In the Stockholders' Interest?

The public had never heard of keenwitted Manhattan Lawyer Abraham L. Pomerantz until he bobbed up late last fall as counsel for Russian Spy Valentin A. Gubitchev. For that job Pomerantz got an undisclosed fee (from an undisclosed source) which he claims was "the biggest ever paid in a criminal case." But that was not his usual line of work; only twice before in his career had Pomerantz taken a criminal case.

Pomerantz' regular business is filing suits in behalf of stockholders against corporation executives whom he suspects of having pulled a fast deal. At that somewhat specialized work he is the nation's top lawyer. In 17 years, he estimates that he and associates have forced corporate bigwigs to pay back more than $20 million to their companies. In so doing, Pomerantz and a few associates have collected, according to his estimate, $5,000,000-plus in fees.

Bull's Eye. Last week, Pomerantz was ready to collect again. This time his target was Textron Incorporated's Royal Little, who had parlayed a Providence rayon yarn dyeing mill into a $54 million, 20-odd plant textile empire. Textron's baffling labyrinth of foundations and "charitable" trusts had been investigated by Congress, but nobody had ever explored it with such profit as Pomerantz. As usual, he was representing a small (50 shares) stockholder, a Mrs. Lillian Berger of Boston. She, through Pomerantz, charged that Little and his family had been enriched by profits which should have gone to Textron. When Little took the stand in Providence's federal court, Pomerantz undertook to prove the charge.

Under Pomerantz' prodding, Little admitted that his family trust, American Associates, Inc., had turned a quick $700,000 profit by buying & selling the Newmarket Mill at Lowell, Mass. Textron, offered the same chance, had turned it down because, said Little, Textron could not get a loan to swing the deal. In a second deal, Textron had bought the Suncook Mill in New Hampshire for $1,750,000 in 1943. Only a month before Textron bought the company, Little admitted, his family trust, which had been buying Suncook stock since 1933, had bought an additional 2,000 shares. Asked Pomerantz: Didn't Little in one capacity or another make more than $600,000 profit? Answered Little: "I know it was substantial." It was also conceded that Little's family trust made a substantial profit as exclusive export agent for Textron, and that Textron had failed to inform its stockholders of the relationship.

Little protested that he had abstained from voting on any of the deals involving Textron. But last week, deciding that he had had enough, Textron's Little agreed to have his lawyers work out a settlement with Pomerantz. This week a settlement equivalent to $600,000 was before the court and stockholders for approval. Pomerantz was asking a fee of $100,000.

Eagle's Eye. As Pomerantz' fees go, this was small. Some of his bigger cases and fees for representing stockholders:

> Manhattan's National City Bank's ex-Chairman Charles E. Mitchell and associates were forced to repay the bank $1,800,000 because of fat bonuses paid to management. Pomerantz' fee: $450,000.

> American Tobacco Co.'s late President George Washington Hill and associates were ordered to repay a bonus of $2,000,-ooo to the company because the court ruled that it was more than the company's regulations allowed. Pomerantz' fee: $500,000.

> Publisher William Randolph Hearst and associates were required to pay Hearst Consolidated Publications, Inc., which owns many of the Hearst papers, $5,000,000 because the court held that it had been overcharged when it first bought some of the papers from Hearst. Pomerantz' fee: $800,000.

Just before taking on Textron, Pomerantz had persuaded a court to force ex-Chairman C. L. Lloyd and ex-President L. Frank Pitts of Chicago's Nu-Enamel Corp. to pay the corporation $1,198,000 because they had bought a company cheaply and sold it to Nu-Enamel at a big profit. Pomerantz' requested fee: $300,000. Is Pomerantz interested in the welfare of the small stockholder? Said he candidly: "The lawyers do make large fees. The plaintiffs get nothing out of it, but the stockholders do get recovery."

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