Evening star., 1943-01-22
Flynn
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Tlvnn
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securities acquired while he was
chamberlain were caused by a rea
estate tumble" in 1928.
Investments Explained.
Mr. Be"le told the committee that
the funds in question were court
trust funds, some representing
moneys deposited with the Cham
berlain for children without guard
ianS Of total of s13,330 900, some
S8,240,000 was in cash, $3.50 900 in
city bonds, sl,250,0 900 In guaranteed
mortgages and So, ,42O, 900 in mortgage
certificates. The mortgage securities
had been purchased at par, he said
and most were in default at the time
Of his examination early in 1884.
Of the guaranteed mortgages, ST.
235 ,545 had been bought from the
State Title g. Mortgage Co. he testi-
fed, and of these Sl169,345 were in
default. He said $500, 100 worth of
mortgage certificates had been
bought from the same firm, and all
were in default.
In his testimony Mr.. Flynn said
it was not true" that the State Title
& Mortgage Co. was "a bad COM
! pany" and denied that he gave the
| firm any special consideration.
Mr.. Berle attributed the defaults
! in part to the general real estate
slump and in part to "the lower
quality of securities sold by the
State company.
He said his investigation brought
out that after the crash, when it
became necessary to pay money out
of an account which held defaulted
securities, money was transferred
from another account which was in
sound shape. Mr.. Berle called the
practice transferring from solvent
funds and replacing it with a se-
curity of doubtful value" AS cham
berlain he ordered the practice dis
continued
Out of Office at Time.
The practice Of shifting from one
! trust fund to another did not, of
course, occur during Mr.. Flynn's
term of office" Mr.. Berle told the
/ committee. He ended his term be-
/ fore the crash, while the real estate
market was in good shape"
Mr.. Berle also emphasized that
while the fund transfer was duly
reported to the corporation counsel's
office, they did not bring any
action against Mr.. Flynn"
Mr.. Flynn, wearing a white car
nation, sat in the rear of a press
table few feet from Mr.. Berle.
The Assistant Secretary of State
said he knew nothing of the paw
ing block incident, or of Mr.. Flynn's
appointment, while sheriff, of Dutch
Schultz as deputy.
He told Senator Vandenberg. Re-
publican, of Michigan he was in
cluded in no State Department
discussions concerning a diplomatic
post for Mr.. Flynn, as envoy to
either Mexico or Australia.
Also under questioning by Sena-
tor Vandenberg, MI. Berle said he
had heard while chamberlain that
a company in which Mr.. Flynn was
interested had borrowed money
from the State Title and Mortgage
Co. to finance garage.
Did you think that had any
bearing on the situation?" Senator
! Vardenberg asked
I couldn't tell at the time" Mr.
Berle said.
Coburn's Message.
Chairman Connally announced
receipt Of the following telegram
from Mr.. Coburn:
My name has been mentioned
connection committee hearing or
confirmation Edward J. Flynn. ]
have no knowledge or evidence Mr.
Flynn knew work on his property
was being done with city material
and labor l DO not wish to be a
witness either for or against Senate
continuation"
MI. Coburn, Senator Bridges had
said, would appear before the com
mittee to tell why Flynn was
eXOnerated'
Others asked TO appear are Rob-
ert l.. Moran, former Bronx commits
sioner of public works: Paul J. Kern.
former New York City civil service
commissioner, and William B. Her
lands, city commissioner of investi-
cation.
Mr.. Kern MADE the origina,
charges regarding the alleged use
of city-owned paving blocks on Mr.
Flynn's estate. Mr., Herlands in
vesttgated the accusation at the
request Of Mr.. La Guardia and sub
mitted report to the Mayor aftel
Mr.. Kern had made public hi.
, charges
) Senator Connally said Mayo, La
Guardia would testify tomorrow
morning.
In New York, Mayor La Guards
said through his secretary that hi
was not coming to Washington to
daV to testify at the FlVnn hearing