New-York tribune., 1878-02-07
DISCOVERY OF THE DEFALCATION.

p,NK NEUTRALITY-SUSPICIOUS. CONDITION OF
THE BANK-IHE CAPITAL IMPAIRED $2S3OOO.
Rumors of a heavy defalcatiOn were circulated IN
Wall-st Yesterday afternoon, and the name OF
promnent trust company was mentioned as the
Numbered concern. Later in the day the
matter was traced to the Bank OF North
America, whose paying teller, it was learned, had
appropriated to his own use over 100000 of the
funds of the bank. without the knowledge or sus-
pieion of the officers of the bank.
The low figures at which the stock of the Bank
has recently sold, and the fact that although a
State institution it had never been officially exanl-
ined by tie Banking Department, induced
Henry l.. Lamb, the present Acting Super
intendent to order examination. The
investigation was begun last Saturday morning by
the official examiners, A. b. Kirkland. of Albany,
and William Lummis, of this city, the latter
gentleman having acted in this case by
the request of Mr. Lamb. Mr.. Lumms is
member Of the Governing Committee OF
the Stock Exchange. and also member OF
its Committee on Securities at large. When the
examiners came to examine the accounts of the
paylng-teller of the bank, Augustus NJ. Iurney he
AT first hestated TO exhibit his accounts in detail
and finally went to the PRESIDENT Mr. DoWd, ana
confessed that he defauter
The amount Of the defalcation afterward as
certaincd to be just $1O0,60O Turney said that his
crimnality had been occasoned by losses IN specu-
lations dating far back as 1869, his fTst offence
bearing the date of the memorable Black Friday,
when he took about $65 900 belonging to the bank.
He had successfully covered up the deficit by aitera-
tons of his books and it he'd remained undiscovered
and unsuspected, increasing amount TO the pres
ent tine. In carrying ont his scheme, however. 1T
became necessary to have accomphce, and he
therefore took into his confidence the receiving
teller. Charles X. Lefingwell.
During this time seventeen semi-annual examina-
tons have been made by the committees appointed
BY the Board of Directors. The accounts were made
10 appear to balance by changing the footlngs in
long columns of figures. OF late the only figure that
il was necessary to change was the fifth from the
units figure. which increased by,one. Sincethe
disco sfry the bank officers have recovered through
the defaulter 81 900 in cash reducing the aggre
gate loss to $4,000. They say they also feel con-
fdentthat they Will he able to recover upon the
tcller's bonds $150 600 more, which will leave the
net loss $4,000. There is some doubt, however,
about the banks being able to obtain the full
amount mentioned, as one of the bOndsmen is dead.
The State examiners have concluded their irves-
LEGATIONS, but do not feel warranted in publishing
their report in detail until it has been submitted to
Mr.. Lamb. who will arrive here from Albany this
morning Ii is learned, however, that the total
impairment of the cspital stock of the bank including
the balance of old losses by over certifcation
in 1873. and previously, the details of which were
published at the time will be about 1888, 600. Ac
cordng to the last statement of the bank, IL had
surplus of 81 600. The depositors it is positively
stated, however, need have no apprehension as to
the safety of their funds since this impairment Will
affect the stockholders only, and the present inves
tigation has been made in thorough manner The
assets of the bank and the collateras of every loan
have been taken at their actual market values.
lrs.lDOa ann l., ,...l.,
the basis of the actual loss of 100000 by the def
alcatIOn. 1t has since, stated been re-
duced $4,000. The remaining $1s3,0OO was
made up of old losses upon loans over
certifcatons and discounts, which the bank
had been carrying along, hopes of reducing
them. The examiners, however, insisted that they
should be charged out and that only such remain
ing colaterals as had market value should be
counted against them. The bank has re-
peatedly lost large sums by the certiti-
cation of checks for amounts not held by it at the
time Portions of these sums have since been recov-
ered but the principal part of the deficit aside from
the defalcation of Turney is attributed to Oyer-cer
tifcations.
The statement of the examiners shows the bank to
be strong in cash items The directors consider
ing the propriety of either reducing the stock
making il up again to par. The former will proba-
bly, be done. There is, therefore, no reason, it is
claimed, to apprehend any more serious results than
another shock to public confidence and severe les
son TO the officers and stockholders of the insitu-
ton.
The statement of the examiners il is conceded
presents the darkest aspect of the case. The bank
holds certain contingent assets which they estimate
TO be worth perhaps, $4,000, but these could not
be taken into account until realized upon. An
item of S63, ,OOO in the list of liabilities, is
referees Judgment, not yet confirmed by the court ;
aud the bank officers are assured by legal authority
that their refusal to pay it will be sustained. AT
the same time, as it is present liability, the ex-
amners were obliged TO count it as such.
When il became known that the examination of
the bank had been in progress for several days, and
that Turney's defalcation was known to the
officers nearly as long a time, the privacy
with which the whole affair had been con-
Quoted was the subject of general remark on
the street. The defaulter was kept at bis
desk, so as to allay suspicion; and not even the
clerks IN the bank knew ANYTHING about the true
situation of affairs lie was kept, however, under
the closest surveillance and as he was leaving the
bank yesterday afternoon, he arrested.
Upon the notification of the defalcation. De-
tectives McNaught and Crowley of the Central
Office were detailed to arrest Turney. He went
with them without q word, and locked up in
one of the cells in the Central Office. Some friends
called TO speak with him, but he allowed to
See no one.
1t Is believed by the bank officials that Turney
had intimate relations with some persons outside of
the bank. who acquainted with his
hnancial condition, and who used their
knowledge to extort money from him from
uihe 10 time. When Turney made his
confession on Saturday TO the President he stated
That 1000 was coming In from persons
outside, with which he would reduce the