Indianapolis Times, Indianapolis, Marion County, 13 December 1938 — Page 11

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DEC. 13, 1938

Hearings Opened on ‘Lost’ 18 Millions in

Y Py

Drug Firm’s Assets

Warehouses Found Nonexistent, Suits Filed and Resignations of Two McHesson and

Robbins Officials Demanded.

BULLETIN

NEW YORK, Dec. 13 (U. P.)

~—U. S. Commissioner Garrett W.

Potter issued warrants today for the arrest of F. Donald Coster, president of McKesson & Robbins, Inc., and two other persons in connection with an alleged shortage in the drug company’s listed

assets.

Named with Coster in a complaint charging violation of the Federal Securities Act of 1934 were George Dietrich, assistant treasurer of the company, and George Bernard, representative of the: company’s Canadian and English agents.

NEW YORK, Dec. 13 (U.P.).—The Attorney General's office began & series of public hearings today on the McKesson and Robbins, Inc, scandal—the disappearance of 18 million dollars of the assets of the third largest wholesale drug firm in the world. There were repercussions in half a dozen cities as investigators

searched for the company’s listed

warehouses and found them non-

existent: stockholders filed suits and directors demanded the resigna-

tion of two company officials: The trail of McKesson and Robbins operations, however, extended over most of the earth and As- | / sistant Attorney General Ambrose ¢ 'V. McCall, in charge of the State's % investigation, said it might take six months to fix responsibility for the amazing manipulations. This much was known: That the pboks of a 105-year-old firm, which sold $174,572,000 worth of goods in 1937, had been falsified to show vast stores of crude drugs in Canada where none existed; that Dun and Bradstreet reports of the company had been forged to hide the vanished assets.

U. S. Pricks Up Ears

There were rumors that aroused the attention of Federal authorities —that illicit drug and alcohol traffic fitted into the situation. District Attorney Thomas E. Dewey also was making an independent investigation, to learn whether any part of the case came within his jurisdiction. McCall summoned three witnesses for an all-day hearing. One was George Bernard, Brooklyn, representative of W. W, Smith & Co, Ltd., of Montreal. McKesson and Robbins transacted its Canadian business through Smith & Co. Eleanor Lochner, employe of Smith & Co., and Harold Spear, New York Stock Exchange specialist who dealt: in McKesson & Robbins stock, were the others summoned. The Stock Exchange suspended trading in McKesson & Robbins stock last week. _Another assistant attorney general, Joseph F. Ruggieri, was touring Canada, looking in vain for the warehouses. He was reporting to Mr. McCall by telephone. The company had claimed five well stocked warehouses. - At Montreal, Mr. Ruggieri went to A. H. Raymond & Co.'s address, ‘which had been listed as one of the largest warehouses, and he found it to be a pigeon-hole quarters staffed by a public stenographer, Miss Violet Quesnot, who said her business for Raymond & Co., was to receive mail addressed there. The mail averaged about 12 letters a year, she said, and she forwarded them to the company’s address in Brooklyn. She said she had been employed in 1933 and had not seen anyone connected with the company since. Investigators could not find an A, H, Raymond & Co., in Brooklyn. Address Found Fictitious

The other Montreal “warehouse” was listed on the books as B. Pierson & Co. Mr. Ruggieri found that the address was fictitious. He was proceeding today to Toronto and Ottawa to look for the other three “warehouses.” Other developments Were breaking apace. At Bridgeport, Conn. Peter Margoles, who said he $7000 worth of McKesson & Robbins stock, filed suit against F. Donald Coster, president of the firm, and George Dietrich, assistant treasurer, charging them with having falsified . company reports and demanding

$10,000 damages. He named Mrs. Coster, the president’s wife, charging that she had “monies and goods” of her husband’s estate. The McKesson & Robbins board of directors, sitting in New York, gave Mr. Coster and Mr. Dietrich until today to resign and announced that if they failed to do so, the board would meet Dec. 19 to remove them. Mr. Dietrich was supervisor of the crude drug department, under Mr. Coster’s direct authority.

Coster and Dietrich

Make No Statements

BRIDGEPORT, Conn. Dec. 13 (U. P.).—F. Donald Coster and George E. Dietrich, president and assistant treasurer respectively of McKesson & Robbins, were uncomsmunicative today, the deadline set by the board of directors of the firm, for their resignations. ‘Their counsel, Samuel Rich, said he was “not at liberty” to say whether the demands of the directors would be met, and “doubted” whether either Mr. Coster or Mr. Dietrich would make any statements for publication. Neither official of the concern, which is under investigation as result of an alleged 10 million dollar shortage in its crude drug department assets, could be reached at his Fairfield home. Mr. Coster has been reported ill. 3

MALAY DEFENSES TOP SCHOOL NEED

SINGAPORE, Dec. 13 (U. P.). — Warships and soldiers to protect Malaya are more important than the estbalishment of a Malayan university, in the opinion of the Malay Association of Selangor. The Malay associations of Penang and Perak joined the Selangor Malays in a memorandum opposing plans of a British commission to establish a Malayan university. “If the governments of the Malay states still have reserve funds to spend, we believe they would be better spent in increasing the strength of the Malay regiment and in the construction of warships to guard this important British outpost,” the associations informed the commission.

TOBACCO VOTE IS DEC. 17 LAFAYETTE, Ind. Dec. 13 (U, P.). —Indiana tobacco growers will vote Dec. 17 on whether marketing quotas should be established for the 1939 crop, according to an announcement by L. M. Vogler, Indiana AAA chairman.

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FOLLOW PLATFORM, REPUBLICANS URGED

Tucker Says People Are Expecting Results.

Republicans in the Indiana House of Representatives must attempt to enact measures drafted along the lines of the party’s platform pledges, James M. Tucker, Secretary of State, declared last night. Speaking at a meeting of the Irvington Republican Club, 54462 E. Washington St., Mr. Tucker declared: “The Republican legislators must attack the State Reorganization Act,

attempt to take politics out of the State Welfare Department and investigate the corruption charges made by U. S. Senator Frederick VanNuys. “Remember that the people turned to the Republican Party in November because they expected results. They will not be satisfied with anything less than that. “Republicans in the lower house cannot excuse a lack of effort because the opposition party has a majority in the Senate. Attempis must be made to follow our platform pledges.” Arch N. Bobbitt, State G. O. P. chairman, is to address the meeting next week, Ralph Hamill, club president, announced.

PENSION GROUP LEADERS CLAIM HOUSE VICTORY

‘General Welfare’ Sponsors Propose Gross Income "Tax for Nation.

By LEE G. MILLER Times Special Writer WASHINGTON, Dec. 13.—A shabby suite of offices on the seamier side of Pennsylvania Ave, half a mile or so from the Capitol, is the nerve-center of an old-age pension drive that is certain to make itself felt in the new Congress. This is the headquarters of: the General Welfare Federation of America, whose goal is “security for all at 60”—to be achieved through passage of the “General Welfare Act.” Here the visitor finds the Rev. Thomas E. Boorde, federation president, and Arthur L. Johnson, its executive secretary and dynamo. The Federation is a sort of offshoot of the Townsend Plan movement. But its bill differs radically from the $200-a-month scheme of Dr, Townsend, and it has repudiated Dr. Townsend and all his works— a gesture which the doctor has reciprocated.

Proposes Gross Income Tax

Whereas the Townsend Plan calls for a tax on transactions of all kinds to finance pensions, the General Welfare Act or “GWA” proposes a 2 per cent gross income tax. The proceeds would be prorated among all citizens past 60 who agreed to abstain from productive labor. Mr. Johnson, a 45-year-old Californian, has just completed a redraft of the measure, involving several major changes. One of these would exempt from the gross income tax the first $100 of monthly income of any person or firm, Another would exempt from the

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tax all income spent for wages, for taxes or for interest on loans. Another would exempt income from goods produced for export.

would work, said:

“Suppose a firm takes in $10,000 in a given month. It pays out $4000 in wages, $100 for taxes, $100 for interest, and gets a basic exemption on the first $100 of income. That means a total exemption of $4300, hence a total taxable income of $5700. The 2 per cent tax would be

$114.” ; Claims Majority

Last year the “GWA” was indorsed by some 102 members of the House. A petition to force a vote on the bill was signed by 140 members—far short of the necessary 218 (half of the House membership). A total of 164 signed a petition requesting a hearing on the measure.

Some proponents of the measure, notably Rep. Gerald D. Boileau (Prog. Wis.) and Rep. Jerry O’Connell (D. Mont.), failed of re-election. But many newly elected members are pledged to this or some other pension plan, and even such veteran conservative members as Rep. Allen Treadway (R. Mass.) are giving “GWA” various :degrees of support. Secretary John€on says: “We figure that a majority of the new House is favorable to a measure of this kind. If we get the breaks, the House will pass the bill next year. A number of Senators also are favorable.” Copies of the redrafted measure are being mailed to House members, nd Mr. Johnson hopes that as many as 150 will consent to serve as cosponsors when it is introduced next month.

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