ustxtxb_obs_1956_01_11_50_00007-00000_000.pdf

Paper Quotes Him That His Firm Was Not Paid $30,000 ‘Burial’ Fee; Irwin Repeats His Point frozen all of Irwin’s records in his office until Irwin paid the fee. The Observer asked Cain about the $15,000 or $16,000 additional fees Irwin had told the Observer he had paid the fine that year, and Cain said that it should be remembered that his firm represented Irwin’s many companies and that sometimes all eight people in his office were working on them. The Observer also talked to Berg 7. man about the case. Bergman did not express any reluctance about talking to the Observer. The Observer. .quoted Bergman that the back fee was for trying “about a lmndred cases” for Home Service Casualty in the last year. The Observer also quoted Cain that the “back fee” was for 50-odd Home Service lawsuits. H OME SERVICE is an interesting case in itself. A commission audit dated July 20, 1955, said the company’s cash condition was very poor \($6,357 in cash and $358,947 in been impaired to get cash funds. Aug. 29, 1955, the Insurance Cornrrdssion alleged the company was insolvent, had a capital impairment larger than allowed by law, had falsified its records, had overvalued its assets -, and had a deficit. Surplus larger than $157,215. Sept. 19, 1955, the Insurance Commissionin a two-paragraph order ruled that “upon consideration of all the evidence, the board finds that the facts and the law are with Home BERGMAN DENIES: REPORT AUSTIN In an interview in the Dallas Times Herald, State Rep. Douglas Bergman of the law firm of Irion, Cain, Bergman, and Cocke is quoted as denying an Observer story in which Joe Irwin . of Dallas was quoted as saying he had given that firm a total of about $30,000 this year. The Times-Herald also said ,on its page one that Bergman “labeled as false published reports that his law firm has accepted $30,000 in fees from failing Dallas insurance companies to get the firms ‘buried quietly’ to avoid newspaper publicity.”‘ The newspaper said these.. charges were published in the Observer and attributed to Irwin, which theywere not. The Observer quoted Irwin Dec. 28 that he had paid about $30,000 in fees to the firm of which Rep. Douglas Bergman is a member and that between $13,000 and $14,000 of this was a “back fee” he said he paid to the firm to get three companies “quietly buried by the Insurance Commission” to protect American Atlas stockholders. Irwin, an ‘insurance speculator, was in Austin Thursday for a hearing on Asked if his statement that he had given the firm of about $30;000 this rect, he said: “That’s right. About $30,000.” “Where the $30,000 conies from, don’t know,” Bergman was quoted in the Times-Herald. “Over the past firm $5,000′ or $6,000 in fees on various matters, but’ no $30,000.” Bergman agreed Irwin had paid the firm a back fee of $13,800. Irwin had his auditor check his records this week. Tuesday afternoon he told the Observer that his records show that he paid, through his firms, $27,697.92 to Irion, Cain, Bergman, and Cocke between March 5, 1955, and December 31, 1955. He said there may be .’some other checks to the Bergman firm in January, February, and March of 1955 ; and that, in addition, he recalled giving Cain five $100 bills which Cain said he was going to use to fly Insurance-Commissioners Byron Saunders and Garland Smith to the West Coast in early summer, 1955. Irwin said he would make the in, formation available when it is fully tabulated. In regard to the statement the Times-Herald said the Observer published that ..Bergman’s firm .accepted $30,000 “to get the firms ‘buried quietly’ to avoid newspaper. publicity,” it is noted that the Observer did not attribute such a statement to Irwin. Said this newspaper’s story: fourteen thousand of this \(total fees fee’ paid to Bergman’s firm to help get three of his minor companies :quietly buried by the Insurance Commission’ to protect his stockholders in American AtlaS Corporation.” Directly, the Observer quoted Irwin that this fee was “less than $14,000 to get ’em to hush up the closino -il’ of the three companies” so his American Atlas would not be damaged by the publicity. From Dallas Tuesday afternoon, Irwin said this fee was exactly $13,750.36. He confirmed that he had stated to the Observer reporter this Was a back fee paid by his Home Service Casualty for the purpose of giving three of his minor companies “quiet burial,” as he put it Tuesday. He said as he recalled it was a .fee forlegal work done in 1955 and perhaps the last month or two of 1954. This “back fee” was dated Nov. 30, 1955, he said. It was on Nov. 22, 1955, that the .Insurance Commission revoked Home Service Casualty’s permit to do business and asked the Attorney General to file suit for receivership, which he did. The ObserVer confirmed the “back fee” with Frank Cain of Irion, Cain, Bergman, and Cocke, by telephone, and published his explanation of it. AUSTIN Joe Irwin’s American Atlas Life Insurance Company of Dallas is tied up very tight this week on a finding by the Board of Insurance Commissioners that its management is not worthy of the public confidence. New management is being arranged, but it is contingent on the board’s approval.’ District Judge Charles a Betts has \\ frozen the assets of the company and forbidden removal of its records pending his decision. on an appeal from the board’s suspension of Irwin’s permit for American Atlas Life to do business in Texas. No question has been raised as to the company’s solvency. Last week Paul Connor, legal examiner for the board, read into the record accounts of how some of Irwin’s employees signed papers of land purchases from him without paying for the land, which notes Irwin then entered as assets in American Atlas. Company agents told the employees it was to “balance the Woks.” In addition, Connor presented further inforniation on the purchase by All-American Horne Lloyds, now in receivership, of taxicab drivers’ signatures on papers in which they allegedly bought land for as much as $20, 17ibut which involved no payinent of money to Irwin and were signed after Clyde Bell, Irwin’s son-in-law, paid the drivers $5 for signing. Irwin claimed these notes as assets in AllAmerican Home Lloyds. The evidence was introduced into the American Atlas hearing as germane to the board’s charge that the latter company’s management was unworthy of public confidence. RALPH CURRIE, Irwin’s lawyer at the hearing last week, a prominent Republican and recently a candidate for a federal judgeship in Dallas, told the board that Irwin’s position was that he was not a manager of Dallas Fire and Casualty and never had been. The board also revoked Dallas Fire’s license, and the Attorney General brought a receivership action against it. In its ‘petition on Dallas Fire, the . state alleges the directors are “not worthy of the public trust” and that they “recklessly abandoned and concealed all company records” and closed the company’s offices with “complete disregard to the rights of policyholders, creditors, stockholders, and other claimants.” The Insurance Company of Texas re-insured Dallas Fire’s insurance on April 1, 1965. When Earl Shelton, its president at the time, closed its offices, attempting, said Connor, a voluntary dissolution. Jack Shelton, who was secretary of Dallas Fire, told the Observer in Austin that Earl Shelton has been working as an examiner for the Oklahoma insurance department since then. Board Finds Its Management Unworthy of Public Trust Connor introduced into the record a letter dated Oct. 14,1955, stating that an effort was being made to try to loCate Dallas Fire’s assets, and signed, “Joe Irivin, President, Dallas Fire & Casualty Co.” Minutes of a stockhold, ers’ meeting of Dallas Fire dated Aug. 16, 1955, show that. Irwin and his group, represented by Frank Cain of Irion, Cain, Bergman, and Cocke, were claiming management, but another group, represented by V. C. Thompson, former examiner for the commission, was disputing the claim. Currie said Irwin at one time thought he had acquired 60 percent of Dallas Fire’s stock \(Bascom Giles’s portion before Irwin bought . itObcate to the stock was disputed by the then existing management and he “never did assume management and control.” He said Irwin’s only interest in Dallas Fire is as a creditor. Irwin had agreed to take stock held by Bascom Giles and associates in return for securities he provided. Thompson, representing Earl Shelton and what he said was a majority of the directors, alleged at this meeting that Irwin’s securities were not good; for example, that he provided martgage loans on land at $57,050 but appraised by members of the National AssOCiation of Real Estate Appraisers at $3,100. Thompson said Irwin’s certificate to Giles’s stock had been “canceled” because of this challenge to the value of the securities. But Irwin replied that if this was so he should get his securities backand they were not forthcoming from Thompson. Debts outstanding against Dallas Fire include $15,000 to I.CT.. for the reinsurance agreement, $9,000 to Lloyds of London for underwriting, and $1,000 to Emil Hahn, Austin man who is chairman of the grand jury looking into the U.S. Trust case. C OMMISSIONER J. By., ron Saunders refused an Irwin motion for a delay in the hearing to consummate the new management agreement. .Currie said Irwin and the other officers would resign “if that be necessary,’. but they did not agree they are unworthy of public confidence. An insurance commission investigatortor read affidavits from A. C. Charles Bybee, C .F. Bybee, Harold Lee Little, and William N. Chamberlain, all painters working for Irwin on a job in Waco. They testified that L. Romerio or Mr. or Mrs. Joe Irwin induced them to sign papers buying land in Pecos County when they did not intend to buy it and did not pay anything after signing the notes. They said in substance they signed the papers to accomodate Irwin and because they were afraid of losing their jobs. Little, in his affidavit, said Irwin told Bybee “that these papers didn’t Service Casualty Insurance Company, and withdraws its allegations of Aug. 29.” Nov. 8seven weeks laterthe commissioners alleged their Sept. 19 findings “were based upon false and misleading evidence porduced before it at that time” and said its Aug. 29 allegations “were and are correct.” The company was closed Nov. 22, 1955. In a series of the company’s instruments all dated March 15, 1954, Cain is shown as president of the corporation, attorney -in -fact, and chairman of a meeting of the stockholders. He was authorized to take steps to . get the company a permit to do business from the Insurance Commission. He is shown as holding only one share of stock out of 272,038 shares subscribed to. Irwin held the largest block103,000 sharesat that time. The firm of Irion, Cain, Bergman, and Cocke are shown in these records as general -counsel for the corporation at that time. mean a thing, that they needed them to balance the books.” Chamberlain said Mrs. Irwin “told us that the papers did not mean a thing, that they needed them to balance the books.” Irwin, in an affidavit, said he traded” 1,000 shares of American Atlas for 160 acres of land in Pecos and sold it “for $550 per acre” to eight people \( four of whose affidavits had been the writer any money,” said Irwin, and they signed notes “strictly as an accomodation.” In addition., former Austin city judge Joe Robertsnow director of credit life and a legal adviser on the conu -nission stafftestified that he had two affidavits from Dallas cab drivers who signed investment mortgage notes on some land 17 miles south of Dallas, owned by. Irwin: Bell had paid these drivers $5 for signing. They said they did not intend to buy /and. Roberts said it appeared this practice with cab drivers’ had included notes with a total face value of $171, 820. Irwin listed these notes as assets of All-American Home Lloyds. J. B. Walling, state representative from Wichita Falls, told the board that the day before officers of First National Bond and Trust and of American Atlas had consummated an option agreement under which First National can buy American Atlas. James G. McCollom, an officer of First National, said the company, would change American Atlas management to R .ersons acceptable to the board.. Walling represented First National. The board then revoked American Atlas Life’s permit to do business. Saunders explained this would not hinder the transactions for new ownership and management of American Atlas. Currie appealedthus automatically staying the revocation pending the appeal’s outcome on the grounds that the board did not have substantial evidence of the management’s unworthiness ofthe public trust and did not allow for the plan to change the management. About 100 persons, many of them American Atlas stockholders, attended the hearing. Irwin was present but said nothing to the board. In a letter to his stockholders before the hearing, he said: “I have one outstanding bad habit. I will believe in my fellow man and especially in my friends.” Again, he said : “The board, I’m sure, is acting in good faith.” Irwin enclosed a copy of the Dec, 28 Observer with this letter to stockholders. He sent Bell to Austin the night after the Observer editorial staff had closed out its Dec. 28 issue. Bell was shown the page proofs and placed the order. The Texas Observer Page 7 Jan, 11, 1956 Irwin’s American Atlas Tied Up