Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-02-09

ltitiouS or questionable. Bankers
said the offers were hard to
levaluate because they all depend
on appraisals as yet ynmade.
Auditors at Work
Mr.. Bush said auditors had
been hard at work on company
books since December. but that
IA number Of matters remained to
be settled before certiflcation of
an audit would be possible.
Naming as defendants both
Mr.. Bush and Mrs. Lucille D.
Bush. his wife, who is the firms
secretary-treasurer, the corpor-
alton and subsidiary companies.
the complaining stockholders in
Baltimore court charged that
uncollectiblH loans of a "ficti-
tious and irregular nature" are
Substantially in excess" Of the
$88, 500 so far reported and that
almost one-fourth of the ccm-
Ipany's outstanding loans or an
amount in excess Of 100000 is
delinquent or uncollectible.
The petition also declared thai
the normal ratio of delinquent
cies in a well managed small
loan business is no higher than
8 to S per cent. the latter being
the maximum figure, and added
that Coastal itself stated in its
stock offering circular that its
regular provision for bad debts
was 1874 per cent.
Figure Held Misleading
The petition charged that the
$88, 500 figure in the company
circular in December was false
and misleading, and was known
to be so, or in the exercise of
any degree Of diligence, should
have been known to be so, and
that its effect was to mislead
stockholders and lull said stock
holders into a false sense Of Sc
curity, and to forestall action
by said stockholders against the
Of Coastal"
The plaintiffs also charged in
the petition that the defendants
made profits from transactions
with Coastal, which dealings
were not at arms length and
were undisclosed to the stock
holders represented by the plain
tiffs and were in violation Of the
fiduciary obligations which these
defendants owed to the plain
tiffS."
In addition to bank borrow
ings, which Mr.. Bush said now
total $1,635.000 the company
has a funded debt. which &C.
cording to the June 80 state
ment, totaled $515.000. 1t in
cluded a 100000 So per cent
10-year subordinated note held
by the Colonial Life Insurance
Co., also $4,000 of 6 per cent
10-year subordinated debentures,
$4,000 Of 6 per cent five-year
subordinated debentures, series
A. and $4,000 Of 6 per cent five
year subordinated debentures.
series B.
Suburban Trust Co. is trustee
under the trust indenture for
the $150.000 of 10-year deben-
lures.
Capital Stock Listed
Capital stock on the latest
balance sheet is listed at $552,-
ITO, including two issues Of pre-
ferred stock totaling 1928, $50,
1928, 410 Of class A common and
$1.l50 of B common.
The coastal registration state
ment for a stock offering was APP
proved last August by William
5. Marshall. Mr.. Marshall at that
time headed the SECS regional
Office here and. unknown to it,
also was a director of the COM
pany.
When the registration was filed
Mr.. Marshall's dictatorship I'M
the company was revealed and itI
is understood he was ordered to
resign from the Coastal board
and promised to do so.
When the December troubles
started, 1t was found he was still
a director and repeatedly was
asked to resign from the SEC
and refused. His resignation
then was formally requested at
a full-dress meeting Of the SEC
and was received.