The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1895-10-12
THE DOUBLE CROSS
Mr.. David DisclOses the Secrets
of the Blaine Banks.
TELLS OF wHEELER's SCHEMES.
Says They Borrowed From One Bank TO
Pay Fraudulent Debts in the Other
Startling Affidavit.

/
tional bank for yesterday Lester W. Da-
! vid. receiver OF the Blaine State bank.
/ applied 10 Judge Hanford for a vacation
/ Of the order appointing Emnons- IN sup
/ port OF MS application David fled an al
/ fdavit in which he cites from the Wheel
I ers own books figures that tend 70 show
/ them up IN the light OF bank wreckers,
I 10 their own profit.
Dsvid's affidavit. which was drawn by
/ J. T. Ronald. his attorney. might appro-
priately be headed a new way 10 pay
old debts Il begins with the organiZa-
1 ton of the Blaine National bank IN 1890
/ and traces the various steps up 10 the
present condition OF affairs In Septem-
ber 1894. the bank went into voluntary
/ liquidation for the purpose OF closing out
! its business, and thereupon paid It's debts
took up and sold its bonds deposited with
| the United States treasurer, and paid on
/ and redeemed all of its circulation. At
| that time the bank was perfectly solvent,
| having a large amount of assets, but &C
cording TO the affidavit II. W. Nhee!er
and Z. r. Wheeler, respectively president
and cashier, for the purpose OF oefraud-
ing the stockholders and for their own
! advantage conceived the idea OF organ
| iZing a bank under the laws OF the state.
Besides the Wheelers there were three
other directors. Il. N Kingsley. ID. ,.
Miller and James Barnes. Miller and
/ Kingsley We're farmers, and Barnes
:
three were devoid of the experience nee
/ essary to enable them to cope success
| fully with the Wheelers.
How They Absorbed the Cash.
Having conceived the idea of looting
( the bank OF cheating and defrauding the
/ stockholders and OF converting the pro-
Ceeds TO their own use. the Wheelers. IL
is said, induced the other directors 10
/ consent to liquidation. Thereupon the
| state bank was formed. the Wheelers re-
tanning their respective Offices, and the
| new concern engaged in business with the
books, furniture and fixtures of the ma
tional bank. In pursuance Of their pur-
pose. continues the affidavit, the Wheel
ers proceeded 70 collect the money OF the
national bank and deposit il in the state
bank II. W. Wheeler, E. r. Wheeler, l..
Fl. Wheeler and Lee Wheeler. brothers,
! all owing the national bank at the date
of its discontinuance large sums OF mon
ey From time 10 time. they would
realize from the national bank and de-
post the money in the state bank, they
would borrow il from the state bank, CIV
/ ing in return their own paper unsecured.
! BY this process, it is said, they came 10
| owe the state bank at Orious time more
! than 5000. About November 3. 1891. II.
J w. Wheeler. being indebted TO the nation
al bank S, 200 is said TO have borrowed of
! the state bank 81. 200, with which he pad
his note 10 the national bank. About Au-
/ gust =. 1895. David continues, the Wheel
/ ers sold TO the state bank note for
/ Sc. 800 indorsed by II. W. Wheeler with
! out recourse" and afterwards Endorsed
by Lee Wheeler without recourse"
which note was unsecured and on which
the interest never has been paid. For
/ this note. David says. the Wheelers Is
sued to Lee Wheeler certificates OF de-
post on the state bank for the full
amount OF principal and interest, and
with the certificate of deposit paid off
/ portion of their debts to the state bank.
Juggling With the Funds.
/ Al another time z. R Wheeler is said TO
} have issued 10 himself a certificate OF de-
post on the state bank ION call" which
/ was afterward changed on the register 10
/ time certificate and Wheeler credited him.
! self with $50 interest on the same. In Jan
| uary. 1875. they are said to have disposed
/ Of "a the Chase National hank. of New
! York government bonds belonging 70 the
1 Blaine National bank. and after the re-
dempt!on OF the circulation there remained
fl the New York bank 10 the credit OF the
Blaine bank 50 $50 50 which the Wheelars.
/ IN pursuance Of their conspiracy. are al
I legged 70 have appled 20 their own use. r.
/ r. Wheeler is said to have been in the hab-
Il Of honoring drafts upon the bank by
/ 7. H. Wheeler although the latter had no
/ funds on deposit. and 10 prevent discovery
OF the fraud on the stockholders the
/ wheelers are said 70 have issued 10 L. II.
/ Wheeler. August 80 1895. a certificate OF
I deposit for 1855.
/ II IS further asserted that in pursuance
! OF their scheme TO loot the bank the Wheel
ers formed the Consolidated Mills
and Merchandise Company Of Blaine. for
/ the pretended purpose Of making shingles
and dealing in merchandise. but for the
Z real purpose OF enabling them 10 borrow
/ money Of the bank rot in their own name.
/ but in the name Of the corporation. This
I obligation was evidenced by note only, and
! tho transaction was entered into the re-
/ ceiver saws. so that the stockholders would
/ not discover the real truth and thercup0n
/ make trouble about the Wheelers borrow
ing too much money from the hank The
f books Of tho state bank. Receiver David
SAYS. contain the evidences Of oil the fore
+ going transact ons, as well Of many
others. The Wheelers. he saws. also drew
salary as officers Of both banks.
The struggle Tor Possession.
/ Turning 70 tho proceedings in court Da-
( N.a saws ne believes that The Nhoc,crs
( have not acted in good faith In securing
+ the appointment Of Emmous as receiver
! 81 she National hank, but for the sole
+ object % getting possession or the hooks
+ a. the State bank lie denies the charge
/ that he took possession Of the State bank
BY violence or threat. or before he
/ had fled bond. as alleged in
I the application made TO Judge Han
/ ford last week Instead when he
went 20 the hank. he saws Nc found J.
L WeeeIe~. DO ha6 heen served by the
+ sheriff with tHe order o. appointment.
/ Wheeler AZ once vent out ~ he bank but
/ Immediately returned with = H. Wheeler
/ attorney far the hank. who 'I.7se T'-
/ cashier 70 turn over The assets and take
+ n receipt. This was done lni the assets
/ were found 20 he as follows:
cash ......... acknowledgements 80 e.
3 NNHh fGhktfTt q. 1taf ~