HIGH FINANCE: Hadacol Hangover

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As an old horse trader, Louisiana's Dudley J. LeBlanc likes to say that the man who buys a horse has only himself to blame if the horse keels over and dies. Only six weeks ago, a group of Manhattan traders bought the odd-looking business animal that LeBlanc had raised on Hadacol, a patent medicine comparable to a vitamin-enriched Manhattan cocktail (TIME, Sept. 10). This week it looked as if the horse they bought was about dead.

In Manhattan's federal court, Hadacol's purchasers filed a voluntary petition for financial reorganization. After paying LeBlanc $250,000 down (previously announced as $1,100,000) for the company, they made some shocking discoveries. Hadacol's $3,600,000, 15-month profit had somehow mysteriously turned into a $1.8 million second-quarter loss. Worse, they charged that LeBlanc had 1) concealed $2,000,000 of unpaid bills and a tax debt of $656,151 to the Government, 2) falsified Hadacol's records to show $2,272,000 of "accounts receivable" which, in large part, did not exist.

As the court named a trustee to try to get the prostrate horse to its feet again, a new whiplash struck it. The Federal Trade Commission complained that Hadacol's leeringly prurient ballyhoo ("The Hadacol boogie makes you boogie-woogie all the time") is "false, misleading and deceptive" in representing the nostrum as "an effective treatment and cure for scores of ailments and diseases."