Mr. LUND. Of January 1. Mr. BROOKS. To refresh your memory, in the Kansas City Star of January 17, there is a story on the "Amazing New Face at 2420 Broadway," commenting on the renovation job that these folks had done. It says: · The military units headed by "a colonel, commander, and major," presently are in space at 25th and Walnut Streets, in the old Hall Building. They plan moves to the new quarters shortly. So I am led to believe by that that they must not have moved on the 1st if they were planning to move "shortly," on January 17. If this story is correct, maybe they didn't move for another couple of weeks. Mr. LUND. Mr. Knight tells me that on the evening of December 31 we turned the keys of the previous building we occupied over to the owner. So we must have been out by December 31. Mr. BROOKS. It is possible that they had the keys but just didn't use them. Mr. LUND. The owner may not. But the armed services, I am pretty sure, wouldn't have walked off and not have any keys to get in the building with a bunch of inductees around. Mr. BROOKS. Maybe the Kansas City Star was wrong. Mr. LUND. I am afraid it was that time. Maybe it was political license or reportorial mistakes. Mr. WALLHAUSER. Could it have been that it was substantially completed and they were substantially in? Mr. LUND. They were in the space, and it had to be substantially completed. There may have been some defects-I mean, omissions. There always are. I know, for example, the drapes weren't in the windows. They weren't in on the day we had the dedication of the building, which was several months later. Mr. BROOKS. We want to thank you for coming down. We would like to invite Mr. Thomas Jay, if he is here, the regional commissioner, to testify. Mr. LUND. Thank you, sir. Mr. BROOKS. Mr. Jay, would you raise your right hand and be sworn? Do you swear that the testimony you are about to give this subcommittee shall be the truth, the whole truth, and nothing but the truth, so help you God? Mr. JAY. I do. TESTIMONY OF THOMAS G. JAY, REGIONAL COMMISSIONER, GENERAL SERVICES ADMINISTRATION, REGION 6, KANSAS CITY, MO. Mr. BROOKS. Give me your name and your full position. Mr. JAY. My name is Thomas Jay. I am the regional commissioner for the General Services Administration, region 6. Mr. BROOKS. We are delighted to have you with us today. Wo would have apparently satisfied you better had we started with you yesterday morning. We would have scheduled it that way but I had trusted that you would understand the reason for giving you an opportunity to testify after we had heard the charges from the people that worked for you and otherwise. I hope that you do understand it. We are interested in developing all of the facts. We would appreciate your telling us how long you have been the regional commissioner and a little bit of your background, something about the responsibilities of your position here as the GSA regional commis sioner. Mr. JAY. I entered GSA duty on June 3, 1957, here in Kansas City. Previous to that time, for approximately 4 years, I had served as the regional real estate manager for the Post Office Department, the Wichita region. Previous to that time, and back to when I came out of the service, I was engaged in commercial real estate in Kansas City. Mr. BROOKS. The GSA region, over which you are the commissioner, covers what? Seven States? Mr. JAY. Seven States. Mr. BROOKS. With a budget of roughly what? $50 million? Mr. JAY. Approximately. Mr. BROOKS. Approximately 1,600 or 1,700 people? Mr. JAY. Yes, sir. Mr. BROOKS. I just thought that first we might try to clear up a few minor items before getting down to these contracts. I wonder if you would tell us how you came to be involved in the promotion of the Mecca Motor Hotel Corp., and if you are, give us the names of your partners. Mr. JAY. Yes, sir. May I use my words, sir? Mr. BROOKS. Of course. Mr. JAY. The Mecca Motor Hotel, Inc., is a group comprised of four persons at the present time: Ralph F. Myers, Lyle Dutoit, Paul Dutoit, and myself. For sometime this group has-incidentally they are all personal social friends of mine. I met them personally socially. None of them are doing business with my office, or have done any business with my office. For some years we have talked of ways to make money, frankly; possible business investments we could make. We try-we planned at one time a bowling alley; which didn't work out. And in or about July 1 of last year the corporation secured a long-term lease on a piece of vacant property in Kansas City, not as a real estate speculation but as a business venture upon which we proposed-the corporation proposes to have erected a downtown motel. That is purely and simply-to this date the corporation has not consummated a deal for the construction and the operation of this motel. Mr. BROOKS. Mr. Jay, the date of the corporation to do business was June 23, 1959, last year? Mr. JAY. Sir, I don't know. Mr. BROOKS. Approximately that? Mr. JAY. Approximately then. Mr. BROOKS. My understanding is that the president is Mr. Dutoit. Mr. JAY. Yes, sir. Mr. BROOKS. The vice president is Mr. Paul Dutoit; the treasurer is Mr. Myers; the secretary is yourself, is that correct? Mr. JAY. I don't know. Mr. BROOKS. You don't know who the officers are? Mr. JAY. I know who all the people are in it. Mr. BROOKS. But you don't know which jobs they hold? Mr. JAY. No. This was done by a lawyer. Lawyers did this corporation forming. Mr. BROOKS. You didn't know that you were the secretary of it? Mr. BROOKS. You knew that you were the secretary but you didn't know who the treasurer was. Mr. JAY. That is right. Mr. BROOKS. I understand that each of the directors, of which you are one also, all directors put up about $2,000 to form the corporation? Mr. JAY. That is correct. Mr. BROOKS. I understand that you say that you are all personal friends, social friends, you all dine together or are members of the same clubs? Mr. JAY. That is right. Mr. BROOKS. Not golf clubs. Mr. JAY. No, we don't have a golf club in our country club. Mr. BROOKS. You are all members of the same country club? Mr. BROOKS. I understand that they brought you into this group because of your extensive real estate background and interest in real estate and also making money. Mr. JAY. I was not brought into it. Mr. BROOKS. You were one of the original instigators? Mr. JAY. I was in it from the start, sir. Mr. BROOKS. You were in it from the start? Mr. JAY. Yes. Mr. BROOKS. This was an ordinary discussion of how we can honestly make some money by investing it, et cetera? Mr. JAY. That is exactly right. Mr. BROOKS. As a usual speculative business proposal that you hope will do well? Mr. JAY. That is right, sir. Mr. BROOKS. Is my understanding correct that you were going to assist in securing the lease from the Scottish Rite Temple? Mr. JAY. Yes, sir. Mr. BROOKS. And that Mr. Lyle Dutoit assisted in working out the details of this lease with the Nobles? Mr. JAY. Yes, sir. Mr. BROOKS. And each of you is doing something different in the promotion of this enterprise? Mr. JAY. Making some contribution toward the enterprise; yes, sir. Mr. BROOKS. And you put up your $2,000 and they are expecting you apparently to what I mean is that you are an active participant in the organization. Mr. JAY. Yes, sir. Mr. BROOKS. I am not alleging that they gave you your interest. That is what I want to make clear. Mr. JAY. Yes, sir. Mr. BROOKS. You paid for your part and you are one of the partners in every sense of the word, that you know what is being planned, have participated in the planning and organization. Mr. JAY. Yes, sir. Mr. BROOKS. This is a fair appraisal of the situation. Mr. JAY. I am not always up to date on the present status of them, because what is happening now is being handled by some of the other members of the group. I am periodically brought up to date on it. Mr. BROOKS. For your comments or evaluation of it and your suggestions? Mr. JAY. Yes. Mr. BROOKS. The Mecca Motor Hotel Corp. I understand hopes to form a joint venture with the Sheraton Hotel chain. Is that one of the proposals that you are all working on? Mr. JAY. The Sheraton Hotel chain is one of the groups with which our group has been in contact; yes, sir. It is one of them. Mr. BROOKS. You have been checking with several sources? Mr. JAY. I beg your pardon? Mr. BROOKS. You would check with several sources of a joint venture, because if he doesn't agree, you want somebody eise that does. That is understandable. Mr. JAY. Yes, sir. Mr. BROOKS. Am I right in assuming that Mecca is making an effort to get a loan to construct facilities which will cost in excess of $3 million? Mr. JAY. That is our projected plan, sir. Mr. BROOKS. Are you aware, sir, of the GSA Order No. ADM6240.1, the subject of which is "Employee Participation in Real Estate Transactions"? Mr. JAY. I would like to have it in front of me. I am aware there is a regulation; yes, sir. (A document was handed to the witness.) (The document referred to is as follows:) GENERAL SERVICES ADMINISTRATION WASHINGTON 25, D.C. GSA ORDER ADM 6240.1 Subject: Employee Participation in Real Estate Transactions. 1. Purpose This order restates and continues in effect in the GSA order system the current provisions of Administrative Order No. 182, dated June 8, 1956. That order prescribed rules governing the ownership of real estate and the reporting of real estate transactions by employees of PBS and other employees having duties in connection with the acquisition or disposal of real estate. It also prescribed rules governing the use or disclosure of official information concerning real estate by employees of GSA. 2. Cancellation Administrative Order No. 182 is canceled. 3. Employees of PBS and others concerned with real estate matters a. An officer or employee of PBS in the Central Office or any regional office (other than a wage board employee or a guard), or an officer or employee of GSA in the Central Office or any regional office whose duties are related in any way, directly or indirectly, through the furnishing of advice, preparation or review of documents, or otherwise, to the acquisition or disposal of real estate or any interest therein 1 (1) shall not, directly or indirectly, without the prior approval of the Commissioner, PBS, purchase any interest in real estate for purposes of speculations or investment, or for any other purpose than that of providing a home for himself and members of his immediate family; (2) who, or whose spouse, or a member of whose immediate family, acquires or disposes of, directly or indirectly, any interest in real estate (other than a leasehold interest for a term not in excess of one year) shall report each such transaction to the Commissioner, PBS, and shall furnish such information concerning the transaction and his interest and participation therein as may be required of him. b. For the purposes of this paragraph a person shall be deemed to be a member of the immediate family of an officer or employee if such person resides or makes his home with the officer or employee or if such person, or the officer or employee, is wholly or partially dependent upon the other for his support. 4. All GSA employees No officer or employee of GSA shall, directly or indirectly, make use of, in any transaction in which he has a personal interest, or, except in the performance of his official duties as authorized pursuant to established policies, regulations, and procedures, disclose to any other person, any information concerning the actual or potential value of any interest in real estate or any plans or proposals with respect to acquisition or disposal by the Government of any interest in real estate, which information was acquired by such officer or employee (a) in the course of the performance of his official duties or (b) from any other officer or employee who acquired such information in the course of the performance of his official duties. 5. Violation Any violation of the provisions of this order shall be reported to the Commissioner, PBS, and to the Head of the Service or Staff Office or the Regional Commissioner of the regional office to which the person charged with such violation is assigned, and shall constitute ground for appropriate disciplinary action up to and including separation. FRANKLIN FLOETE, Administrator. Mr. BROOKS. It will probably be better for you if you didn't know it. Did you know that violation of that order constitutes grounds for appropriate disciplinary action up to and including separation? Mr. JAY. I would assume so, sir. Mr. BROOKS. Did you get the required prior approval from Mr. Floete who is the Administrator of the GSA, as you know, before you entered into this motel promotion? Mr. JAY. Yes, sir. Mr. BROOKS. Would you introduce that in the record. Mr. JAY. There is no written-it doesn't state that I have to have a written approval. Mr. BROOKS. Mr. Rod Kreger, special assistant to Mr. Floete, was contacted on January 19. He advised us that the only real estate transactions that you had reported at that date, of which there was any written evidence, was the ownership of two houses in Mission, Kans., for rental property. You have no written prior approval? Mr. JAY. No, sir. Mr. BROOKS. And you say that you have an oral agreement with Mr. Floete? Mr. JAY. I have his oral approval, sir. Mr. BROOKS. As of what date? Mr. JAY. As of June 1958. Mr. BROOKS. As of June 1958? Mr. JAY. Before the lease was signed, sir. |