Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-04-18
Housing
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spot any questionable transac-
tions or conduct by FILA per-
sonnet"
Mr.. Cole said the investigation
may develop cases leading to
prosecution" of FILA personnel.
The administrator said a re-
port of heavy gambling by lone
top official" helped set off the
investigation. He refused to
name the official or to discuss
the report that the man had
lost as much as $1,000. half his
yearly salary, in a single nights
gambling.
Counsel Put ION Leave"
In the reverse of the Powell
situation, Burton c. Bovard,
FILA general counsel. refused
Mr.. Coles request to resign, and
was put ION leave"
The charges of irregularities
in FILA operations apply to two
parts of the agency's work-in-
surance of loans for large-scale
apartment projects and of loans
to home owners for repair and
modernization. In the latter
cases it is charged that high
pressure repair statesmen have
fleeced thousands of home own
ers through use Of FILA facili-
ties.
The Internal Revenue Service
has uncovered 1.149 instances
over the country, Ill in this area,
where corporations made quick
and often heavy profits by OBJ
tanning FHA-insured 10 ans
based on Government appraisa1s,
of more than the cost of the
apartment projects. In one case,
a promoter obtained a loan of
more than SO million for a prof.
ect that cost less than 81 mil
lion. The promoter pocketed the
difference.
Internal Revenue got into the
situation when many of the pro-
meters asked that the quick
profits be taxed at the Is per
cent capital gains rate, instead
of as ordinary income which, in
some instances would run up to
IS per cent. A decision on this is
pending in tax court here.
The Investigations are aimed
at determining how and why
these corporations and indi-
viduals were allowed to make
such profits.
President Eisenhower ordered
Internal Revenue to turn over
its files on the Lao cases to
Senator Capehart's Banking
Committee. The Indianan said
he had been assured the files
would be in committee hands by
10 am. tomorrow and would
provide "all of the information
about the cases we are seeking"
Revenue officials still haven't
completed going over all of the
1000 apartment loans insured by
FILA.
Another hearing on the FILA
scandals will open Tuesday. That
will be before the Joint Commit
tee on Reduction of Non-essen-
tial Federal Expenditures, of
which Senator Byrd, Democrat,
OF Virginia. is chairman. The
first witness there will be T.
Coleman Andrews, Internal Rev.
enue commissioner.
Jurisdiction of the Byrd COM
mittee. which has been investi-
eating housing since last July,
has been challenged by Senator
Capehart. But Senator Byrd said
he has White House assurance
that he will get the housing in
formation in Government hands,
too.
Senator Capehart called these
additional witnesses:
Wednesday - Richard G..
Hughes. president of the National
Association of Home Builders;
William A. Clarke. president of
the Mortgage Bankers Associa-
ton. formerly headed by Mr..
Hollyday.
Thursday - Ronald j. Chin
mock. president, National Associ-
alton of Real Estate Boards; j.
Olney Brott. general counsel of
the American Bankers Associa-
ton; Eugene M. Thore, general
counsel of the Life Insurance
Association of America, and
Harry E. Proctor, assistant gen.
eral counsel of the National
Association of Mutual Savings
Banks.
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