INVESTIGATIONS: How to Find Gold

• Share

Goldfine Bernard 35Kneelnd HAncock 6-5632 Res 72Beacon ASpnwl 7-6280 Mobile Service ask Long Distance for Mobile Operator and then ask for Bos JL-4-2638 SumRes 61ManomtAv HUll 5-1221

In Boston's U.S. District Court last week Judge Charles E. Wyzanski Jr. heard the latest installment in two years of testimony that gives clues as to how Sherman Adams' friend Bernard Goldfine managed to live, despite income tax laws, as high as his current listing in Boston's telephone directory suggests. The suit was brought by George B. Heddendorf, 55, economist for the Babson Institute, who in 1949 invested about $5,000 savings in the stocks of the Goldfine-controlled East Boston Co. and its subsidiary, Boston Port Development Corp.

Heddendorf knew that the net value of the company's real estate was far more than the market value of the outstanding stock, but he was surprised to get neither dividends nor the legally required financial reports. Meanwhile, the Boston Stock Exchange needled the Securities and Exchange Commission into getting a 1954 court injunction forcing a public report. This reluctantly released information was enough to send Heddendorf straight to court with the charge that Boston Port's majority (80%) stockholder, one Bernard Goldfine, had teamed up with friends to milk the company and other shareholders. Last week Goldfine agreed to put back into the company some $400,000, about $130,000 more than he personally owed.

Items from the Goldfine school of management, as revealed in the court record:

¶ Between 1945 and 1948, Goldfine arranged to borrow $79,750 from the company in 21 unsecured loans, never repaid a cent of principal or interest.

¶ He knew and approved of matching loans, usually made the same day, to Company President William J. McDonald, whose death in 1948 left Goldfine in sole control of the company, also left all of McDonald's company borrowings forever uncollectable because of a statute of limitations.

¶ Though most of the loans were interest-free, Goldfine agreed in some cases to pay interest; in 1949 company records officially excused him from every cent of $67,833 unpaid interest.

¶ Even while he built up his dominant stock interest, he never took up the legal responsibilities of a company officer; he simply operated through his private secretary, Miss Mildred Paperman, who held key posts as treasurer and director of Boston Port.

¶ No man to keep more records than he had to, he ordered faithful Miss Paperman to run the company for a couple of years on a cash basis; as soon as each month's rental checks came in she cashed them at Boston's Pilgrim Trust Co., paid bills in folding money rather than checks. ¶ After selling a piece of Boston Port land to the state of Massachusetts for $700,000, instead of the $400,000 that the state originally offered, Goldfine pocketed $20,000 in commission for himself—in the form of a loan from Boston Port.