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pany purchased 25 acres of land from Golden Palm Acres on May 9, according to records of deeds in Florida. Another 12 acres were transferred from Golden Palm Acres to Atlantic & Pacific Land Co. three days later. Several land sales by the Fleishman firm also have been recorded.

(From the Newark News, Aug. 7, 1966)


(By Gunter David) What recourse does the New Jerseyan have if, after buying distant property sightunseen, he discovers he has acquired swamp land for a homesite ?

To whom does the bilked purchaser turn when he learns that the far-away acre represented to him as being part of a potential oil field is, in fact, in an area where drilling is prohibited by the state?

The answers to these questions are discouraging. The sale of such land in one state to residents in another is a multi-million-dollar business—yet those who conduct it, the unscrupulous as well as the legitimate, have few regulations to comply with.

Most of them do not, for example, come under the jurisdiction of the New Jersey Real Estate Commission. None must answer to the State Consumer Fraud Division. And few get the attention of public prosecutors.


In New Jersey, a victim might complain to the State Real Estate Commission. But he will learn that the jurisdiction of the commission extends only to real estate agents or brokers. These must register with the commission and the properties they wish to sell undergo careful examination by commission members.

But persons selling their own land, either as private individuals or as officers of corporations which own land for sale, are exempt from the commission's require ments. That is because the commission operates under a law dating back to 1921.

If the intent of the law was to exempt the individual land or home owner from state interference in the sale of his property, the law now serves as a shield for unscrupulous land sales operators. Yet, while various parts of the real estate statutes have been amended, this one has not.

“We can only be as good as the law under which we operate,” says a staff member of the commission.

AN EXAMPLE Naturally, a land sales promoter wishing to avoid scrutiny of the law_will take advantage of this loophole. A recent example is that of Golden Pa Acres, which sold swamp land in Florida from an office in Newark to many unsuspecting investors.

From the Real Estate Commission offices at 1180 Raymond Boulevard it is only a short walk down the hall to the offices of the Consumer Fraud Bureau.

Jobn A. Lombardi, deputy attorney general in charge of the bureau, will explain that his office deals mainly with complaints regarding goods and services. Any complaints regarding real estate are referred to the Real Estate Commission.

The Real Estate Commission, in turn, does its own bit of referring. It refers cases to the prosecutor's office. But prosecutors in New Jersey must deal with a variety of complaints, and a land fraud complaint is liable to be put on the bottom of the heap.


In addition, fraud is most difficult to prove, according to Lombardi. “You have to prove that there's been the intent to defraud, and that's difficult to do. The accused will apologize, he'll say it was a mistake, and he'll offer to make good.”

A bill proposed by Sen. Harrison A. Williams, Jr., D-NJ, aims at curtailing or at least sharply reducing the activities of such interstate land promoters. It would require them to register with the Securities and Exchange Commission and to disclose fully and publicly all information about the properties they wish to sell. The measure would cover all subdivisions of 25 or more lots, regardless of the type of ownership.

you know.

Following hearings on the measure, Sen. Williams said: "Few buyers have stood as naked of protection as the uninformed buyer who purchases remote land from unscrupulous promoters. The federal government must extend to small investors in real estate the same protection now available to small investors in securities."

They surely have little protection in New Jersey. One prosecutor's investigator put it this way, "Well, after all, it's a gamble, so if these people, lost, they lost."

Senator WILLIAMS. We are grateful indeed. I don't know how you developed the interest, but you sure developed the interest and burrowed deep in an investigation of what is happening.

I like that last phrase you used, “The innocence of folly of the public should

not serve as a shield for the crook.” Is that right? Mr. DAVID. Right.

Senator WILLIAMS. We had a great speech here about 3 weeks ago by Senator Russell Long of Louisiana and he said that people liked to be I don't know whether he used the word "liked"—but are susceptible to being fooled by the medicinemen. And he told about his father and the snake oil promoters that were selling the medicine from the bark of a tree. I just can't recall how it was, but it was the same juice. But the juice taken from the lower bark was $1, and the higher bark was 50 cents. And everybody would buy the dollar juice,

Certainly there will be innocence and folly. All we want to do through this legislation is not guarantee against innocence and folly, but at least protect people in their innocence and in their folly by letting them know what they are buying. It is as simple as that, isn't it?

Mr. DAVID. That is right.

Senator WILLIAMS. They are buying this swampland which is Golden Palm Acres. This is swampland, isn't it?

Mr. DAVID. Absolutely. I have some pictures here of the general area. And you can go fishing there occasionally. That is how deep the swampland is.

Senator WILLIAMS. And yet it was described to you as the “land of potential richness."

Mr. DAVID. I could make thousands of dollars.

Senator WILLIAMS. You didn't go down to see your "potential richness," did you?

Mr. David. No, I couldn't sell the newspaper on that. I would have loved to.

Senator WILLIAMS. One of the television-radio networks heard this story and they went down, I am told, and took some pictures, and I am told this is going to be shown shortly. Tonight.

Mr. DAVID. It is on tonight?
Senator WILLIAMS. It is scheduled for tonight on CBS.
(The transcripts are printed on p. 492.)

Àr. DAVID. Well, the State of Florida furnished me with photographs of the general area and with maps, so that I knew I was on wet but firm ground.

I just want to ask this, Senator, if I may: Does your bill provide any sort of real penalties for people who don't obey this requirement?

Senator WILLIAMS. Well, incarceration up to 5 years.
Mr. DAVID. Oh, fine.
Senator WILLIAMS. I would say that is a penalty.
Mr. DAVID. Yes.


Senator WILLIAMS. Senator Thurmond!
Senator THURMOND. Thank you, Mr. Chairman.

Senator WILLIAMS. We are grateful, indeed, that you have given us so much help.

Senator THURMOND. I just wanted to make the statement that we are interested in this problem, the public ought to be protected. It is just a question of the best approach to the problem. I feel, and I am sure the other members of the minority, when we consider this bill or any other legislation which is suggested or that we might suggest, the public should be protected. But sometimes one approach is preferable over another approach.

I just wanted to make that statement, to let you know of our deep interest in the protection of the public.

Mr. DAVID. Thank you.

Senator WILLIAMS. I appreciate that statement from my good friend, Senator Thurmond of South Carolina. That indicates to me that we have made more than progress, we are on our way to some solution. May I interpret it that way?

Senator THURMOND. You can interpret it any way you want to. I merely said I was interested in trying to protect the public. I am not committing myself to any particular course at this time.

Senator WILLIAMS. But as I interpret your statement, you appreciate, with our witnesses, the deep problem and the need for some action? Senator THURMOND. Well, I expect to give this matter most care

I ful consideration. I want to hear the various witnesses and I want to get other information before I will commit myself to any approach or procedure.

Senator WILLIAMS. I am not asking you whether this course or that course. But some course?

Senator THURMOND. I am not committing myself to any course until I get all of the information. We have heard the man from the Justice Department this morning who took the position that he felt

Senator WILLIAMS. That the mail fraud statute was enough.

Senator THURMOND. That is right. So I want to hear all sides of it, before I make any statement about it as to what course to pursue.

Senator WILLIAMS. We are in a hearing session, not an executive session, and this is no time for commitments to a course of action, but I think everything you said, Senator Thurmond, is the sort of thing we would write to Mrs. Smith in Columbia, S.C., your constituent. No commitment at this point?

Senator THURMOND. No commitment whatever.

Senator WILLIAMS. This man, Mr. David, is committed. He was on the line. He went to this, then it was Golden Palm Acres, and we put Golden Palm Acres on the griddle here June 20 and 21. They changed the name after that-Atlantic & Pacific.

Mr. DAVID. They transferred a lot of the property to Atlantic & Pacific.

Senator WILLIAMS. And I am not frying Florida. This happened to be a man operating out of-he advertised the fact that he was operating out of the Chamber of Commerce Building in Newark, N.J. Right? Now the chamber of commerce had moved out of that building, I think, years back.

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Mr. DAVID. Years ago; yes.

Senator WILLIAMS. Now the chamber of commerce is a name of great dignity. So he starts right at the letterhead misrepresenting.

Mr. DAVID. Right. I will say this in all fairness, the building is still known as the Chamber of Commerce Building, you see, but it is a clever place to rent space.

Senator WILLIAMS. I checked it out, and they have been out of there a long time.

Mr. David. Yes, sir; but it is still known to the public in general as the Chamber Building.

Senator WILLIAMS. Oh, it is? Well, maybe I have been a little harsh. But it certainly gives this man right on the top of the stationery a dignity. And then he goes into the sale of Golden Palm Acres, which we know to be swampland. And with the more than suggestion, and not quite a promise, but heavily implied, that if you buy these acres oil exploration have disclosed that you might be sitting on an oilwell.

Mr. DAVID. In all probability. He was pretty definite about it.
Senator WILLIAMS. I don't know how close oil is.

Mr. DAVID. I was going to tell you about that. I have the literature here, which I picked up there. And you open it and you have pictures there of industry nearby. Well, as you quoted former Senator Barry Goldwater, nearby is a relative thing. Industry is 40 miles away. It is near the airport, near the Miami Airport, but it is 40 miles away.

Then in the literature are incorporated reprints from local newspapers telling about successful oil drilling in general. Well, I checked it out with the State of Florida and the successful oil drillings were 60 miles away, and we must bear in mind that this land was in an area where you were not allowed to drill.

Senator WILLIAMS. Because of the flood control.

Mr. DAVID. Because of the flood control area, you see. So whether successful oil was drilled 2 miles away or not, doesn't make a bit of difference, because that part is in a conservation area, which the State of Florida controls, and it will not permit it to be touched at all.

Also there are reprints of stories with headlines telling about drilling 12 miles away. When I checked that out it turned out that they drilled all right, but they found nothing.

So the followup news story, saying that nothing was found in that spot, was not included in the literature. So you get the distinct impression that this is land that is hot for oil.

Senator WILLIAMS. What we are trying to do through this legislation is protect the honest dealer in real estate by requiring just a disclosure of what the property is, what the facilities are, what its proximity to water is, if they are going to sell it on the basis of oil, what the oil experience has been.

It is just an honest disclosure for people who are many miles from the site that they are buying and it would be obviously unrealistic to expect that they would go to that property to see what they are getting

Mr. McCulloch had an idea that there should be a requirement that they fly into the place. I think that is unrealistic.

Mr. DAVID. Not at $500 an acre, or $300 an acre.

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Senator WILLIAMS. That is right. It would cost better than that to fly there. I can imagine myself buying some property in South Carolina if I knew from a description that was required, without going to South Carolina.

Senator THURMOND. It is all good down there, though. You can't lose.

Mr. DAVID. I think that omission

Senator WILLIAMS. Now you see that? You mean every part of South Carolina is a valuable piece of real estate?

a Senator THURMOND. I haven't seen any that is not. Of course some of it is more valuable than others. I think one of your problems here is not that the property is not valuable, it is just not as valuable as they try to sell it at. İt might be worth $25 an acre and they are selling it for $1,000 an acre.

Senator WILLIAMS. Don't you agree if you are buying-say you are buying equity shares in a company, you ought to know what the company is all about. And we require that under the SEC law and regulations. I, for the life of me, don't see why there could be any controversy with the proposition that the same should apply to something that is even in a sense more important, real property. Not equity, but real property, real estate.

Do you see the point?

Mr. DAVID. I would like to add just one sentence, if I may. I have heard the Senator just saying that they just didn't present the whole picture. Isn't that what you were just saying? To my simple mind, without being a legal person, because I heard the same answer from the prosecutor of Essex County, omission is just as big a lie as outrageous lying

If you sell something, and you don't tell the real story, that is a lie. And it is misleading and fraudulent. Maybe not in the eyes of the law, but in the eyes of the poor slob who just plunked down $500, that is an outright lie.

Senator WILIAMS. Well, this has been most helpful indeed. Our witness comes to us from his work as a newspaper reporter, right?

Mr. DAVID. Right.

Senator WILLIAMS. Our newspaper with the greatest circulation in New Jersey; right?

Mr. DAVID. Newark News circulation on Sunday, 450,000; weekdays, 300,000.

Senator WILLIAMS. I can't fully express my gratitude to you for your testimony. I can't extend that gratitude to your newspaper. They never endorsed me.

Mr. DAVID. But they did pick up the tab for this trip.
Thank you.
Senator WILLIAMS. Thank you.

Stanley Selig, Selig Bros. Real Estate Co., Indianapolis, Ind. STATEMENT OF STANLEY SELIG, SELIG BROS. REAL ESTATE CO.,

INDIANAPOLIS, IND. Senator WILLIAMS. You were discussed in June, Mr. Selig, and we wanted to make sure you had an opportunity to be heard today.

Mr. SELIG. I certainly thank you for the opportunity.
Senator WILLIAMS. You may proceed any way you wish.

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