The Saga of Serge

To the stockholders of the Panhandle Producing and Refining Co., sleek, glib Serge Rubinstein, 37, last week made a self-sacrificing gesture: he resigned as president and chairman to save the stockholders "embarrassment."

Cause of the embarrassment: his indictment last Jan. 30 by the U.S. Government on draft-evasion charges. Allegedly, the Russian-born adventurer in international high finance who had dazzled Wall Street by his lightning-fast climb to control of 17 companies* in four years had filed false affidavits stating that his induction would leave his dependents without financial support. In severing his four-year connection with Panhandle, Rubinstein did not go away emptyhanded. He sold 296,525 shares of Panhandle stock for a profit of $2,965,250.

New Fields. If the stockholders thought Rubinstein's motive altruistic, the U.S. Government did not. It immediately asked Manhattan's U.S. District Court to raise Rubinstein's bail from $20,000 to $1,000,000 because he was about to flee the country in a four-motored C-54 he had just bought. Furthermore, said the Government, Rubinstein was dumping his securities, and probably had $5,000,000 in cash. He had opened a big bank account in Mexico.

Brusquely, Rubinstein explained that 1) the plane had been bought at the request of the Portuguese Government for a new airline, and 2) the cash in Mexico was for Rubinstein enterprises. The court was unimpressed. It set bail at $500,000. Rubinstein said he would "take legal steps."

This did nothing to lessen the suspicions of the authorities, well versed in the fast-moving Rubinstein saga. Serge had been fleeing something, usually the authorities, most of his life.

The first time was during the Russian Revolution. The son of a St. Petersburg banker and financial adviser to Rasputin, Serge fled to Sweden with his family when the Bolsheviks came to power. Eventually he made his way to England, studied economics at Cambridge University, quit to apply what he had learned. In his first deal, he made $17,000. At 24 he was running Paris' Banque Franco Asiatique, dabbling in French politics, performing feats of financial legerdemain for all comers--at a fee. He was also playing the French money market. Result: in 1935 the French Government ran him out of the country for selling francs short (he made a reported three million francs [$210,000] doing it.)

New Corporation. Never one to be caught short himself, Serge had meanwhile been building up control of the Chosen Corp., Ltd., a British concern which owned Japanese companies operating gold mines in Korea. By 1937, when the Sino-Japanese War threatened to wipe out his interests, Rubinstein smartly sold Chosen's Far Eastern properties for $1,700,000 to a Polish friend. The latter supposedly smuggled Chosen's cash in Japan out of the country, wrapped in obis.

In 1938 Rubinstein moved the Chosen Corp. and himself into the U.S. He took the trust's money into Wall Street, in 1942 bought control of Panhandle for $187,000. Soon he turned it into a holding company controlling $6,600,000 in subsidiary oil, urban real estate, road-building and construction interests.

After Rubinstein took over, the price of securities of the companies usually went up, and he cashed in. Example: Panhandle stock went from $1 to $14. He married a tall, blond sculptress and bought the palatial six-story mansion at 814 Fifth Ave. of famed financier Jules Bache. As in his financial deals, the cash outlay was small, only one-fifth the $105,000 price. Downtown, Rubinstein worked hard. Uptown, in cafe society, he played hard. He became known as the man who always picked up the check, and thereby made new friends who might prove useful.

New Charges. But Chosen stockholders did not approve of Rubinstein's doings. Before the New York Supreme Court, they charged that Serge had kept part of the cash from the Japanese deal, put it into the Manhattan bank account of one Serge Manuel de Rovello. Cried one irate stockholder: "The history of this company is the history of a racket probably without precedent. . . . There can be no doubt that the disposal of our property was conceived in iniquity and born in sin." Cried another: "Let us never forget . . . the manipulations, financial jugglery, or what some would term jiggery-pokery."

The case was settled when Rubinstein paid over about $2,250,000 to the stockholders. But it caused U.S. immigration authorities to pounce: they found that Serge had adopted the new name for use, as he explained, "on formal occasions," that he had changed his Russian citizenship for Portuguese. A passport-fraud charge could not be made to stick. But his draft board hopes to be more successful.

For all his troubles, Rubinstein last week had a simple explanation: "I'm being persecuted."

*Panhandle Producing & Refining Co., Midway-Victory Oil Corp., Warren Bros. Co., James Stewart & Co., Inc., Jackson Heights Properties Inc., to mention some.

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