Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-06-04
WARDMAN CALLS
SELF F|GUREHEAD,
SCORES BANKERS"
informs House Inquiry He
Knew Nothing of Re.
financing.
SABBATH WILL INSIST
ON GRAND JURY PROBE
Thought He Was Rich, Woke Up
Without Nickel, Realty
Operator Says.
BY JOHN II. CLINE.

holdings here with an ultimate loss
of millions of dollars to the investing
public, today testified ne knew roth
ing about the disastrous reflnanclne
Of his holdings by Halsey, Stuart IL Co.
The 62-year- builder told House
subcommittee investigating mortgage
refnancing that he was mere figure
head so far as the fiscal affairs OF
the companies bearing his name were
concerned
IT did the building work." he said,
and signed the papers when they
we're put before me. All that stuff
vas foreign to me-"
He said Leonard Stanley. Halsey
Stuart representative. ran the show.
II didn't even have an opinion about
the matter" he said. Stanley had all
the opinions. You'll never stop this
sort of business until you get rid OF
all the Halsey Stuarts in the country.
Grand Jury May Get Case.
After it had been testified that rep
resentatiyes of the bankers still
have a hand in the management, Rep
resentative Sabbath, chairman OF the
subcommittee. said he was going to
insist the matter be presented to the
grand jury.
Il am convinced the statute of limi-
tations has not run-that this is a
continuing fraud" he declared. Il am
going to insist that the matter be
presented for indictment"
Wardman said he was cleaned out
by the bankers" and didn't even know
what was happening.
They wiped me out" he declared.
''They didn't leave nickel. I'm broke
now, but I'm still going"
Are you planning to build up an
member asked.
mo sir" Wardman replied. I'm
through with that stuff"
Wardman said he was retained as
nominal head of the organization
at salary of $4,000 a year.
Gave Up Salary.
st didn't know then what I know
now" he said. and deliberately gave
up nv salary because I thought it
would help the security holders"
He said he thought the management
of the properties by Thomas D. Car
son and Humphrey Lloyd. put in by
1.-THE bankers" had been Intentionally
destructive"
The bankers" he said, deliberately
depressed the price Of the securities
SO they could wipe out the widows
and orphans" and buy up the bonds
themselves. Wardman said he did
not even know whether he was making
any money before the crash.
Il thought I was rich man." he
said. why, was paying big income
taxes I raised the salaries of my as
sociates and then woke up and found
didn't have nickel.
Refinancing Described.
James P. Hobbs took the stand
after Wardman his former associate,
at first failed to answer his name.
Hobbs told of the refinancing of the
Wardman properties through Halsey-
Stuart Co.. when sll,00O,000 of first
mortgage reflnancing bonds and 81
SOC. 900 of debentures were issued and
sold.
He said no provision was made for
paying s4.000,000 of the bonds falling
due in 1881, three years after the
refinancing. and expressed the opinion
it was very unlikely" the properties
could earn enough to pay this sum.
The witness then described the in
tricate corporate set-up of the made
over Wardman Companies, which
lodged control of all the properties in
the bankers. H. l.. Stuart, he said,
insisted that current liabilities of the
Wardman Companies be reduced, and
to accomplish this more than $4,000
600 of three-year notes were issued to
creditors. Although reluctant to admit
the controlling Wardman Co. was in
solvent at the time, Hobbs said their
liabilities were greater than their
assets.
Appraisals Differ.
He testified that the firm of Ford.
Bacon 81 Davis, at the request of the
bankers appraised the properties at
100000 few months after Weaver
Bros had fixed the value at s23,-
100000.
Hobbs said he was retained after the
reorganization under a f1ve-year con-
tract at $4,000 year, but resigned
after six months because he expected
to be asked to resign. He said he had
no work to do.
Robert Taylor, another of Ward
mans associates before the refinanc-
ing, told the committee the bankers
advanced money on very doubtful"
Sdrriritu from tho solo of WardnnQn
bonds to keep the Wardman cor
poration from going into bankruptcy.
They did this he said, because they
wanted to dispose of some of the Sc
curities still on their hands before the
crash came.
r. S. " Hartz, speaking for the
employees savings fund of the B. Il o.
Railroad, which bought 100000 of
the bonds, said he believed Halsey
Stuart g. Co. was guilty Of "tragically
bad Judgment" in the reflnancing, but
said he has never believed they inten-
tionally defrauded those to whom they
sold the bonds. He said he believed
the company suffered financially and
lost customers and prestige.
He also said he regarded Mr.. Carson
as an honorable and upright gentle
man. and that he as bondholder
would be willing to have him continue
his work in managing the properties.
Hartz, however, criticized the plan
under which the properties are now
operated as harmful in several re-
spects to the bondholders.