Evening star., 1937-05-10

W LhS ACHGOCIuItC NuLWUut NOW"
mittee, and Pierre S. du Pont, mem
Der OF the munitions family, are &C.
cused BY the Government of hauing
engaged tn fictitious stock sales to
establish losses In order to reduce
amount OF their income tar pay
ments.
By the Associated Press.
NEW YORK, May 10.-In the Sum-
mer months before the 1929 Wall
Street panic, when the bulls" were
In control Of the stock market, Pierre
S. du Pont was bear" and was a
heavy seller Of securities.
This was brought out today in the
hearing of the income tax case against
Du Pont and his close business as
soeiate, John j. Raskob, from whom
the Government seeks to collect a
total of approximately $l,8OO,OOO in
alleged deficiency taxes for 1929.
Mason B. Leming, special attorney
for the Bureau of Internal Revenue
and chief Of Government counsel in
the tax case, introduced into evil
dence memorandum from the elder
ly Du Pont to his secretary, Frank
McHugh. dated June 25, 1929.
It read:
Dear Frank:
Il have been thinking of selling
more General Motors common, but
had not made up my mind to do so
until I talked with ]. J. r. this after
noon.
IF the stock goes to rs, let out
100000 shares, which will leave about
100, ,o00 Place money on call. prefer
ably with Morgan & Co. or other
banks than the Bankers Trust Co., so
as~to divide total"
The initials in the letter referred to
Raskob, and Leming, when asked by
Richard L. Disney of the United
States Board of Tax Appeals who is
hearing the case, for what purpose
the letter was introduced, the Govern
ment attorney said:
This is just another item showing
the close relationship between du Pont
and Raskob"
Offers to Save Time.
when Leming has introduced such evil
dence, James S. Y. WINS, chief counsel
for du Pont, remarked:
We'll save you plenty of time by
stipulating the closeness of their rela-
tionship."
During the Summer months before
the crash, when call loans averaged
around 20 per cent, du Pont had NIL
Lions of dollars on call The exact
amount of his call loan account with
the Bankers Trust Co., where he kept
his principal account. has not been
brought out.
His memorandum to McHugh to
sell when General Motors common
reached 76 came after stock split-up.
Not long before this General Motors
In which Du Pont and Raskob had
been heavily interested-reached
214A before the split-up.
Du Pont was asked when the noon
adjournment was taken If the sale
was made at 76.
I'D have to look it up" he replied.
IT don't recall whether this particular
transaction was made"
If it Nas, it would have meant
around sl5,000,0OO added to the
money Du Pont had out in call loans
In the bull market" days.
Ieming has introduced much evi-
dence to show the close association be-
tween Raskob and Du Pont. He
charges that they acted with mutual
intent IN a series of cross sales of
stock after the crash. AS a result of
these sales, Du Pont and Raskob de-
Quoted losses totaling more than
$7,000,000 on their 1929 returns. The
Government, charging the sales were
fictitious and were accompanied by a
repurchasing understanding, seeks to
collect s1026,34O deficiency tax from
RAskob and S6l7,3l6 from Du Pont.
The balancing off" transaction
came late in January. 1880. 1t has
received little attention in the case
90 far.