigation, conferred with Federal
officials in Chicago yesterday before go
ing to Milwaukee.
Syndicate Handled Sale.
Halsey, Stuart & Co. maintain an
Office in Chicago. They sold the bonds
with the aid of a syndicate including
A. 3. Leach & Co., Wardman Construc-
tion Co., Wardman Real Properties,
Roger Caldwell of New York, William
r. Compton Co., and Hambleton & Co.
The bonds were secured by a first and
refunding mortgage on the Wardman
Park Hotel. the addition thereto, the
Carlton Hotel. the Boulevard Apart
ments. Cathedral, north and center;
the Chastleton Apartments. the High
lands Apartment Hotel Stoneleigh
Court, 2700 Connecticut avenue, the De-
partment of Justice Building and the
fOI1r largo ~ h,t;1l ot
necticut avenue and Davenport street.
The properties now are in the hands
Of receivers appointed by the District
Supreme Court following a collapse of
the bond issue, March 2, 1881.
Unable to Meet Interest.
The receivers were appointed after
the owning corporations announced
they would be unable to meet the in
terest payment due March |, 1881. The
announcement was made by counsel for
the Hotels Management and Securities
Corporation. which controlled stock of
the Wardman Realty & Construction
Co., which, in turn, controlled the
Wardman Real Estate Properties, Inc,
the title holders.
The Sl1, 900 issue of first and re-
funding mortgage 6ia per cent serial
gold bonds was made in September,
1928, when the syndicate OF bond houses
published widely advertisements con-
cerning the huge financial operation.
In these advertisements, the state
ment of the bond houses carried the
following statement as to valuation OF
the properties securing the issue:
Based on reproduction cost new, less
depreciation, independent engineers re-
port a valuation of s28,887,l l46 (in-
Guiding land. buildings, furniture, fur
nishings and equipment and valu-
alton of S2,153,687 for Wardman Park
Hotel addition when completed. but ex-
elusive of furnishings to be installed
therein These bonds, together with
the total underlying mortgages to be
outstanding. will represent SIS per cent
of this valuation"
Sharp criticism of alleged inflated
appraisals of some of the properties in
cluded in this refinancing bond issue,
however, were contained in the report
made later by the Blaine Subcom-
mittee of the Senate, which made an
extensive investigation Of real estate
conditions here.
A number of the properties involved
in the bond issue have been sold since.