The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-07-10
RAN THE PEOPLES U.S.BANK
rrirD ORDER Issued AGiINAf
SY. LOJIS CONCERN.
II, Promoter lsed the Mails In securing
sale, OF stock and soliciting Deposits
NE cot ~ 900 900 From the Public
,, ,an.d n Third OF II to Himself.


an, Loaned q Third OF II TO Himself.
V,.uINGruN, July "a fraud ordeT
-,,r., the People. United States Bank,
~ officers and agents IA such, ana H. ..
,i. II 81. Louis. Mo-. was issued by
p..,,,,strr- GENERAL Cortelyou on july y,
,,la effect tomorrow morning. The
4o,isi,n e the Postmaster General was
re,chcd after a full hearing OF the case by
49,, Assistant Attorney General for the
Post ONlCo Department,
IN ,,.r,on.e to a citation to show cause
,,hy fraud order should not he issued
a,sin.r them the Peoples United States
Rank and +. S Lewis appeared before the
,,sist,n+ Attorney General for the Post
nc,co panartmen, on June 49, in the per-
.on. Of George Shield and Shepard Bar
clay, attorneys, and f. 8 Lewis'
Frank J Cabot and II, L.. Kramer,
and made answer TO tine charges
r'lo ,i,lence in the case showed that
Mr. Lewis used the mails as his prime
ggent in promoting the sale OF stock anu
securing deposits in the bank.
The Peoples United States Bank was
,reanized to transact all OF its business ny
tho u.c of the mails The plan was to re-
rnive IA wings deposits. carry on cerli"eu
,herk system ard do exclusively mail
order banking business. Mr.. Lewis began
,he promotion of this bank in the Womdns
u1oa.inc for February. 1904, and has in
ali SUBSEQUENT issues of the Womdn's Md0d-
me extensively advertised this bank.
Among the false and fraudulent repre-
scntation- and promises which the Post
,raster-General found Mr.. Lewis had made
in the promotion Of his scheme were those
relative to the amount OF capital stock
which Mr. Lewis had subscribed and
would sui scribe, representations relative
10 the independent. strong. capable men
who would compose the board of directors,
concentrations and promises that all funds
Of the bank would be loaned by a COM
mirtee composed Of fifteen directors OF the
principal banks in st. Louis and that the
funds would not be loaned to himself or
other directors.
The Postmaster General found that in
HI. early articles in the Woman's Md1n-
ure and in his other advertising
literature about the bank Mr. Lewis
represented that he would subscribe to
the capital stock a dollar for every dollar
subscribed by all others, 80 that he would
own half of the capital stock, and
that later he represented that he mad
pledged his entire fortune. every dollar
he had. and his publishing business In this
banking enterprise and that his subscrip-
tons would exceed a million dollars. These
representations were found to be false and
made with intent to deceive.
The inspectors found that Mr. Lewis
had not cooperated to the extent ola single
dollar Of his own money although the bank
had been in operation seven months, and
had paid up capital stock OF $4,000 600
The inspectors found that Mr.. Lewis had
made an admission to that effect to Bank
Examiners Cook and Nichols on April 3, 1905.
The inspectors and their Office force in
81. Louis made a careful checking OF the
subscription books, finding that on March
49, 1905. Mr.. Lewis had received and held
as payment for shares Of stock In the bank
81 2s9 81, and had accounted toIthe bank
in an amount not exceeding 2.2O4 ,903.05,
This showed that every cent OF the
5000 900 capital stock which had been paid
in was paid out OF subscription money re-
caved by Mr. Lewis from the public, and
that none of his money had been invested
in the enterprise. This was found to be
the fact although Mr.. Lewis had stated In
writing to the inspectors that S4e5, $50 OF the
s5oO,oOo paid in at the original incorpora-
ton of the bank were his personal funds.
Subsequently, at the hearing before the
Assistant Attorney General, Mr.. Lewis
admitted that that money was received
by him from the people and was not his
own. Although asked to do so at the
hearing. Mr. Lewis failed to produce any
evidence whatever that any OF his personal
funds had gone into this enterprise or that
he ever intended to subscribe, or was in
financial condition to subscribe for the
large amount Of stock which he represented
he would take.
On March Is Lewis had loaned from the
banks funds to himself and his enterprises
s3a., ao4 80, the paid in capital stock OF the
tank then being half million. On March 20,
when 81 600. 600 capital stock had been paid
In, a statement furnished by Mr.. Lewis
al the hearing showed that he had loaned
to himself and his enterprises 1907, 6SS, 80.
The University Heights Realty and
Development Company, which had bor-
rowed from the bank $348, 1888 20 and the
stock of which to the extent Of 1,277 shares
Mr. Lewis sold to the bank, has assets
consisting for the most part Of land pur-
chased for 100000 as a speculation In
suburban property, and upon which Mr..
Lewis stated about COO had been ex-
pended In improvements. It's liabilities
are shown to be 1914, 7O0.53.
It appears further that Lewis endea vored
to obtain proxies from all stockholders APP
pointing himself to vote the stock. which
proxies should remain in force for three
years at least, and in case revocation was
desired IN that time Mr.. Lewis was to have
opportunity to purchase the stock.
On April 8, 1905. the cashier Of the bank
tod the Inspectors that 1881 shares Of the
Increased capital stock had been issued
and in every instance the shareholder had
signed proxy to the above effect.
II appears that 1t is the intention Of the
bank 10 increase its stock to Sc, 900 900 and
remittances are being asked for on that
account
1t Is understood that the funds of the
bank which have not been borrowed by
Lewis and his enterprises, uniting to
about two-thirds OF the total amount re-
united, are deposited in banks and will be