Broadcasting Telecasting (Jan-Mar 1958)

MACK PROBE continued two insurance agencies — Stembler-Shelden and Andar Inc. In an opening statement, attorney Whiteside charged that Dr. Schwartz ' bears false witness and is an unmitigated liar." He said the subcommittee former chief counsel had in his possession information on loans to Comr. Mack dating back to 1950, involving $7,830, which he did not reveal. The balance owed on these loans is $250. Mr. Whiteside testified, and no interest lias been charged the commissioner. He denied emphatically that the commissioner ever had been "pledged" to him in anj way and claimed that Dr. Schwartz' testimony was based on "second hand hearsay." He cited the Katzentine affidavit as being lull of rumors and hall truths. In denying that disbarment proceedings have ever been instituted against him in Florida. Mr. Whileside charged "Mr. Schwartz is using the technique of 'big lie'." Paul Scott. National attorney in Miami, offered him $10,000 to represent Public Service Tv Inc. in the prosecution of its application for ch. 10. Mr. Whiteside said. Also, he said, he had luncheon with G. T. Baker (at Baker's request) during which the National Airlines president also sought to retain his services on the ch. 10 application. Mr. Whiteside insisted he had not been retained or employed by National Airlines because he did not accept a fee. Questioned about the testimony of Judge Robert Anderson that he had been "retained," Mr. Whiteside said the judge apparently had one interpretation of when an attorney was "retained" and that he had a completely different one. The witness said he talked with Comr. Mack many times between September 1955 and May 1956 and never at any time had he specifically asked Comr. Mack to vote for National but merely pointed out the character qualifications of National's executives. "All things being equal, I wanted him [Mack] to vote for National," Mr. Whiteside said. According to Mr. Whiteside, Comr. Mack had left the impression that he was going to abstain when the FCC voted on ch. 10. When asked what specific proof he had that Comr. Mack had repaid the loans, Mr. Whiteside testified that he had furnished Dr. Schwartz with seven promissory notes marked "paid to satisfaction." This later became a big issue and was referred to often in questioning. The committee contends it does not have the notes marked paid nor. several members stated, have they ever had them. They questioned Mr. Whiteside at length as to why he did not list the notes as part of an itemized statement of records turned over to the subcommittee under subpoena. Using the attorney-client relationship plea for the first time, Mr. Whiteside refused to discuss his May 1956 call to Comr. Mack, in the presence of Perrine Palmer. During this call according to testimony two weeks ago [Government, Feb. 24], Mr. Whiteside told Mr. Mack he was no longer interested in the ch. 10 case and that if the commis Page 28 • March 3. 1958 sioner ever felt "pledged." he was released from that pledge. Mr. Whiteside claimed this was a part of the dispute over the Grant Foster trust fund, which he formerly administered for Mr. Foster, and that Mr. Katzentine's actions relating to settlement of the fund were "tantamount to blackmail." His difficulties with Foster centered around the amount of fees charged, Mr. Whiteside stated. Despite repeated questioning, he refused to admit that he obtained a better settlement after agreeing to phone Comr. Mack and withdraw his support of National Airlines. Mr. Katzentine. at this time, represented Mr. Foster in settlement of the trust fund with Mr. Whiteside. He again stood behind the attorney-client relationship when asked if a $30,000 campaign contribution had been made to Charlie Johns, candidate for governor, from the Foster trust fund. The impropriety of loaning Comr. Mack money never was discussed between the two, Mr. Whiteside said. Also, he said, the fact he was accepted to practice before the FCC in October 1955 would make no difference because the loans were between two friends of long-standing. "I have never attempted to pressurize any friends of mine who might be in public office," Mr. Whiteside stated in denying he had attempted to influence the commissioner's vote. At various times, members of the subcommittee attempted to show that Mr. Whiteside's loans to Comr. Mack began at about the same time Mr. Mack was appointed to the Florida Railroad & Public Utilities Commission. Rep. John Moss (D-Calif.), who clashed often with the witness, again asked what proof Mr. Whiteside had that Comr. Mack had repayed any of the loans. Mr. Whiteside produced photostats of pages from his firm's cash book which far from satisfied any of the subcommittee members. In explaining Comr. Mack's associations with the two insurance agencies, Mr. Whiteside said he bought an interest in W. Y. Stembler agency in January 1953 for $49,000. He then assigned one-sixth (1,666 shares) of the agency to Comr. Mack at no cost to the commissioner. In May 1954, the agency merged with a second Miami firm and became Stembler-Shelden with Mr. Mack retaining one-sixth ownership. Comr. Mack's stock, according to Mr. Whiteside, is held in trust by G. C. Stembler, son of W. Y. Stembler. Later, in January 1956, Mr. Whiteside transferred 100% ownership of Andar Inc. to Comr. Mack at no cost to the commissioner. Andar, it was explained, at that time had no assets or liabilities and was a holding company for Coral Gables (Florida) Checker Cab Co.. owned by Mr. Whiteside. It since has been engaged in buying and selling property, real estate, making loans and as an insurance agency. Mr. Whiteside said the insurance interests were given to Comr. Mack to help set him up in business and assist him in repaying the loans. The two had an understanding that Comr. Mack would return to Stembler Shelden when the commissioner retired from public service. Mack ownership in the two agencies is "completely proper if you consider the circumstances," Mr. Whiteside testified. The witness further stated that Comr. Mack received the following amounts as "earned income" or "ownership participating interest payments" from Stembler-Shelden: 1953, $732; 1954, $5,040; 1955, $1,533, and 1956. $2,590. Some of these payments were commissions on "leads" Comr. Mack had furnished the agency, Mr. Whiteside said. He stressed that no leads have been furnished since Comr. Mack became a member of the FCC. Since 1956, Comr. Mack's monetary compensation from Stembler-Shelden has been transferred to Andar Inc.. Mr. Whiteside stated, and some of the money then has gone to him (Whiteside) in repayment of the Mack loans. In August 1957, Comr. Mack's debt of $2,350 to Mr. Whiteside was transferred to Andar Inc., the witness testified. This, in turn, was repayed Feb. 1. 1958, when Andar Inc. sold a kitchen for $2,600 it had purchased for $2,000. Mr. Whiteside admitted that he arranged financing for purchase of the kitchen and Comr. Mack did not participate and had not been out a dime. Comr. Mack has received $4,350 from Andar Inc. directly and indirectly, Mr. Whiteside stated. Payments of $1,600 and $400 also have been transferred from Stembler-Shelden to Andar and credited to Mack's account, the witness said. It further was testified that $1,250 in 1956 was applied to Comr. Mack's loan account with Mr. Whiteside, plus $300 in January 1957. [Discrepancies in the amount of money accruing to Comr. Mack from the two agencies are because there were numerous figures given by the witness which did not add up — a near-unanimous conclusion of the subcommittee members.] As testified by Mr. Whiteside, most of Comr. Mack's loans have been repaid by transfering the indebtedness to Andar Inc. with Mr. Whiteside then withdrawing monies accruing to Andar in Comr. Mack's name. Mr. Whiteside denied that any of the loan have been "forgiven" rather than repaid. Asked the difference between giving Comr. Mack outright so many dollars and taking repayments from Andar for a gift to Comr. Mack. Mr. Whiteside replied there was a "vast difference." He said he had helped set his friend up in a business where he could earn his own way and also stated there was a difference as far as the payment of federal income taxes are concerned. "The moral and ethical question is not one whit different," retorted Rep. Moss. Mr. Whiteside said that it makes no difference which of his bank accounts (it was brought out the witness has over 20) the Mack loans were charged to. He said he did not keep personal books apart from his law firm books and that Comr. Mack's loans were placed on a note basis only after 1950. Rep. Moss again questioned the witness at length about how the Mack loans were Broadcasting