Mr. KOPECKY. Yes, sir. Mr. KENNEDY. Hoffman Machinery Corp.? Mr. KOPECKY. Yes, sir. Mr. KENNEDY. That is one of the biggest companies in the country; is that correct? Mr. KOPECKY. It is a major corporation, listed on the New York Stock Exchange. Mr. KENNEDY. Had Mr. Roth been associated with the Herald Vending Corp.? Mr. KOPECKY. In prior years he had been associated with the Herald Vending Corp., and withdrew approximately around 1950. Mr. KENNEDY. And had Mr. Milton Holt been indicted with the Herald Vending Corp. in 195- what year? Mr. KOPECKY. The indictment was filed in 1954, and Mr. Holt, of local 805, the Herald Vending Corp., and others were indicted. Mr. KENNEDY. For what reason? Mr. KOPECKY. The charge was violation of the Sherman Antitrust Act. Mr. KENNEDY. What was it found that they were doing? Mr. KOPECKY. The indictment charges generally that it was Mr. KENNEDY. Control of trade? Mr. KOPECKY. Control of trade, locations, and competition. Mr. KENNEDY. And the use of the union as an enforcement arm for this company! Mr. KOPECKY. It specifies members of local 805 refused to service vending machines of member operators of the association who failed to conform; local 805 to boycott locations, local 805 to carry out, enforce, and police the allocations of locations by persuading and compelling member operators who failed to conform. Mr. KENNEDY. Were they found guilty on that? Mr. KOPECKY. Yes. Mr. KENNEDY. Mr. Roth was not mentioned in that indictment, although some of the acts went back to the 1940's; is that right? Mr. KOPECKY. The indictment specifies that these acts go back to 1936. Mr. KENNEDY. Was Mr. Holt also indicted for perjury? Mr. KOPECKY. Yes. Mr. KENNEDY. He was found guilty of perjury? Mr. KOPECKY. Yes, sir. Mr. KENNEDY. And he received a suspended sentence. That was just last year, was it not? Mr. KOPECKY. Yes, sir; that is correct. Mr. KENNEDY. Would you tell us what financial deals or dealings there have been between the Continental Industries and Valley Commercial with Mr. Milton Holt while he was an officer of this local? Mr. KOPECKY. Continental Industries and its officers? Mr. KENNEDY. Yes. Mr. KOPECKY. Beginning in October of 1957, certain officers of Continental Industries have either loaned or made arrangements for personal loans to Mr. Holt, totaling eight in number for a total of known loans through the present date of $243,600. The CHAIRMAN. How are they secured? Mr. KOPECKY. Some were secured, others, Mr. Chairman, were unsecured and without interest. The CHAIRMAN. All of them without interest? Mr. KOPECKY. Not all of them. Certain of them. The CHAIRMAN. Some are unsecured and without interest? The CHAIRMAN. Give a breakdown of the amounts. Did you say there was a total of eight? Mr. KOPECKY. Yes, sir. The CHAIRMAN. Give a breakdown of the amounts. This is within what period of time? Mr. KOPECKY. Beginning October 18, 1957, through the present date. The CHAIRMAN. From 1957 to the present? A little less than 2 years' time? Mr. KOPECKY. Yes, sir. The CHAIRMAN. Eight separate loans? Mr. KOPECKY. Yes, sir. The CHAIRMAN. Give the amounts and the order. Mr. KENNEDY. And how they were arranged and from whom. The CHAIRMAN. First give the amounts and we will see how they run. We will see the size of them. Then give the details. Mr. KOPECKY. The first loan was October 18, 1957, $20,000; the second loan, October 18, 1957, $30,000; the third loan, April 10, 1959, $35,000; April 15, 1959, $54,600; May 1, 1959, $12,000; April 19, 1959, $27,000; April 20, 1959, $55,000; and in May of 1956, $10,000. The CHAIRMAN. 1956? Mr. KOPECKY. Yes, sir. This is a recent loan which I learned about in the past day so I have to qualify that. All of the others begin in October 1957, with the exception of this one $10,000 loan. The CHAIRMAN. There is a $10,000 loan included in this that was in 1956? Mr. KOPECKY. Yes, sir. The CHAIRMAN. All right. Now, you may give detailed information with respect to the securities. First I will ask you: Have these loans been repaid? Can you tell what is outstanding, the total outstanding and the amounts? Mr. KOPECKY. Yes, I can. The CHAIRMAN. Let us have the total outstanding indebtedness. Mr. KOPECKY. At the present time there is a total of $117,000 which is still outstanding. The CHAIRMAN. Now give us that that is secured and unsecured and let's ascertain, if we can, how much of the outstanding indebtedness is unsecured. Mr. KOPECKY. I can do that with regard to the $117,000 that is still outstanding. Sixty-two thousand dollars is unsecured. The CHAIRMAN. Just about half of it? Mr. KOPECKY. That is right. And the other $55,000 loan, which was arranged through a bank, is secured. It is secured with stock put up in Continental Industries by Mr. Holt. The CHAIRMAN. What part of the outstanding indebtedness bears no interest? Can you tell us that? I assume it would be part of the unsecured. Mr. KOPECKY. That is correct; $27,000. The CHAIRMAN. Is unsecured. In other words, about half of the unsecured indebtedness bears no interest? Mr. KOPECKY. That is correct. Mr. KENNEDY. Can we go through them one by one, Mr. Chairman? The CHAIRMAN. All right. Maybe I was a little ahead of the thing, but I wanted to get that information. Mr. KOPECKY. The first loan, on October 18, 1957, for $20,000, was obtained by Mr. Holt from the Franklin National Bank, of Franklin Square, NY. This has since been repaid, and at the time Mr. Holt put up 7,000 shares of stock of Continental Industries, which he had owned. The bank representatives have indicated that someone at Continental had made the arrangements through the bank for this loan. Mr. KENNEDY. So that we get the record straight, these transactions are all with or on behalf of an employer who has contracts with this local? Mr. KOPECKY. That is correct. The Chairman. In other words, he is borrowing it as an officer of the local; he is borrowing money from a business firm that he makes bargaining contracts with. Mr. KOPECKY. That is right; either borrowing it directly from the firm or through some intermediary with the help of the firm. The CHAIRMAN. We have passed legislation through the Senate that would take care of this very problem, if we can get the House to agree. Mr. KOPECKY. Yes, sir. The second loan was made at the same time in the amount of $30,000, and this was obtained by Milton Holt from the Valley Commercial Согр. This was made through a rather devious means. The loan was Mr. KENNEDY. Did you point out the fact that on this $20,000 from the Franklin National Bank, the bank representatives have given us information that the loan was made because they had received a call from Continental Industries recommending that the loan be made? Mr. KOPECKY. Yes, sir. Mr. KENNEDY. And at that time Holt purchased $20,000 worth of U.S. Hoffman Machinery Corp. stock; is that right? Mr. KOPECKY. Actually, he used the $20,000 to purchase $30,000 Worth, because the margin requirements permitted him to purchase more. He only needed $20,000 in cash to buy $30,000 worth of stock. The CHAIRMAN. To purchase it on margin? Mr. KOPECKY. Yes, sir. Mr. KENNEDY. He has since sold that stock and received a net profit of $10.304.55? Mr. KOPECKY. That is correct. Mr. KENNEDY. He sold it in 8 months, June of 1958? Mr. KOPECKY. That is correct. Mr. KENNEDY. This is the same company, U.S. Hoffman Machinery Corp., of which Mr. Roth is president? Mr. KOPECKY. Mr. Roth is also president of that corporation. There was a second loan in the amount of $30,000 obtained by Mr. Holt from the Valley Commercial Corp., on the same day. Mr. KENNEDY. What was the Valley Commercial Corp.? Mr. KOPECKY. That is, for all intents and purposes, an affiliate of Continental Industries. They share space at the same location, and it is a factoring organization. It is a finance organization. The CHAIRMAN. In other words, it finances the sales of the other, takes up the notes, and so forth. Mr. KOPECKY. That is correct. And Mr. Holt obtained the loan from a firm known as Adams Associates. Adams Associates is a financial investment organization, and one of the principals of this Adams Associates is the CPA for Valley Commercial Corp. and Continental Industries. I have an affidavit from the principal in that firm, and he indicated that the loans were made at the behest of Mr. Sternberg, and that Mr. KENNEDY. Who is Mr. Sternberg? Mr. KOPECKY. The executive vice president of Valley Commercial and a business associate of Mr. Roth. The CHAIRMAN. The affidavit may be made exhibit No. 41. (Affidavit referred to was marked "Exhibit No. 41" for reference and may be found in the files of the select committee.) Mr. KENNEDY. So this loan was actually made from Adams Associates at the request of Mr. Sternberg, who is an executive vice president of Valley Commercial Corp; is that right? Mr. KOPECKY. That is correct. Mr. KENNEDY. And what interest was paid on that? Mr. KOPECKY. No interest. The CHAIRMAN. Has it been repaid? Mr. KOPECKY. Yes, that one has been repaid. Mr. KENNEDY. And that loan was personally guaranteed by Herbert Sternberg; is that right? Mr. KOPECKY. It was guaranteed and then the loan was immediately reimbursed to Adams Associates by Valley Commercial Corp., so, in effect, Valley Commercial Corp. made the loan. Mr. KENNEDY. And there was no security on that loan? Mr. KOPECKY. No security. Mr. KENNEDY. Interest free and no security? Mr. KOPECKY. That is correct. Mr. KENNEDY. The same kind of procedure was used on the $54,600 loan? Mr. KOPECKY. Yes. With regard to the second loan of $30,000, made at the same time as the first one, Mr. Holt again bought some additional stock of the U.S. Hoffman Machinery Corp. With this $30,000 he was able to buy $40,000 worth of stock of U.S. Hoffman Machinery. Mr. Roth is the president of that. He has since sold all of that stock. Mr. KENNEDY. What profit did he get on that? Mr. KOPECKY. In excess of $23,000. The CHAIRMAN. So on the two loans by the purchase of stock, he made in excess of $30,000? Mr. KOPECKY. Yes, sir. The CHAIRMAN. Over a period of what time? Mr. KOPECKY. Over a period of 15 months. The CHAIRMAN. Fifteen months? Mr. KOPECKY. With money he did not put up himself. The CHAIRMAN. From money that he actually got by reason of his official connection with the union and its business relations with the company? Mr. KOPECKY. That is correct. The CHAIRMAN. In other words, he was actually getting the loans from management, with whom his union has bargaining contracts? Mr. KOPECKY. That is correct. And in the affidavit which I obtained from Adams Associates, they indicated that they did not know who Mr. Holt was, that they now know who Mr. Holt is, and had they known of the connection between Mr. Holt and Continental Industries, that they would not have agreed to making such loans. Next we come to the third loan in the amount of $35,000, which was made April 10, 1959. Within a 5-day period there was an additional loan of $54,600, and within another 2-week period, on May 1, 1959, these was an additional loan of $12,000. These loans to Milton Holt were arranged by Herbert Sternberg, the executive vice president of Valley Commercial Corp. The $35,000 loan is still outstanding. Mr. KENNEDY. From whom was that loan made? Mr. KOPECKY. Mr. Holt obtained that from Adams Associates. Mr. KOPECKY. In the same manner as I described previously. Mr. KOPECKY. On that particular loan, Adams Associates charged 6-percent interest because they were not reimbursed by Valley Commercial. They felt since it was their own money that they were expending Mr. KENNEDY. Was that secured? Mr. KOPECKY. That is not secured, but the note is endorsed and personally guaranteed by Mr. Herbert Sternberg. Mr. KENNEDY. What about the $54,000? Mr. KOPECKY. That was a short-term loan which was unsecured and without interest and has been repaid. Mr. KENNEDY. What about the $12,000? Mr. KOPECKY. The $12,000 was also a short-term proposition. In that instance, Adams Associates loaned the money to Mr. Holt at the request of Herbert Sternberg of Valley Commercial, and Mr. Holt gave Adams Associates his personal post-dated check, approximately for a 3-week loan, and when the date of the check came due they put the check in for deposit and it cleared. Mr. KENNEDY. How was he able to arrange the purchase of stock and the quick profit on the United States Hoffman International Corp. or Hoffman Machinery? Mr. KOPECKY. I didn't hear you. Mr. KENNEDY. How was he able to arrange the quick profit on the purchase of the Hoffman stock? Mr. KOPECKY. The price of the stock went up on the market. Mr. KENNEDY. Was that any arrangement between the two of them as far as we know? Mr. KOPECKY. No. |