The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1894-04-07
"A HOLE IN The Cash.
The State is Out Ten Thousand
Dollars
By the Purchase of the Worth
less County Bonds.
The Sum Not So Large as Pub
lished Last Night,
BUT LARGE ENOUGH
70 Show Gross Carelessness of
School Commissioners.
Explanation Given by Messrs.
Osborn and Gaines,
NOT VERY STRONG.
Both Say the Deal Was Re-
publican Plot.
Supt. Gaines Makes Some Very
Severe Threats.
JT VERY STRONG.
Both Say the Deal Was a Re-
publican Plot.
Supt. Gaines Makes Some Very
Severe Threats.

AS announced in the STATE JOURNALS
extra edition last evening, the state school
fund commissioners have been taken in
by being induced to purchase at par two
lots of fraudulent Hamilton county bonds
amounting to $4,000.
Governor Lewelling and the state school
fund commissioners, Attorney General
John I. Little, Secretary of State II. 5.
Osborn, and Superintendent of Instruc-
tiOn H. n. Gaines have for several days
been worried over the purchase of these
bonds which they now know to be fraud
ulent.
The first purchase of the bonds was
made on the 1st of March through \. d.
Mckinley, who was formerly a clerk in
the Office of the superintendent Of in
struction, and the last purchase was
made March 27 through D. ID. Hornaday,
who was also at one time employed in
that Office and who is familiar with the
workings of the board of school fund
commissioners.
These bonds were the property of
George w. Crane, but Mr.. Crane did not
know that the school fund commissioners
ere negotiating for the purchase of the
bonds until the second lot had been sold
by his attorney, F. p. Lindsey.
Mr.. Crane when asked about these
bonds this morning said: s'Several years
ago l came into possession of $1,000
worth of Hamilton county bonds 1t was
Immediately after the bonds were issued
and when they were supposed to be all
right, l bought them and traded Hamil-
ton county scrip for them.
Tho Bonds Were Worthless.
s'Soon after l got the bonds 1 placed
them in the hands of various parties as
securities, and it was not until some time
afterward that it was discovered that the
bonds were worthless. Before it
discovered that they were worthless how
ever, | was offered 80 cents on the dollar
for lot of the bonds, but would not sell
them.
'.The Aetna Insurance company owns
about 100000 worth of similar bonds,
and about two months ago l made ar
rangements with F. p. Lindsey, the at
torney for the Aetna. to place my bonds
with his and find purchaser for them if
he could.
about a month ago Mr.. Lindsey came
to me and asked what l would take for
the bonds. | told him 80 cents on the
dollar, and he said he had a customer for
lot to the amount of $4,000.
81 gave him an order for the bonds
the party who held them, and he shortly
afterwards paid me $4,000. which / in
turn paid over to the :party who held the
notes, which had been secured by these
bonds.
"On March 27th he came to my office
with another $4,000, and said he had sold
the rest of the bonds. / took the money
but shortly afterwards learned that the
bonds had been purchased by the state.
Mr.. Lindsey had not told me who the
purchaser of the bonds was. and | sup
posed it was some bond dealer who had
got them on good margin, and believed
they would come out all right
when l learned the bonds had been
sold TO the state l knew the commission
ers had been taken in and l accordingly
wrote a letter to State Treasurer Bid
die returning the last $4,000 l had re-
ceived and all that was in my possession
for the sale of the bonds and received
Mr. Biddle's receipt Here is the letter
l wrote to Mr.. Biddle.''
Letter to MT. I8iddIe.
TOPEKA, Kan. March %.
William I'll. Bddle. State Treasurer:
DEAR SIR: With this / hand you $4,000
in the same package in which it left
your office, presume. This money has
just been paid from your Office for $4,000
of Hamilton county bonds and is return
ed to you ts trust, for the purpose of
holding it until it is determined whether
or not the bonds are legal claim against
Hamilton county. They are defaulted
bonds and were taken by me in business
at par about the time of issue and were
placed as collateral security for borrow
ed money.
But as there is question in regard to
the legality of their issue, the holders of
the notes for which they are placed as
collateral, consent that you shall hold
this money until the courts determine
whether or not they shall be collectible.
A suit is now Instituted in the United
States court on similar bonds in the
amount of $4,000, owned by the Ktna
Insurance company.
If the bonds are declared legal, then
the money is to be returned 10 me or my
assigns: but if it is declared that they are
illegally issued, then it shall revert back
to the permanent school fund