Evening star., 1953-06-18
Suspect Found
In Real Estate
Swiind|e Here
Forgery Worrunt
Issued Against Man
In Mental Hospital

major swindle here has been is.
sued and will be served as soor
as the man is released from 8
Maryland mental institution
United States Attorney Leo A
Rover announced today.
The swindle involves the sale
of non-exiStent second trust
notes on private homes. Source!
in the prosecutors Office dis
closed that while the inveStiga'
ton is not yet completed, it il
estimated that $250,000 is in
volved.
Charged in the warrant with
forgery was Emmanuel Macht
who~l lived at Quebec House here
Mr.. Rover said Macht entered
a Maryland mental hospital 6
few days ago.
1--WE know where he Is, but we
have been informed he is badly
in need of psychiatric treat
ment," Mr.. Rover said: "We
checked directly with the insti-
tuition to guard against malin-
gering."
Mr.. Rover said the warrant
and request for a bond of $751;
O00-will be forwarded to the
United States Attorney in Bal
timore. Mr.. Rover explained
that the institution will notify
the Baltimore prosecutor before
Macht leaves so that he can i'm
mediately be served with the
warrant.
"Surface Only Scratched"
AS for the investigation of the
fraudulent sale of notes, Mr.. Rover
said, 1--WE have only scratched
the surface"
w. r. Downing, secretary OF
the District Real Estate Com
mission, said today that so far
only one complaint has been
filed with the commission in con-
nection with the swindle. This
was placed by a man who said he
bought 20 deeds of trust from the
suspect. Total cash involved was
$50, 900, Mr.. Downing said, add
ing that "some or all" of these
deeds may be fraudulent.
Mr.. Downing refused to iden-
tify the complainant. He said
he has reason to believe that
more complaints will be filed.
One Of the assistant prose-
cutors working on the case dis
closed that several more COM
plants had reached his office.
These came from Mach's Gus
toners who complained he had
missed some monthly INSTALL
mentS.
Meanwhile, David H. Legum of
the real estate firm of Legum &
Gerber, which last employed
Macht, issued a statement say
ing he was no longer with the
firm and that the license issued
to him as an employe of the
company had been returned to
the Real Estate Commission
when he left the firm.
The company said it under
stood he had been in the real
estate business approximately 10
years, during which he worked
for other firms here and in Bal
timore.
Company UncOverS Fraud.
The company said it had first
uncovered the facts about the
case in the course of a routine
check. The notes which might
be fraudulent. the company said,
were sold independently and had
no connection with the company.
The alleged racket was dis
closed when Assistant United
States Attorney John B. Dia-
mond III asked police to spread
an area-wide dragnet for Macht,
Mr.. Diamond declared the
swindle may be one of the great
est real estate rackets in the
Districts history.
A full-Scale investigation by
the Real Estate Commission,
workers in the Office of the
recorder of deeds, police check
and fraud squad detectives and
the United States attorneys Of
flee is under way.
Mr.. Diamond described the
racket as the sale of false Sec
ond trust notes to unSuspecting
persons. The notes have been
drawn up on newly purchased
properties without the actual
owners knowledge or consent,
he said.
The racket. Mr.. Diamond re-
vealed, may have been worked
by Macht for the past eight
to 10 years. He said he
couldn't even venture a guess as
to the number of persons who
may have been used in the
swindle.
How Plan Worked.
He described the racket in
the following manner:
The salesman would pick out
a piece of property known to be
encountered only by a first trust
usually property recently sold
by the unsuspecting real estate
company for whom he worked
The salesman then would draw
up a second trust note and sign
it either with forged or fictitious
names. He would then have it re-
corded at the recorder of deeds
office and attached to the original
property title hoping that the
original owner would not dis
cover it.
At that point the salesman
would seek out q prospect and
persuade him to buy the second
trust as an investment. paying
higher interest rates than banks
Macht is believed to have
kept an elaborate bookkeep.
ing system. Each month
he sent money orders to the
buyers of the worthless notes
for the regular inStallmentS in
order to allay suspicious.