Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-08-26
Builder al FILA Quiz
Reports Profit Of
S5OO,OOO legally
BY the Assoeiotsd Press

BY The Asseeiotsd Press
NEW YORK, Aug. 26.-The
builder of q 81 million Queens
apartment project insured by
the Federal Housing Administra-
ton testified today he and his
brother made half a million dol
lars legally on. the deal.
Morty Wolosof told his story
at a hearing Of the Senate Bank
ing and Currency Committee in
vestigating irregularities In FILA
loans. The one-man hearing is
being conducted by Senator
Bush. Republican, of Connecti-
cut.
Mr.. wolosof said that. through
an appraisal Of the Alley Pond
Apartments in Bayside. he in
creased the book value OF the
buildings by 1897 900 so that q
surplus was created.
Calls Action Legal.
Mr.. Wolosoff said this. made it
legal under New York corporate
laws to pay himself and his
brother $250,000 each in divi-
dends.
The witness first said the APP
praisal was made so that an
unbiased estimate of the build
ings, then just completed. would
be available for entry on the
corporate books,
Pressed by committee counsel,
Mr.. Wolosof said, 81 think that
was right" when asked If the
States corporate laws prevent
distribution of dividends except
when there is a surplus and If
he had the appraisal made so
the value could be increased and
q dividend declared.
Mr.. Wolosof said the FILA
mortgage on the six-building
project, based on an estimate Of
their cost, amounted to $4,612,-
600, but that the actual building
cost was $4,176, 423.
Tells of Appraisal.
The witness testified the ap-
praiser hired after completion of
the buildings was paid between
$1,000 and $4,000" and appraised
the properties, at about 1897, 900
above their cost.
Under questioning Mr.. Wolo-
soft said the corporation direc-
tors authorized the appraisal,
but when asked who the direc-
tors were. replied:
There must be thrree-my
brother is one-but I don't know
who the other one is"
did you distribute to your
self half million dollar as divi-
dends?" he was asked.
Mr.. Wolosof said that was so,
with half the money going to
him and half to his brother.
Nothing Wrong, He Says.
MIR. Wolosof said he believed
there was nothing wrong in max
ing the half-million- dollar profit.
"The Government wanted
housing" he said. II think there
was value received. The Govern
ment got (mortgage) premiums
and they got housing and I got
profits.
Mr.. Wolosoff insisted the
tenants were not hurt financially.
The witness said that If he mad
told the FILA his construction
costs were less than the mortgage
and had offered to reduce the
mortgage it would not have
helped anybody.
He said reducing the mortgage
would have reduced carrying
charges about $40 or SIS month
on each apartment suite. To a
question whether the tenants
would not therefore have bene-
flied by that amount, he replied:
"That is not So"
Says Tenant Wasn't Hurt.
Mr.. Wolosoff held that the
FILA allowed him to charge rent
on the basis of $50 a room per
month, but that the going rate"
for apartments in that area was
$24 a month per room and that
was all he could get.
1.-THE tenant was not hurt"
Mr.. Wolosoff said firmly.
The witness, a nattily-dreSsed,
forceful speaker Of about As
years, said there were risks and
uncertainties in building apart
ments and that he didn't know
how much they would cost until
they were finished.
Its no bargain owning those
buildings" he said. "You can't
make any money. We used to
have big waiting lists. If I
could raise the rental we could
make a dollar"
Mr.. Wolosof complained that
the FILA was competing with him
through Section 213 of the Hous-
ing Act, which provides Govern
ment-insured mortgages for CO.
operative apartments which rent
for less than ordinary apart
ments.
He said his profit on the con-