Evening star., 1934-06-08
HOTEL STOCK DEAL
Barred T0PROBERS
Reynolds Hits Payment to
Mayf|ower of S435,000
Worthless Shares.

A transaction by which the Amer
ican Bond g. Mortgage Co. of Chicago
paid a $435, 900 debt to the Mayflower
Hotel Corporation in alleged worthless
stock was condemned today by Senator
Reynolds, Democrat, of North Carolina
upon resumption of the investigation
by a subcommittee of the Senate Dis
trict Committee of the proposed hotel
financing and reorganization plan.
The deal was disclosed to the sub
committee by Rush Holland, one OF
the three receivers. He said the mort
gage company had sold s435 900 worth
of the hotel bonds and instead OF
turning in cash transferred to the
hotel corporation $435,0 900 worth of
the hotel stock which it owned.
Gave Away S435,000.
I'VE know the stock was not worth
anything" declared Reynolds. The
officers of the corporation must have
known it. They gave away S435 600
which belonged to the bondholders. +"
Later Senator Reynolds asked Hol-
land, who is an attorney. If he did
not believe all persons involved in
the transaction should be subjected to
criminal prosecution.
Holland replied that it involved a
serious question.
Senator Reynolds and Senator
Kean, Democrat, Of New Jersey,
chairman of the subcommittee. both
questioned Holland extensively about
tie salaries and duties of the three
receivers when it was brought out
they had been paid $112,5 since
they took over operation of the hotel
In July, 1854 salary Of about sl2,-
500 a year each.
Explains His Duties.
Holland explained he reached his
office at the hotel about 10:30 or
IL o'clock each day, worked min
imum of four hours and that his
duties consisted chiefly OF signing
checks and making periodic inspec-
tions of the hotel furnishings to de-
termine their physical condition.
DO you open the refrigerator to
see how much food is in it?" asked
Senator Kean.
The steward does that" replied the
witness. i open it to see its physical
condition"
Senator Reynolds asked Holland
how many checks he signed day.
Ten or a dozen some days" he
answered. "On other days / sign as
many as 1875"
Through further interrogation, Sem
ator Reynolds developed the fact that
the receivers do not live at the hotel,
but get their lunch there free.
Asks About Salaries.
Senator Reynolds questioned Hol-
land about the salaries of certain of
the employees and brought out that
the manager receives $4,000 a year;
the housekeeper, $500 a month, and
the wine steward. who purchases all
liquor supplies, $3.50 month.
William P. Richards, District tax
assessor, the first witness called dur
ing the investigation, was called to
introduce for the record the personal
tax returns filed by the hotel for the
fiscal years 1928 to 1884 inclusive.
He had previously told the committee
the personal property assessment in
1881 amounted to about $780, 900, and
it was developed later that circulars
distributed when the securities were
being marketed placed the valuation
of the personal property at 81 SOC, 900.
S. Wallace Dempsey, former men,
ber of Congress, who represents an
outside interest that wants to bid on
the hotel when it is sold for auction,
explained the terms his client will
offer if it is practical for an outsider
to bid.
Mr.. Dempsey asserted this is the logic
al time to sell the property because
hotels here have had an exceptionally
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