Swartzell, Rheem & Hensey Company (Washington, DC)

Episode Information

Episode UID
8169421191573
Episode Type
Suspension → Closure
Bank Type
trust
Bank ID
816942119 hash
Start Date
January 27, 1931
Location
Washington, District of Columbia (38.895, -77.036)

Metadata

Model
gpt-5-mini (chosen from majority vote of a three-model LLM ensemble)
Short Digest
d21dabfae2698e4f

Response Measures

None

Description

This is a mortgage banking house placed in receivership and bankrupt, not a traditional commercial bank.

Events (4)
1. January 27, 1931 Receivership
Newspaper Excerpt
Justice William Hitz of the District Supreme Court today appointed Henry P. Blair and Julius I. Peyser as receivers for Swartzell, Rheem & Hensey Co., which yesterday filed a petition in voluntary bankruptcy.
Source
newspapers
2. January 28, 1931 Other
Newspaper Excerpt
Besieged by the constant stream of investors, many of whom fear that their life's savings have been wiped out in the crash of the Swartzell, Rheem & Hensey Company, mortgage bankers, receivers for the concern have been unable to investigate the records...
Source
newspapers
3. March 16, 1931 Other
Newspaper Excerpt
Major Julius I. Peyser, Henry P. Blair and Judge Michael M. Doyle were elected trustees to handle the affairs of the bankrupt Swartzell, Rheem and Hensey Company, mortgage banking house, at a meeting of the creditors...
Source
newspapers
4. April 28, 1931 Other
Newspaper Excerpt
Approximately $1,000,000 in secured notes has been returned to customers of Swartzell, Rheem and Hensey Company by the trustees of the bankrupt concern...
Source
newspapers

Newspaper Articles (10)
1. January 27, 1931 Evening Star Washington, DC
Article from Evening Star, January 27, 1931

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Article Text

MORTGAGE GROUP RECEIVERS NAMED H. P. Blair and J. I. Peyser Appointed for Swartzell, Rheem & Hensey. Justice William Hitz of the District Supreme Court today appointed Henry P. Blair and Julius I. Peyser as receivers for Swartzell, Rheem & Hensey Co., which yesterday filed a petition in voluntary bankruptcy. The receivers are to conserve the assets pending the appointment of a trustee in bankruptcy when the creditors of the company have held a meeting. Bond of the receivers was fixed at $100,000. Through Attorney Leon Tobriner, the company in its application for a receiver tells the court that there are now outstanding notes aggregating $18,000,000 which have been sold from time to time to some 5,000 clients of the company in sums running from small to large amounts. Under the provisions of the various deeds of trust securing these notes the principal as well as the interest has always been payable at the company's office and it has been the custom that the proceeds be distributed or credited to the various customers either in cash proceeds or upon the books of the company. Collected Rents. In addition to its investment business, the company tells the court, it has been engaged in the collection of rents of various properties including apartments, private residences and business properties for clients and in the fire insurance business. There is now pending for settlement in the District Title Co.'s office a certain deed of trust on premises 1445 Park road in the sum of $175,000. this fund being applicable to the payment of notes secured by the deed of trust at the office of the petitioner for distribution among the note holders. Interest is to be corrected from day to day on the $18,000,000 of notes, the court is told, and the makers of these notes have no other means or place of meeting their payments except at the office of the company. Holds Notes of Customers. As an additional reason for the receivership, the company points out that it has in its custody and in its vaults for safe keeping notes representing many thousands of dollars which are the property of its various clients and also other notes which are held for collection belonging to clients, and to whom remittance has to be made at various interest periods. In the office of the company are a great number of books of account and records of its various transactions, the court is told. The volume of business transacted by the company has been large, the court is told, and its assets as well as its business records and the conduct of its business cannot a this time be abandoned or its office *losed without serious loss and injury not only to its creditors but to the investing public. The attention of the court is called to the fact that the election of a trustee, considering the great labor necessary to the preparation of the schedules of assets and liabilities to be filed in this case, cannot be had for at least 30 days in the ordinary course of procedure. It would be unfair to all parties in interest, counsel asserts, whether creditors or otherwise, that the business of this company be discontinued for that period. The receivers are authorized to conclude all pending negotiations and receive payment of all transactions which in the ordinary course of the bankrupt business would have been payable to it. They have authority under the order to employ and pay such clerks, agents and assistants as they may find necessary to properly perform their duties as receivers.

2. January 28, 1931 The Washington Times Washington, DC
Article from The Washington Times, January 28, 1931

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Article Text

PROBE OF BANK CRASH STARTS Besieged by the constant stream of investors, many of whom fear that their life's savings have been wiped out in the crash of the Swartzell, Rheem & Hensey Company, mortgage bankers, receivers for the concern have been unable to investigate the records and are unable to make any definie statement concerning its affairs. Receivers Get Property Major Julius I. Peyser and Harry P. Blaire, appointed receivers by the District Court, are in possession of the company's properties. Major Peyser said: "We have not had a chance to do anything yet excent to confer with the constant stream of people who have been coming in to see us. "The vaults still are locked and we do not know what we shall find when these are opened. We have sent for all officers of the company and expect that they will assist us in untangling the situation. "We are taking the names of investors and will notify these as soon as we can regarding their problems. So far we can make no statement of the assets of the company. The firm has 10 days in which to file this statement. When the assets are listed we expect to be able to answer many questions now being asked. Rover Asks Probe Department of Justice accountants today started their investigation of the concern's books at the instance of United States District Attorney Leo A. Rover. In the petition for voluntary bankruptcy listed liabilities of the company included $18,000,000 in notes which were held. by 5,000 persons. Although this would make an average of $3,600 held by each of the 5,000 individuals, it is believed that many of the notes are held in large lots by other companies.

3. January 31, 1931 The Washington Times Washington, DC
Article from The Washington Times, January 31, 1931

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Article Text

BANKRUPTCY REPORT IS DUE SOON Swartzell, Rheem and Hensey Note Holders Are Advised to Keep Paper Pending Action Belief is growing that losses investors through the failure of to Swartzell, Rheem and Hensey will Company. mortgage bankers, first not be as heavy as was at feared. Definite knowledge of the sitwill not be available, inves- howuation until accountants and tigators ever, of the Department their of have completed and the firm's have prepared Justice until check the of receivers records and of the assets a of the bankrupt liascehdule of assets liabilities This statement and made firm. will probably not be the middle of the the receivers bilities week, before says. coming the Holders of notes against firm are being advised to keep them. Hotel Work Resumed Investigation of the company records to date has disclosed that a number of unsecured notes deeds there mortgage are against outstanding. property which Trust was originally used have as security for notes issued instances been released in some and other notes issued. Projects listed with the receivas being properties against held ers unsecured notes are the Shoreham which include Leon Building. and Broadmoor. Ponce de The Westchester apartments. LaSalle apartments was mistakenly included in this list yesterday. Work on the Shoreham Hotel which receivers were appoint- William for yesterday by Justice the District has been ed Court, Hitz of resumed. completed Supreme The project is 95 per cent origiThe Shoreham Hotel was nally financed by the Swartzeil, The reRheem & Hensey Co ceivership action. filed Thursday to against the hotel. was agreed by the officials. Receivers Meet Following a meeting at the morning of Francis H. Dueay, E. ers, hotel this Gordon, the John receiv- Mr. Laskey and Spencer Laskey stated that the receivers which will meet daily at the hotel will be operated under their supervision. Major Julius I. Peyser, who with Henry P. Blair is receiver defunct mortgage firm, that they of over for announced the management had the also taken Hay- fiAdams House which was nanced by the concern. This action was taken in the interest of note holders and will not interfere with the hotel operation. of The financial difficulties Harry Wardman, father-in-law of Rheem, vice head of Edmund and active Swartzell, president Rheem and Hensey Company, are linked with those of the bankrupt firm. The Shoreham Building, construction of which was forced to abanthe structure was don Wardman when the projects half completed. is one of against which unsecured notes are in existence. Inquiry Ordered litigation which appears to follow in the certain The wake of Rheem and Hensey will the bankruptcy Swartzell, subject deeds local practices relating to in first mortgage the sharpest of to realty trust scrutiny notes they have ever received. into the defunct investment the The probe affairs company had of disclosed that the firm the habit of of trust on been deeds has in property. releasing issued. upon which mortgages had been the considerably in advance of date of maturity of these more gage notes. Legal 'Cover" Kept This equivocal practice. fierce about the propriety of which a in controversy already is raging realty circles, had a legal cover the in a clause inserted in all note issues. which reads: "It is mutually agreed and between the reparties hereto of full covenanted spective payment principal that and the interest, at the office of Swartzell, Rheem and Hensey, shall constitute payment of the notes, and the parthe second part, acting in ties mortgage trustees of the of execu- the of the trust, shall therehave power to and the land or of without the reconvey tion upon presentation release premises cancellation of the notes."

4. February 2, 1931 The Washington Times Washington, DC
Article from The Washington Times, February 2, 1931

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RHEEM FAILURE FACTS AWAIT ON REPORT Receivers and Officials Are Silent on Chance of Grand Jury Proceedings in Case Further light on the affairs of Swartzell, Rheem and Hensey Company, bankrupt mortgage banking house, will not be shed until Department of Justice investigators file a report, receivers stated today. While it is possible a Grand Jury investigation may follow receipt of a statement by accountants and investigators, this, according to Assistant Attorney General Nugent Dodds, will depend upon the nature of the disclosures. Study Possible Criminality Receivers and officials declined to venture an opinion whether criminal charges will be justified. Mr. Dodds said: "The department doubtless will be in a position to answer such questions after the schedule of assets and liabilities of the company have been prepared, filed and studied. "Operations under the unusual clause in the trust agreements used by the company, which apparently authorized officials to release and reconvey property without notification that notes have been cancelled, will certainly be studied. "The intent of the officials of the company will have a direct bearing on the future action of this department." A steady stream of holders of notes and receipts of the bankrupt company continues to besiege the Swartzell, Rheem and Hensey Company building on Fifteenth Street Northwest. The receivers, Major Julius I. Peyser and Henry P. Blair, are reiterating their advice to note holders to hold on to their securities. It has been suggested that holders of notes form committees to act in unison regarding the various projects. Investigations to date have disclosed that trust deeds or mortgages against several properties have been released, apparently under the unusual agreement, and that some notes are not secured. Belief is growing in the financial district that the losses to investors will not be as heavy as at first feared, as it is thought the assets will be larger than expected. The receivers, however, decline to venture a statement until after the schedule of assets and liabilities has been completed.

5. March 1, 1931 Evening Star Washington, DC
Article from Evening Star, March 1, 1931

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Article Text

RECEIVERS ASK RULING ON RETURN OF NOTES Swartzell, Rheem & Hensey Controllers Says Noteholders Have Been Given Credit. The District Supreme Court yesterday was asked to advise Maj. Julius I. Peyser and Henry P. Blair, receivers for Swartzell, Rheem & Hensey Co., bankrupt investment house, what to do about returning notes which were left with the firm for collection prior to its action in seeking bankruptcy. Attorney Michael M. Doyle and Attorney Mark Friedlander tell the court on behalf of the receivers that all the notcholders who have filed petitions for return have been given credit on the company's books. All of the notes are purported to be secured despite the fact that trusts on the property involved have been released, the receivers state. In asking the court for advice the receivers point out that they doubt their right to return the notes.

6. March 13, 1931 The Washington Times Washington, DC
Article from The Washington Times, March 13, 1931

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Swartzell Creditors Pick Trustee Tomorrow made public concerning the find Another chapter in the history of the bankrupt firm of Swartzell, ings of the receivers, the predio Rheem and Hensey Company, tion has been freely made by mortgage banking house, will be interested observers that there started tomorrow when creditors of the concern will gather in will be marked discrepancies be Equity Court No. 2 to select a tween the receivers' report an trustee to take over the concern's that recently made in behalf o affairs. the company in which it was indi Selection and qualifying of the trustee will be followed by a recated that the assets would over port of the receivers, Maj. Julius balance the liabilities. I. Peyser and Attorney Henry P. Schedule Under Study Blair, who have been in charge The schedule filed with th of the property since the crash of the mortgage house in January. courts in behalf of the company Receivers To Report has been the subject of study b In relinquishing their duties, the lawyers retained by noteholder receivers will, in accordance with and other creditors. These fig the District regulations, turn over ures are to be compared with to the trustee an accounting of those of the receivers and are ex their activities and a report of investigations made. pected to aid materially in th This will include an estimate of mapping out of future action. The meeting tomorrow has beer the company's liabilities. called by Fred J. Eden, referee in Although nothing has been honbruntcr has

7. March 14, 1931 The Washington Times Washington, DC
Article from The Washington Times, March 14, 1931

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BLAIR, DOYLE, PEYSER ARE NAMED Receivers Will File Report Monday; Quiz of Officers Saturday; Rheem Hissed Major Julius I. Peyser, Henry P. Blair and Judge Michael M. Doyle were elected trustees to handle the affairs of the bankrupt Swartzell, Rheem and Hensey Company, mortgage banking house, at a meeting of the creditors held in the District Supreme Court building today. Major Peyser and Mr. Blair have been in charge of the company since the crash more than two months ago. Judge Doyle has been acting as counsel for the receivers. Bond for the trustees was fixed at $100,000. Postponement Sought Election of the trustees was carried through in spite of efforts by several attorneys to postpone this action until a later date They claimed, on behalf of clients, there was no reason for the "tremendous rush." They also contended their (Continued on Page 2, Col. 1)

8. March 16, 1931 The Washington Times Washington, DC
Article from The Washington Times, March 16, 1931

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RECEIVERS LIST FIRM'S DEBT AT $1,972,457 Assets $3,149,565 Against $5,122,023 Liabilities; May Pay Clients 60c on Dollar Debts of the bankrupt Swartzell, Rheem and Hensey Company. mortgage banking house, exceed the assets of the firm by $1,972. 457.82, the report filed by the receivers, Major Julius I. Peyser and Henry P. Blair, with Fred J. Eden, referee in bankruptcy, today, discloses. The assets of the concern which was declared bankrupt last January, total $3,149,565.85. The liabilities reach $5,122,023.60. This shows that creditors of the firm will only realize about 60 cents on the dollar. Report . Voluminous is a voluminous one of more consisting The report than 100 of is pages. the volume Approximately required one-third to list the of holders of notes been which paid which names and have have released not been and to the in credited holders. The receivers accounts state of the report: "We found in the vault a metal boxes and in the names number packages of number of individuals, as well as a appear of contain file boxes notes, which securities which and to all of to be the appear valuable papers, property not of These were not customers. listed and are contained in the report." it is thought possible The may above, include original notes for which customers simply were given receipts. Notes Sought The receivers, since the firm have been beseiged by of the customers crashed, firm who claimed that they had left the for had their savings, original given notes, which with they the company for safe keeping. Creditors and attorneys representing a large number of clients who were customers of Swartzell, Henesey, eagerly Rheem studied the and detailed report which was filed this morning. of day Peyser, At Major a meeting creditors and trustees Mr. Satur- Blair, were elected to the affairs comwind receivers, up of the $100.expect to post and 000 pany. bond They today qualify for trusteeship. Creditors To Meet Further meetings of creditors are held in near to be of these, the it future. The first was Mr. an announced examination by of Eden, the company will be officers at 10:30 a. m. Saturday in the District Supreme Court Building. have Only those creditors who permitted proved their clams are by to take the statute meetings. Creditors active part have in until 27, six the firm date July the went months into from the hands of the receivers, in which their to prove claims. Many have hesitated to do this through such fear that by securities action they they might forfeit the now hold. Notes which has been released and which have not yet been credited to customer accounts total $1,988,450.

9. April 28, 1931 The Washington Times Washington, DC
Article from The Washington Times, April 28, 1931

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CREDITORS GET $1,000,000 IN RHEEM NOTES Secured Paper Is Returned to Customers; Federal Probe of Bankrupt Firm Resumes Approximately $1,000,000 in secured notes has been returned to customers of Swartzell, Rheem and Hensey Company by the trustees of the bankrupt concern, it was disclosed today. The notes had been left with the offices of the mortgage banking house for safekeeping and had been kept locked in the company vaults by the receivers and trustees. Return of the notes was made possible by a special order issued by Justice Jesse C. Adkins, of the District Supreme Court, about three weeks ago. Only those notes which in the udgment of the trustees, Major Julius I. Peyser, Henry P. Blair and Judge Michael M. Doyle, are secured may be turned over to owners. Rheem Is Questioned Creditors of the defunct company resumed their examination of Edmund D. Rheem and other officers of the company this afternoon. Their questioning today is directed toward transactions involving the Ponce de Leon apartments. Notes totaling more than $3,000,000 are still outstanding and unsecured, it is claimed by creditors. Having disposed of the larger properties against which original first trusts have been released, it is expected that the present series of examinations of the company officers will close in the next few days. Released On Bond Announcement to this effect by the referee in bankruptcy will probably be followed by submission to the Grand Jury by the Department of Justice of evidence which agents have been seeking since the firm went into the hands of receivers in January. The nature of discoveries which may have been made by investigators has not been disclosed. Rheem was charged with embezzlement by Department of Justice agents after the crash of the mortgage banking house and has been at liberty under $25,000 bond.

10. July 18, 1939 Evening Star Washington, DC
Article from Evening Star, July 18, 1939

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Rheem Co. Trustees To Take $140,000 To Firm's Creditors Lone Offer Is Made at Auction of Building at 727 Fifteenth St. N.W. Trustees of the bankrupt Washington investment house of Swartzell, Rheem & Hensey Co. planned today to present to the firm's 1.700 creditors a bid of $140,000. the only offer made when the firm's former business quarters at 727 Fifteenth street N.W. were offered for sale at public auction yesterday. The building is now occupied by a on Laidlaw a monthly & Co., rental brokerage basis. Auc- firm, tioneer Thomas J. Owen stood on the front steps and addressed a crowd of more than 100 spectators, but there was only one bidder, John M. O'Brien. who offered $140,000 in behalf of James O'Donnell, retired chain drugstore operator. Judge Michael M. Doyle, one of the trustees. explained the creditors had set a figure of $180,000 as the minimum sale price. and this price had been made binding by an order of Referee in Bankruptcy Fred J. Eden. $5,000 Deposit Not Accepted. Judge Doyle and the other trustees. Col. Julius I. Peyser and Henry P. Blair, went into a brief huddle after the only bid was submitted and then directed Mr. Owen not to accept a deposit of $5,000, the sum required if the bid had been accepted. Mr. O'Brien said the bid would stand pending action of the creditors. Louis A. Dent, representing the trustees. named no definite date for such action, but said it would be in the near future. The Fifteenth street structure, located in the heart of Washington's financial district, is the last piece of real estate owned by Swartzell, Rheem & Hensey Co. The firm's crash early in 1931 ruined hundreds of investors and resulted in the indictment and conviction of its executive vice presidents, Edmund D. Rheem. It had years a of and operated had in earned Washington reputation for 60 being as "good as gold" prior to its failure. Then followed a long chain of court litigation in which creditors sought to recover at least a part of their losses. Thus far they have received only 5 per cent, paid in May, 1937. Mr. Rheem was found guilty in District Court on July 10, 1931, of carrying away and concealing notes of $162.000 belonging to the company and with embezzling that amount. Paroled in 1935. Justice Peyton Gordon sentenced him to seven years in Lorton Reformatory. Mr. Rheem was paroled a city on November under stipulation 2, 1935, and of the left Parole the Board designed to protect him from the possible carrying out of threats by some of those impoverished when the firm collapsed. Mr. Rheem was a graduate of a known stay Princeton sportsman. University During and his widely at Lorton he kept books and coached the prison football team. He was paroled to the custody of a friend in Buffalo, N. Y. His wife, the former Alice Wardman, daughter of Harry Wardman, divorced him a short time after he went to prison. The firm's petition for receivership, filed in District Court January 27, 1931, revealed that outstanding notes amounted to $18,000,000. The organization had participated in the financing of building operations for extensive apartment, hotel and office building developments here. The next to the last piece of real estate owned by the defunct company, an apartment building at 705 Fourth street N.W., was sold late last year when District Court ratified an offer of $52,000 for the property.