River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1878-01-24
The Charter oak.

The blow to Hartford insurance interests
occasioned by the downfall of the Charter
Oak Life was supplemented to-day by the
announcement of gross Irregularities, to say
the least, in the management of the Cont
mental Life, of this city. There had been
rumors for several weeks past that something
was wrong and the worst is now revealed
through the report of the special Insurance
commission, appointed by the Legislature
last winter to investigate the affairs of all
State insurance corporations. The Com
mission makes its report to the Legislature,
because doubtful If the case is such as can
be reached by the ordinary legal process war
ranting action by Commissioner Steadman
The Commission state that in the last annual
statement the Continental Life reported a
capital all paid in and surplus of $325,656.
Examination of its affairs shows gross
misrepresentation. Only 100000 of cap
ital was ever paid in, the remainder being
represented by stockholders notes, the exis-
tence of which has been carefully ignored In
the annual statements. For an item of
100000 Ill United States bonds reported in
the assets, the company had only nominal
title, none whatever for $4,000 i'll town
bonds, and the $173,516 cash reported in
bank was represented by fictitious deposits.
The ability to make an apparent showing of
such items came through the conniyance of
Director, John c. Tracy, who is also Presi-
dent of the Farmers d Mechanics Bank,
where the company deposited, Tracy making
fraudulent entries on the companys pass
book, thereby giving to the company the APP
pearance of owning cash assets it never
owned. These entries aggregated 1876, 408,
and, in a recent settlement with the bank,
+bair frorr1inacc hoc avau bean ploi1pad Inv
the company.
1t is further shown that the company has
purchased 1870 shares of its own stock, and
vouchers therefor We're treated as a cash item
in the cash account. Such vouchers, repre-
senting cash expended by the company for
its own stock, were worthless as assets. The
sum paid was $125,000, and this, being in
excess of the capital actually paid in, puts
the company in the condition of having its
stock wholly unpaid for. The payment of a
loan of $133,534 to Sharp's Rife Company
and mortgage of So, 800 is found contin-
gent upon the success of the Rifle
Company, which is doubtful; yet
the loan has long been carried in the ac-
counts as a cash item. A large discrepancy
occurs in the valuation of real estate IN and
near Chicago, which came to the company
from Merrill Ladd in trade. In April, 1873,
the Continental loaned $4,000 to Harkin,
Martin & Wheeler, of Chicago, taking note
with stock of the Utica Cement Company as
collateral. Six months later the firm failed.
The Continental purchased all the stock of
the company. assuming all its debts, making
the real cost $150,000. Subsequently the
Continental exchanged the cement property
with Ladd for real estate called worth $780,,
600 and a mortgage back of $4,000, making
the consideration of the property S212,o0O.
In July, 1876, Ladd failed, and the cement
property was taken again by the company by
a foreclosure suit at cost of S86,7S3. The
Insurance Commission appraised it at only
$4,000. Various Chicago properties are
overvalued almost doubly, and with real es-
tate elsewhere there is loss by generalization
of S138,000 including a loss of about so,
600 on loan of S163,000 on the land of Ja-
cob and Caroline Forsyth, of Sheffield, about
fifteen miles from Chicago. Other miscel-
laneous losses are noted creating an apparent
impairment of capital of S148.000, against
which the company offers only computation
of recuperative power through lapsas, ETC, of
S212, 1000. This would leave small surplus,
which, however, would be swept away and
the capital largely impaired, unless the
Sharp's Rifle Company debt and stockhoid-
ers' notes are good for their face. The IN
surance Commission leaves the settlement of
the problem of solvency TO the Legislature,
willing to wash its hands of this
problem Of financial leGerdermain.