The Key West citizen. [volume] (Key West, Fla.) 1879-current, 1954-09-11
FLA Takes Steps To Recover
''Windfall' Housing Millions
BY STERLING r. GREEN


WASHINGTON R-The Federal
Housing Administration today took
It's first direct step toward claim
ing for the government millions OF
dollars in 'windfall" housing
profits.
Acting in the case of the big
Linwood Park Apartment project
near TT. Lee, N. j., the FILA
ignored a threatened court fight
against the first of several moves
aimed at compelling "windfall'' re-
cipients to return money they made
on inflated government-backed con-
struction loans.
Investigations by government
housing officials and the Senate
Banking Committee have revealed
some builders used a now-expircd
postwar apartment program to get
FHA-insured mortgage loans far in
excess of actual construction costs.
Some pocketed the difference, net
ting profits labeled as "windfallso
by the probers.
The FILA called a special meet
ing for Sept. % of preferred stock
holders of Is corporations which
comprise Linwood Park, Inc. The
agency said it intends to remove
the projects present directors and
elect new ones as first step in
recovering $2,426,821 in alleged
"windfall" profits cleaned from
FHA-insured loans by which the
project was financed.
If it can make recovery in the
Linwood Park case, the FILA has
said it will try to claim the bulk
of more than 40 million dollars
allegedly distributed as profits by
building corporations across the
country under the apartment con-
struction program which expired
in 1850.
The special meeting will be held
In the corporation offices at Hack
ensack, M. 1t was called by FILA
Commissioner Norman p. Mason
through an advertisement in a
Hackensack newspaper.
In effect, FILA was calling il.
self into a meeting, since the
agency owns all the preferred
stock in the corporations. FILA
employees will represent the agency
at the meeting.
Mason acted after Sidney Sarner
president of Linwood, refused TO
call the meeting as FILA requested
Aug. %.
FILA said an attorney represent
ing the Is corporations has notified
Mason by letter that court proceed
'ings will be started to bar FILA
from holding the stockholders
meeting.
FILA contends the sswindfalln
funds were distributed in viola
ton of the projects charter-that
only earned income could be dis
tributed among the common stock.
holders. The agency alleges that
Llnwood Park sponsors obtained
FHA-insured loans totaling $685.
600, but actually spent only &c.
662,5OO on the project and distrib-
buted the rest.
In letter to Sarner directing"
that the special meeting be called.
Mason charged that Linwood Park
had violated its charter in these
four ways:
1t engaged in business other than
the construction or operation of a
rental housing project by making
loans to other corporations con-
trolled by the same persons who
control Linwood Park.
1t redeemed portions of its COM
mon stock without FIJI approval.
1t failed to furnish data on build
ing costs and other information
requested by FILA during the in
vestigation into alleged housing
abuses.
Acting without prior FILA ap-
proval, it compelled tenants to pay
charge for the projects tele-
vision antennas and garage use,
even though tenants may not have
owned automobiles or teleyision
sets.