Evening star., 1938-12-09
M(Kesson & Robbins
Probe Launched by
Attorney General
Affairs Of Drug Firm
Called 'Funtustic'
By Director
~ the Associated Press.

~ the Associated Press.
NEW YORK. Dec. 9-Attorney
General John j. Bennett, jr., today
started an investigation of Nc
Kesson & Robbins, Inc, $87 100000
drug concern, whose financial affairs
were described by director as 80
darned fantastic we still can't be-
heve them"
Mr.. Bennett sent Max Furman
and Joseph F. Ruggieri, assistant
attorneys general, to confer with
stock exchange officials and to make
inquiries among stock exchange
firms to determine what action his
Office will take.
The drug concern went into Fed
eral receivership yesterday.
Federal Judge Alfred G. Coke,
acting on the company's own petit
ton, appointed the trustee yes
terday, with the Securities and Ex-
change Commission as a party, to
direct reorganization of the COM
pany under the new Federal Chan
dler Act.
At the same time the New York
Stock Exchange Committee on
Stock List released a transcript of
testimony by two of the firms di-
rectors, w. l.. Cummings and j. F..
Thompson. concerning the tangled
affairs OF the company.
Detail Company Operations.
In detail, they told of the opera
tions of the company's crude drugs
department in which Justification of
books, mismanagement and waste
were charged in an equity re-
ceivership action brought in District
Court at Hartford, Conn, last Tues
day and superseded by the Federal
Court appointment yesterday.
Describing operations of the crude
drug department. Mr. Cummings
told the Exchange Committee. lit
may be the whole thing is just a
hollow balloon, just a she'll There
may be nothing there. That is the
worst of the picture. However, we
have Mr.. Dietrichs statement
George E. Dietrich, assistant treas
urer) that the loss is in excess of
$1O,OOOOOO.
fantastic that we still can't believe
them"
He said there was no involve
ment of any other part of the busi-
ness"
Under COster's Control.
Mr.. Cummings said the crude drug
department was under the exclu-
sive control of the president of the
company, F. Donald Coster. Assets
Of the department were carried in
the balance sheet at S17,00O,O00.
An investigation of the depart
ment began, Mr. Cummings testi-
fed, when Mr.. Thompson discovered
reported inventories of the depart
ment were not covered by insurance.
The inquiry revealed. Mr.. Cum
mings and Mr.. Thompson said, that:
warehouses which handled busi-
ness of the department, and reported
monthly on incoming and outgoing
inventories, were just plain mailing
addresses"
Say Reports Forgeries.
Annual reports on an associate
trading firm, w. w. Smith & Co.,
an English partnership with Offices
In Montreal, were forgeries."
On the warehouses" Mr.. Thomp-
son testified that mail has gone to
them and been forwarded some
where else. They are all on the
most elaborate engraved letterheads,
all these individual companies which
are reported to have the merchan-
disc: one of them is the Office of
public stenographer: one is the
office of mimeograph operator, and
things like that
Mr.. Cummings told the committee
that after Mr.. Thompson started
his inquiry several weeks ago, "the
next we heard of there was a re-
ceiver appointed for the company"
(7I9e Hartford action)
He said mo criminal actions have
been started. We never thought
about it. Didn't know whether it
was our problem, at all. 1t was the
receivers business"
William j. Wardell was appointed
trustee and Charles F. Michaels,
executive vice president of the COM