The Waterbury Democrat., 1933-06-01

from witnesses dramatic story of the setting up of q $2,OOO,O0O management fund and its split-up by the principal officers of the in- stitutions.
 Frank J. Mcguire, assistant sec retary of the National City Co, Identified the minutes of directors meetings at which the fund was created, and Metallic read to the jury the terms by which the fund was to be distributed among the more fortunate executives.
 The directors decided to set up, the fund in January, 1927. They ordered setup q reserve account out of current earnings. amounting to s per cent after the net oper- ating expenses and the write off for staxes. depreciation and other re- serves had been deducted plus 20 per cent of remaining current earnings"
 The executive committee, which the government claims was then dominated by Mitchell, was to have sole power to divide his fund among the officers" who had contributed most to the development and ad- vancement of the company"
 Mitchell's share of the fund, which reached s2,000,0O0 in 1929, was to be B 1-S per cent, and that of other officers varied from 2 1-2 to II per cent, according to their importance to the company.
 This shall not be construed as contract" the directors resolu- ton said, 'and it may be modified or repealed at the discretion of the executive committee"
 Later. the directors voted to call the scheme standing resolution to apply each year thereafter un- til further ordered by the board"
 In 1929, the directors reapprov- ed and readdopted the resolution of 1927, and again established the 33 Ia per cent as Mitchelrs share.
 The government has shown by previous witnesses that Mitchell received from this fund $666,666 as his percentage, but that he did not include the sum in his income tax for the year.
 Several months later, the de- fense claims, the board of directors by new set of resolutions. declar- ed that the slipup from the man. agement fund was only in "ad- vance, to be repaid by the parti- cipants out of future earnings, if any.
 In statements to the jury, Medalie called this resolution a piece of "sanctimonious hypocrisy" ev l. denced lat time when the pub lie, the stockholders, and govern ment officials were becoming cur fous as to the workings of such funds"
 At meeting of the directors on June 29. 1929. the minutes showed that "the chairman (MitchelD reported an accumula- ton of $2,900,00O in the manage ment fund" and it was decided to split $2,000,00O of this, leaving $90O,000, as a reserve.
 When the resolution declaring the management fund shares an "advance" was read to the jurors, Juror E. J. O'Connell asked: Was that done at a meeting of the ex- ecutive committee or of the board of directors?"
 saThe board of directors" Ma guire replied.
 Medalie read into the records resolution passed by the directo- rate on December 30, 1880, in which it was shown that there still remained in the management fund the sum of $140.93S.9S, which had not been distributed to the regular participants. The resolution rccited that the saiarics given most of the institu- lions officials were How" none of them with the exception of Mitch- eJl's and one other rising to more than $35.0oO.
 The officers, however, who had shared in management 6unds, had increased their stand ards of living, the resolution stated. far beyond their ordinary Income from salaries.
 1t was therefore urged that the remaining in the fund be split up. and the division was voted. Mitchell received s50,515.53 from this fund. ly ch:ck dated January 2. 1881. Tie check was 'etrcduced in evidence.