Evening star., 1935-04-13
SABBATH ATTACKS
FIRST WARDMAN
BONDS AS FRAUD
Head of House Committee
Pledges Prosecution if
Possible.
ATTORNEY O'C0NNELL
TELLS OF SUIT CUSTER
Five District Supreme Court
Judges Will Be Heard on Col.
lusion Charge.

Declaring the Original issue of
Wardman bonds was fraud on the
people," Chairman SABBATH of the spe-
cial House committee investigating
mortgage refinancing announced today
his committee will make every effort
to have the guilty parties prosecuted.
The securities were sold through the
banking houses of Halsey Stuart g.
Co. and Hambleton g. Co., but several
prominent Washington men were in
volved in floating the issue.
II know the original issue of these
bonds was fraud on the people"
SABBATH said. Il don't know whether
we will be able to reach them because
of the lapse of time. but If we can
find any way to have them prosecuted,
we will do so"
Representative Fuller. Democrat. Of
Arkansas, another member of the
committee, said: The bond situation
is worse than the stock exchange
scandal"
O'Connell on Stand.
1IlcSC 1OlIO"CA bCoOhliOliy
by william B. O'Connell. local attor-
ney, who represented former Secre-
tary of the Treasury Leslie NJ Shaw
in the Wardman litigation.
O'Connell said he filed foreclosure
suit in District Supreme Court for
Shaw, and that while his suit was
pending, counsel for the bankers went
before another judge in the same
court and secured the appointment Of
their own receivers, thereby kicking
his suit out of the window"
The second suit on its face was
filed on behalf of bondholders. and
O'Connell did not explain his state
ment that the attorneys acted for the
bankers.
Representative Dirksen of Illinois
asked O'Connell If he thought the
bankers had tried to salvage the
Wardman properties.
II think they tried to steal the
property" O'Connell said.
WELL" replied Dirksen, "salvaging is
polite word for stealing"
O'ConneH Sent Dare.
O'Connell was summoned after he
sent q telegram to committee counsel
daring him to call him as witness,
Five justices of the court were
scheduled to appear as witnesses, and
it is expected they will be questioned
about the collusion charges in con-
nection with the Wardman foreclosure
suit. made by w. Bissell Thomas. at
torney. who represented minority
Wardman bond interests.
Thomas did no explain what he
meant by the use of the term "col-
lusive suit" but did say In response
to q question by Representative Gull
kin, Republican of New York. that he
considered it an indictment Of the
court
The justices who have been invited
to appear before the committee are
Chief Justice Alfred A. Wheat and
Associate Justices Oscar r. Luhring,
James M. Proctor and Jesse G. Adkins
of the District Supreme Court, and
Associate Justice William Hitz of the
District Court of Appeals.
Co-Receivers Disagree.
George E. Sullivan, attorney. said
he resigned as receiver for the La
Sale Apartments because he could not
agree with his co-receivers-Edward
F. Colladay and Enoch A. Chase-in
a settlement worked out with Dul1n
g. Martin for compromising overdue
rent. Dulin g. Martin, a tenant in
the apartment building, offered 81, 800
in settlement of unpaid rent aggre-
eating $4,000, provided a 20-year
lease be Cancelled. Sullivan said he
considered this compromise too liberal
from the receivers standpoint. He
added. however, that the agreement
was submitted to the court and ap-
proved.
H. Clifford Bangs, real estate man,
said he had expressed the belief the
top rental value Of the space occupied
by Dulin g. Martin was $4,000 a year
shortly before 1t was rented to the
Government for Office purposes at
$4,000 year.
ct looks like Washington bond
holders hold losing cards until the
Government comes along and pays
twice the rental value for their prop
erty," the committee observed.
Refinancing Described.
Details of the refinancing of the
Shoreham Hotel were described by
Walter B. City, who said he "had his
chest out" because he thought good
job had been done in reorganizing the
property; He testified that new bonds,
paying lower rate of interest, have
been issued to holders of the old bonds
and that Harry M. Bralove, builder,
has acquired any equitable interest
there may be in the property.
Bralove testified that he acquired
the equitable interest in the hotel,
which is subject to some $4,000 900 in
debts. by cancelling mechanics liens
for $270,000. He also told the COM
mittee he has purchased 100000 of
Shoreham notes from brokers at prices
ranging from 20 to ~ cents on the
dollar. He said he regarded them as
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