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In Boston's U.S. District Court last week Judge Charles E. Wyzanski Jr. heard the latest installment in two years of testimony that gives clues as to how Sherman Adams' friend Bernard Goldfine managed to live, despite income tax laws, as high as his current listing in Boston's telephone directory suggests. The suit was brought by George B. Heddendorf, 55, economist for the Babson Institute, who in 1949 invested about $5,000 savings in the stocks of the Goldfine-controlled East Boston Co. and its subsidiary, Boston Port Development Corp.

Heddendorf knew that the net value of the company's real estate was far more than the market value of the outstanding stock, but he was surprised to get neither dividends nor the legally required financial reports. Meanwhile, the Boston Stock Exchange needled the Securities and Exchange Commission into getting a 1954 court injunction forcing a public report. This reluctantly released information was enough to send Heddendorf straight to court with the charge that Boston Port's majority (80%) stockholder, one Bernard Goldfine, had teamed up with friends to milk the company and other shareholders. Last week Goldfine agreed to put back into the company some $400,000, about $130,000 more than he personally owed.

Items from the Goldfine school of management, as revealed in the court record:

P: Between 1945 and 1948, Goldfine arranged to borrow $79,750 from the company in 21 unsecured loans, never repaid a cent of principal or interest.

P: He knew and approved of matching loans, usually made the same day, to Company President William J. McDonald, whose death in 1948 left Goldfine in sole control of the company, also left all of McDonald's company borrowings forever uncollectable because of a statute of limitations.

P: Though most of the loans were interest-free, Goldfine agreed in some cases to pay interest; in 1949 company records officially excused him from every cent of $67,833 unpaid interest.

P: Even while he built up his dominant stock interest, he never took up the legal responsibilities of a company officer; he simply operated through his private secretary, Miss Mildred Paperman, who held key posts as treasurer and director of Boston Port.

P: No man to keep more records than he had to, he ordered faithful Miss Paperman to run the company for a couple of years on a cash basis; as soon as each month's rental checks came in she cashed them at Boston's Pilgrim Trust Co., paid bills in folding money rather than checks. P: After selling a piece of Boston Port land to the state of Massachusetts for $700,000, instead of the $400,000 that the state originally offered, Goldfine pocketed $20,000 in commission for himself--in the form of a loan from Boston Port.

P: When real estate circles thought Boston Port had bought the lucrative downtown Little Building, what actually happened was that Goldfine got personal title to the property through a loan from the company, secured only by a third mortgage. He handed the second mortgage to Mrs. Goldfine, who thus would have had prior claim in case the deal went sour.

P: Goldfine's real estate company, a local operation that did not peddle its wares very far from home, spent $25,475.73 on tax-deductible "traveling" expenses, put out several items totaling $1,868.16 to the Stuart Liquor Co.

Sharing the Wealth. Goldfine's quick hand with cash became so famous last week that House investigators pricked up their ears when they heard that his mills had sold the U.S. Army $2,255,000 worth of cloth in the last five years for uniform shirts and pants. (Also: $42,651 for green pool-table cloth, presumably used to cover Navy mess tables.) At the same time the investigators were asking Goldfine to bring to the committee, when he appears next week, some $770,000 in uncashed cashier's checks that they learned about from study of his records.

Even Judge Wyzanski barely jumped away from the splash of Goldfine's friendly money. Last November, while he patiently sorted out the complex Boston Port operations, Wyzanski spent an evening with his wife at one of her fund-raising benefits, this one for the America-Israel Cultural Foundation. Who should turn up--and make a $1,000 contribution "in honor of Mrs. Wyzanski"--but Bernard and Charlotte Goldfine, whom the Wyzanskis had never met socially. With an air of innocent enthusiasm, Mrs. Goldfine bustled over to say that her husband had made the gift "because he admires your wife." Outraged, Wyzanski considered disqualifying himself in the Boston Port case, discussed the incident with other judges, then rapped out an unusual personal comment from the bench: "I am not clear whether Mr. Goldfine appreciated the full significance of what he was doing."

But Wyzanski did appreciate the significance of Goldfine's gift-bearing, though he was tolerant enough last week of Sherman Adams' failure to understand. "I was luckier than Sherman Adams," he said, "because I had it read into the record."

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