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Evening star. [volume] (Washington, D.C.) 1854-1972, March 13, 1938, Image 17

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Further Grand Jury Action
Likely in Investigations
of Alleged Thefts.
By the Associated Press.
NEW YORK. March 12.—In an at
tempt to unravel the financial mase
through which the Richard Whitney
& Co., stock brokerage firm, became
insolvent, four separate investigations
will continue Monday, with the pros
pect of further grand jury action.
The austere "White Knight of Wall
street,” as Whitney was known to the
financial sector, is at liberty on two
charges of gracfcl larceny in bail of
$10,000 and $25,000, as a result of in
vestigations by District Attorney
Thomas E. Dewey and Attorney Gen
eral John J. Bennett, and faces a
quis by United States Attorney Lamar
Hardy and the New York Stock Ex
S. E. C. Also Making Probe.
The Securities Exchange Commis
sion also is delving into Whitney’s
tangled affairs.
Bennett said the Whitney firm
crashed with liabilities of "more than
$1,000 000,” all of which allegedly was
(Continued From First Page.)
It came originally from the steel com
"All of the money that was turned
over to me from the Johnstown Citi
zens’ Committee and other sources
was expended on the strike,’’ the
Mayor declared.
He denied emphatically testimony
by C. R. Ellicott. general manager of
the Bethlehem Steel plant in Johns
town, that the latter supplied the
Mayor $4,372 to pay strike bills.
Other witnesses testified that Beth
lehem supplied an additional $31,
078.25 that went to the Mayor by
way of the Johnstown Citizens’ Com
Says He Paid Gas Bill.
Mayor Shields also disputed the
testimony of Mr. Ellicott that Beth
lehem supplied *5.300 to pay for tear
gas which the Mayor ordered. Con
tending he paid for the gas him
self and asserting he thought he had
a receipt to prove it, the Mayor com
mented :
“Something is screwy, about this
gas business.”
Records which Mayor Shields con
firmed showed Mrs. Shields paid back
taxes of *6.727.81 between June 28
and September 30 of last year. Some
of the taxes had been unpaid for five
and six years. Payments on principal
and interest*on debt brought the total
to $23,485.75 for the period. Cash was
used in paying a mortgage for $10,
000 and one for $6,000 on two homes.
The investigators submitted records
which they said showed Mayor Shields
was “hard-pressed” for cash in 1933,
several judgments being outstanding
against him.
“What was the windfall that came
to the family and enabled it to clear
up all this indebtedness?" asked Chair
man La Follette.
"Inasmuch as my money didn’t pay
It, I can't explain,” the Mayor an
swered after a pause.
La Follette Presses Witness.
Senator La Follette pressed for an
explanation of the payments.
The Mayor eyed the ceiling for
nearly two minutes.
"Mr. Senator. I will answer if forced
—I want to appeal to your fairness.
Mrs. Shields is a woman of means.
She inherited some money—there’s a
transaction that goes back as far as
The Mayor went on to say that
“When my difficulties occurred” Mrs.
Shields' mother made provision for
the education of his children, setting
aside a sum for each. One son de
cided he did not want an education,
he said.
“I never yet used a dollar of Mrs.
Shields’ money I could avoid.”
Committee records showed the
Mayor was convicted in 1928 of vio
lating the Federal prohibition law and
bribing a Federal officer. The rec
ords also showed he served less than
two years, receiving a commutation of
sentence and a pardon.
Tax Lien Made Public.
The committee made public a rec
ord of a $76,040 Federal tax lien filed
against the Mayor on July 2, 1937.
Testifying that the tax lien arose
out of his alleged connection with
"an illegally operated brewery,” Mayor
Shields said “they” allowed 12 or 14
years to go by and “only thought of
filing it” during the strike last year.
About two days before the lien
was filed, Mayor Shields told the I
taken by the senior partner without
knowledge of his co-partners.
Specifically Whitney is charged with
the theft of $103,000 from the estate
of George R. Sheldon, his father-in
law, and the theft of $109,000 from
the New York Yacht Club, of which
he was treasurer.
A corps of lawyers and accountants
of the Securities Exchange Commis
sion, working in concert with the
United States attorney, studied data
of the defunct firm in an attempt to
discover if Federal laws were broken.
E. H. H. Simmon! to Be Colled.
E. H. H. Simmons, who preceded
Whitney as president of the Stock
Exchange, will be called Monday by
Assistant Attorney General Ambrose V.
McCall to tell of Whitney’s use of se
curities belonging to the gratuity fund
of the exchange. This fund was re
turned to the exchange after repeated
demands by Simmons.
The exchange, through its presi
dent, Charles R. Gay, began a drastic
A new rule adopted by tha ex
change requires all member firms to
make available to customers on de
mand statements showing the firm’s
financial condition. This statement
also would be available to the ex
Women's Relief Corps to Meet.
The Burnside Corps. No. 4, of the
Women's Relief Corps of the Grand
Army of the Republic Auxiliary will
hold a special meeting tomorrow at
7:30 p.m. at the home of the president,
Mrs. Harriet V. Leich, 1514 Seven
teenth street N.W.
committee, he received word that
David Lawrence, secretary of the
Pennsylvania Commonwealth, had
said he must get out of the strike
“or they would ruin me.” He said
he received the word from Dwight
Davis, a State employe at Harris
burg. P^.
Mayor Shields said the “threat”
materialized in such a short time
that he believed the lien represented
use of political influence.
"The administration at Harrisburg
was solid against me because I saw
fit to adopt the policy X did," he tes
Mayor Shields asked that, since his
Federal sentence had gone in the
record, the record also shows he “went
back to Johnstown after X subscribed
to the requirements of the law,” was
elected Mayor and suffered no impair
ment of his social position.
He said he was innocent of the
Federal charges, having acted only
as “a kind of a broker” in connection
with "the sale of the property."
Record Held Relevant.
Senatw La Follette said he would
not have introduced Mayor Shields’
prison record except that “there is a
sharp conflict of testimony here” and
matters of this kind were relevant
in judging the credibility of testi
In addition to paying for tear gas,
Mayor Shields estimated, with the
aid of committee exhibits in some
cases, that these amounts were paid
by him in cash:
$2,666 for cab hire for special police.
$6,000 for rewards.
$2.5000 for feeding police officers.
$500 for miscellaneous expenses.
$7,000 for hire of private automobiles.
$12,000 for pay of special police.
Senator La Follette said that, by the
Mayor's figures, he would have spent
$5,870.75 more than he acknowledged
receiving from the Citizens’ Commit
tee and other sources.
After some penciled calculations
the Mayor commented:
“Well, after all, we're only esti
He said he was not out of pocket”
in connection with the strike ex
During his earlier testimony Mayor
Shields told the committee he had
destroyed pay roll records of special
police during the strike to prevent
any "reflection” being cast on the in
dividual special officers.
The Mayor was grilled by Chairman
I* Follette about the number of
special police and how they were se
lected. armed and drilled. Mr. Shields
estimated at first he had deputized
“about 500” of the special officers
from volunteers, and later raised the
estimate to “500 or 600.”
“Did you destroy them personally?"
asked the chairman, referring to rec
ords of their services.
“Quite likely, because I * did not
want them lying around,” the Mayor
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