Evening star., 1934-07-22

ChsCkS SlEneO py bDem 10 De 100 per
day. As a matter Of fact, the evi-
dence before the committee shows the
Of checks to be more nearly
10 to Is per day than 100.
Manager Is Praised.
The fact is that the MANAGEMENT
Of the hotel employed before receiver
ship, having been retained by the re-
is very largely responsible for
the efficient running Of the hotel. In
the management the re-
ceivers are TO be commended.
This committee has found in the
course of its minute and detailed in
vestigation that Mr.. Polio. manager
Of the hotel, has made a most salts
factory Job of his management in
every respect and the success Of the
hotel is largely attributable to his
One transaction, which the sub
branded as ''palpable
fraud" upon the Mayfiower Hotel Co
and especially upon the ''unsuspectine
involved the American
Bond 81 Mortgage Co. In this con-
nection, the report said
Testimony shows that at one time
there was $435, 900 due the Mayfiower
Hotel Co. on account of the sale of
these bonds; that at the same time
the American Bond g. Mortgage Co
owned certain preferred stock in the
Mayfiower Hotel Co. Presumably this
stock has been given to the American
Bond a. Mortgage Co. gratis. At any
rate, the American Bond ~ Mortgage
Co. persuaded the Mayfiower Hotel
Co. to accept in lieu of the S435. .00O
due it, preferred stock in its own
company. Thereafter an audit was
made Of the American Bond g. Mort
gage Co. books, and 1t was alleged
that instead of being indebted to the
Hotel Co. in the sum OF
s435 900. the amount was only SAT-
BOO. Thereupon the American Bond
& Mortgage Co. called upon the May
flower Hotel to pay to it in cash the
sum Of approximately $4,000, which
1t did.
Directors InterlOcking.
THE testimony before the commit
tee also showed that the directors of
the two companies we're interlocking,
and in most instances dummy direc-
tors. The occurrence Just described,
in the opinion Of the committee, was q
palpable fraud upon the Mayfiower Ho-
tel Co, and especially upon the Unsus-
pecting bondholders, and those re-
sponsible for such actions should
have been indicted and vigorously
1.-The receivers of the hotel testi-
fed that they have made repeated at
5empts to collect this sum, but that
the American Bond g. Mortgage Co.
is bankrupt, and thus far the trustee
in bankruptcy has refused even to
recognize the claim.
Former Officer Convicted.
ct is interesting to note also at
this point that William J. Moore, a
former officer of the American Bond
& Mortgage Co., and responsible in
part for this fraud, was indicted and
tried and convicted in Pittsburgh,
Pa, on a charge of using the mails to
1efraud. The committee is informed
hat a jury found the defendant
guilty, but that the verdict was set
aside and a new trial granted. The
hearing on the new trial, the COM
mittee is informed, is set for an
Early date"
Bid Should Be Increased.
The subcommittee also expressed
The opinion that the minimum bid
price of $2,800,000 fixed by the court
Tor the foreclosure sale should be in
creased to $4,000, 900, and that the
,erms of the sale laid down in the de-
;ree should be modified to permit the
,ale to an outside bidder.
THE chairman of this subcom-
nittee" Senator Kean), the report
has had long experience
n the handling of banking and other
financial transactions involving the
ale of bonds on railroads and busi-
ness enterprises generally and re-
)ortS, with the concurrence of his as
ociate, Senator Reynolds, who has
Llso had similar experience as a law
Ter in the handling of such matters,
hat it would be to the interest of
hose who are now bondholders that
hey be given a first mortgage bond
ssue for the deferred purchase price
# the May1ower property if and
when the same shall be sold by the
.ourt at a reasonable rate of interest,
-ather than a short term general
mortgage with a prior reorganization
1rst mortgage loan ahead of it.
"In fact, business experience has
aught us that a first mortgage for
rom so per cent to 6623 per cent of
he actual value of a desirable prop
rty. such as the Mayfiower, on a
ong-term basis at a rate of interest
per cent with a rea-
enable amortization provision, will
ell more readily and at price nearer
ar. than even a short-term first mort
age at an equal or somewhat higher
ate of interest. The investing public
refers a long-term mortgage when
nee assured that it is on reasonable
asis and well secured.
Money on Hand.
There is already a large amount
# money on hand, and under the
law of 1884, S5 per cent
an bind the other Is per cent, so
hat the outstanding bonds should re-
eive exactly the same as the deposited
onds. 1t was estimated that it would
axe S400, 900 in cash to pay out these
mdepoSited bonds, but now this will
lot be necessary. This money could
e appropriated to pay off the receiv-
RS, the committees and their counsel
nd leave a sufficient working capital.
IF necessary, it would be to the in
crest of the bOndholders rather than
iaving a trust put ahead of them, to
ave one coupon, cut from their new
onds so that the earnings for six
1onths would go into working capital.
The committee was informed that
rior to the conclusion OF the hearings
.eld by this subcommittee that certain
f the bondholders, acting in concert,