Evening star., 1955-07-22
FHAActs TO Gel
Shir|ey-Duke'
WindfaII Back
Move Is inflicted
For Toking Over
Apartment Project

The Federal Housing Admins
tration announced today it has
begun action to take over the
big Shirley Duke Apartments de-
velopment in Alexandria and to
recover $2.5 million.
This is the first such action
in the Washington area in the
Picture Of Shirley Duke Project.
Puee Gil
FHA's program to try to recover
so-called "windfall' profits. IT
is the fifth action in the Ma
ton involving multimillion dol
lar rental housing projects built
with FHA-insured loans.
Other Action Here Studied
FILA said other rental housing
projects in this area on which
windfall profits were realized
are under study for possible
action similar to that taken in
connection with Shirley Duke.
Shirley Duke consists of 200
three story buildings contain
ing 2,113 apartments. The total
amount of the mortgage loan
was $l3,846, 900.
FILA Commissioner Norman P !
Mason said he has directed the
presidents of the six corporations
comprising Shirley Duke to call
a meeting~of the preferred stock
holders. The FHA holds the
preferred stock. Mr.. Mason said
the agency intends to take con-
troll, remove the present directors
and elect new ones who will
correct violations of the corpo-I
rate charters. An attorney for
FHA said that, if necessary,
actions will be filed in the name
of the corporations to recover
the money.
Wednesday Deadline Set
FHA said the three presidents
of the six corporations have until
next Wednesday to issue the call
for the preferred stockholders to
meet. Frank j. Meistrell, FHAI
general counsel, said if the meet
ing is not called by then FHAI
will issue its own call and pro-
ceed to take action.
FILA said the sponsors of the
huge project took $1.878.938 inI
unauthorized dividends, accord
ing to Shirley Dukes own ac-I
counting.
1t said the six corporations |
were formed In l949 under the
auspices of Investors Diversified
Services. Inc, of Minneapolis,
which has Nationwide lending |
functions" According to FILA,
Investors Diversified Services re-
ceived s926,339.50 in initial serv-
ice charges in 1850 from the pro-
ceeds of the FHA-insured loan.
1t said this was $7l8.l42 more
than the maximum service charge
permitted by FILA regulations.
Names Corporate Heads
The agency identified the pres
idents of the Shirley Duke cor
porationS as E. j. Preston, 9606i
Bruce drive, Silver Spring. Her. |
man w. Huffman. 5429 Connecti-l
cut avenue NV. and Bryan Cor
don, jr.. 5707 North Twentieth
street. Arlington.
: Don A. Lotus, formerly of
Cleveland, assisted in the promo
ton of Shirley Duke. according
to FILA. 1t identified him as a |
former official of Investors Syn
dicate, predecessor of Investors
Diversified Services.
Mr.. Lotus arranged to pur-
chase the Shirley Duke site from
a relative with financing supplied
by IDS. according to FHA. Then, /
the agency said. Mr.. Lotus and
his nephew. j. Charlie Lewis of |
Cleveland, sold the land to Mr.. |.
Preston, Mr.. Huffman and Mr..
Gordon for $178,000 which was
loaned by IDS.
A short time later in their ap-
plication to FILA for a loan, the
three sponsors valued the land
at more than $500.00O, FHA said. |
The agency said the total cap
ital stock of the sponsors was
$4,000. 1t said they admitted
that for every dollar of this in
vestment they took out 1913 in
dividends.