Evening star., 1935-06-05
MORTGAGE INQUIRY
TOLD Of S4,0DO,0DO
MAYFLOWER BID
New York Man Never Got
Offer Considered, Wit
ness States.
WARDMAN EVIDENCE
ORDERED TO GARNETT
SABBATH Takes Action to Have 1t
Presented to the Grand
Jury.
BY JOHN H. CLINE.

BY JOHN H. CLINE.
The House investigation of District
mortgage refinancing shifted today
from the Wardman interests to the
MayfloWer Hotel. as S. Wallace Demp-
Sey former House member from New
York. took the witness stand.
Dempsey said he represented New
York hotel man who was willing to
| pay S4,O00.00O for the Mayflower, but
was never able to get his bid conSid-
cred.
II is expected the committee later
will return TO the Wardman proper
ties. reSuming the inquiry which re-
suited Yesterday in the refusal to re-
ceive testimony from Leonard L.
Stanley. formerly connected with Hal
sey. Stuart e. Co. when he would not
agree to waive immunity from GRIM
inal prosecution.
Garnett Is Defended.
Chairman SABBATH of the SubcOm-
mittee conducting the inquiry yes
terday ordered all evidence in the
Wardman case sent to United States
Attorney Leslie c. Garnett for presen-
tation to the grand jury. In this con-
nection Dempsey said:
I understand Mr. Garnett recently
has been subjected to some criticism,
but from all can learn have reached
the conclusion that he is an able,
hard-Working. conscientious public
III 81 III 70
him will receive careful, intelligent
| consideration
This statement came while another
House committee was considering
report recommending Garnett's re-
moval from Office for incompetenCy.
Bond Methods Attacked.
Dempsey explained he knows MOTH
Ing about the Wardman matter. but
desired to discuss the Mayf1ower Hotel
case.
Most OF his criticism was aimed a
methods adopted by the Bondholders
Committee in dealing with the owners
of the bonds He said the committee
compelled deposit of bonds by threat
ening to pay the holders only the
upset price-some 25 per cent less
than would otherwise be received
unless they deposited with the COM
mittee.
He then told of Senator who felt
obliged to deposit with the committee.
This Senator-I will give his name
to the committee in confidence-de-
posted his bonds with the committee
because he was unwilling to take the
25 per cent loss" Dempsey said He
believed it was an outrage and a
steal, but felt he had no choice but
. to deposit. That is an example of
the way the Protective Committee
worked
He predicted the bondholders, under
the present management set-up will
take further losses. particularly in
view of the Summer drop in business
and the collapse of the N. R. A. He
said the management should be in
the hands of the owners. free from
interference by voting trusts or bank
managers.
Evidence Given Garnett.
The first step toward possible crimi-
nal prosecution in connection with
the Waroman refinancing was taken
late yesterday when Chairman Sa-
bath ordered all evidence taken by his
subcommittee turned over to Garnett.
He specified that the evidence be
accompanied by a request from the
subcommittee that Garnett proceed
as speedily as possible to bring to
justice all persons guilty of perpe-
trating a fraud on the Wardman
bondholders.
SABBATH said the investigation by his
subcommittee has disclosed that a
dozen banking houses throughout the
country have employed the same tao
tics attributed to Halsey. Stuart g. Co.
Immunity Waving Refused.
Stanley, who engineered the 1928
ref1nancing of the Wardman proper
ties as vice president of HalSey, Stu
art, refused to waive immunity when
called to the witness stand. and the
committee would not let him testify.
Stanley began by informing the
committee he was engaged in litiga-
ton with the United States Govern
ment" When asked his meaning. he
said he was under indictment in con-
nection with the sale of securities
and that the case is on appeal TO the
United States Supreme Court
The banker made vigorous effort
to submit a statement to the COM
mittee, offering to waive immunity
from criminal prosecution to this ex-
tent. Members of the committee and
their counsel. however, objected stren-
uously. contending any voluntary
statement Stanley might make OBJ
Viously would be favorable to himself
and insisting on the right to cross
examine him at length if he testified
at all
Appearance Is Refused.
Stanley, after comforting with his
attorney, would not agree to this, and
Chairman SABBATH then ruled he could
not testify, declaring he was unwilling
10 do anything which might later
give rise to the charge that the
committee had extended immunity
to any witness.
Charges that the bankers sought to
gain control of the local properties
when they stepped into the refinancing
picture we're denied by George G.
Shriver of Baltimore. vice president
of Hambleton g. Co., one of the bank
ing houses, in 1928. He said the
bankers had no desire to control the
properties until they came to the con-
clusion they were not being properly
managed, and that his firm had taken
o loss in the deal.