Evening star. [volume] (Washington, D.C.) 1854-1972, 1962-01-20
Maryland Probing
Security Financial
Insurers Plan
On Premiums
Scrutinized

The Security Financial Insur-
ance Corp, the only State
chartered private insurer of
Maryland savings and loan as
SociationS, is under intensive
investigation" by the State.
This was disclosed yesterday
in a hearing by the State In
surance Department on whether
to penalize SFIC on charges of
imposing advance premium"
rates without approval of State
authorities.
The hearing was one of sew
eral actions involving the
Maryland savings and loan in
dustry yesterday. These were
the others:
l. A group of shareholders
in the SO million Mutual Sc
curity Savings & Loan AsSo-
citation sought to show its assets
had been dissipated and the
association should be declared
a Federal bankrupt case.
2. John T. Motion, 54, Alex
andria real estate dealer on
trial for mail fraud along with
the Wall Street Savings &
Loan Association of Forest
Heights, Md, which he formerly
headed, denied any intent to
defraud anyone in the firms
advertising that the accounts
were insured.
3. An attorney for the Free
state Savings and Loan Asso-
citation, Inc, promised to appeal
the receiverShip order against
the firm to Maryland's higher
courts.
William E. Brooke said he
will follow this course if he is
unable by Monday to secure a
$526,000 bond set Wednesday
by Prince Georges Circuit Court
Judge Ralph B. Powers. The
bond was ordered if the firm
was to stave off receivership.
Attorney George T. Bur-
roughs of Upper Marlboro is
scheduled to step in as receiver
Monday. At that time, Mr..
Brooke said he will ask for a
Circuit Court order that Mr..
Burroughs not be allowed to
dispose of Freestate assets
pending the appeal.
/ Sears Studies Case
F. Douglass Sears, insurance
commissioner, took under con-
slderation whether SFIC had
violated State law by changing
its premium policy without his
approval.
He summoned the corpora
ton to explain why it had
asked its insured associations
to pay what he said amounted
to three years premium in adj
vance without his approval.
Mr.. Sears maintained this
amounted to an increase in
the rate he had approved
originally in 1859.
Both David F. Woods, presi-
dent from last July until Janu-
airy, and K. George Christian,
his successor, said they did not
consider the prepaid premium
plan an increase in rates.
Mr.. Woods and Mr.. Christian
said the directors decided to put
the prepaid premium plan in
effect for all its associations
October 10. Il suppose to build
up assets Of the association"
Mr.. Woods said, when asked
why.
Mr.. Christian added it was
because of State "haraSsment"
over trust funds.
In the receivership case, nine
stockholders in Mutual Secu-
rity had a discovery hearing"
as part of their efforts to put
the association in Federal
bankruptcy.
Before Joseph o. Kaiser,
Federal referee, Frederic Rich
mond, Washington mortgage
investor. was questioned about
80 properties on which he OBJ
tanned second mortgages and
foreclosed on most of them.
Mutual Security listed third
mortgages on the same proper
ties.
Charles A. Doctor, lawyer for
the stockholders, sought to
show that Mr.. Richmond and
Mutual Security had conspired
to dissipate assets of the firm.
Mr.. Richmond denied it fatty.
In the Wall Street case Mr..
Motion testified before Federal
Judge R. Dorsey Watkins in
Baltimore that he had paid $3.50
to the Security Financial firm,
but never received an insurance
policy.
Nevertheless he thought the
accounts in his association were
insured by the State authorized
insurer or some other firm.
The Government has charged
him with falsely advertising
that he carried Federal insur-
ance.