Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-02-09
Banks Check $500, 900
Credit to Loan Concern
Continued From First Pag

Continued From First Page
come as provision for bad debts
therefore were inadequate.
Summary Of Earnings
3. That the summary Of earn.
ings in the circular reflected
greater earnings than actually
realized.
4. That balance sheets in the
circular reflected total assets al
values greater than those actu-
ally In existence.
S. That capital and earned
surplus for 1854 and six months
ended June 80, 1855, are mis-
stated and that dividends on
class A common stock were
charged to capital surplus
whereas they should have been
charged to earned surplus.
6. That the accountants GER
tificates said generally accepted
auditing standards had been fol-
lowed whereas the SEC charges
that was not the case; also. that
the accountants were not Gin
dependent public accountants
as defined by the SEC and as
stated in the circular.
7. That reported holdings of
securities by officers and direct
ors failed to disclose all security
interests Of such persons in the
company.
8. That the circular failed to
disclose all material regarding
transactions of officers and d.
rectors.
Stockholders Uneasy
Stockholders Of Coastal FL
nance, first in line to suffer any
possible losses. were not as calm
as the bankers.
The two minority stockholders
Seymour j. Rubin and Abba P.
Schwartz, both partners in the
Washington law firm of Rubin
& Schwartz, 1882 Jefferson place
NV, charged in the Baltimore
petition that fictitious and irreg-
ular loans on the company's
books exceeded $88,500 and that
almost one-fourth Of its loans
are delinquent or uncollectible. "
The company's latest available
report as of last June 80 showed
outstanding small loans Of
$2.667 1924 and a quarter of these
would be $666.956.
Guesses Up to 100000
Banking quarters heard per-
sistent rumors yesterday that
final losses might run higher
than 100000, but Frank A.
Bush, president of Coastal, said
they were "preposterous."
He said that, while delinquent
cies Of the firm might be very
large, they could not be counted
as final losses. Anyone knows
there is a big difference between
dehnquencies and final losses"
he said.
Meanwhile, the tangled skein
of company affairs and the at
tendant gossip led through the
SEC, where a Coastal regis
tration statement, now charged
to have been erroneous, was ap-
proved by a commission official,
since resigned, VINO at that time
was a director of the company.
The first news the company
was in trouble came In Deem
Der. when Mr.. Bush reported a
top official Of the company and
six employees had been discharged
after a discrepancy of $88. 500
had uncovered a series of "fic-
titious loans" and other irregu-
larities and made continuance
of the firms common stock divi-
OCIlQ lIlduFISduic.
False Loans Absorbed
Mr.. Bush emphasized yester-
day that possible losses now be-
ing discussed involved delinquent
small loans and did not include
the $685. of fictitious loans
previously reported and already
absorbed.
He declined to list the names
of the company officer and six
employees involved in the ficti-
tious loans and said no criminal
action had been taken against
them as yet. However, he said
the company had retained spe-
cial counsel to advise on GRIM
inal procedure if it became nee