Kingsbury County independent. (DeSmet, Kingsbury County, S.D.) 1894-1929, 1908-01-17

Is checks: that is. he guarantees
by the bank signature hat the sums
indicated In the checks were held by
the institution to the credit of the
drawer. To overcertify bank paper IL
under the federal statute an offense
punishable by Imprisonment of not less
than five years and not more han ten
years. One count is devoted to each Of
the checks involved. 1t Is alleged that
Heinze knew that Otto Heinze e. Co
did not have to their credit the sums
named in the various checks. The 18th
count in the indictment charged
that HeinZe Intentionally applied the
funds of the bank and without the
knowledge of the directorate TO the
payment of he 10 checks drawn by
Otto Heinze & Co., and knowing that
the company did not have q de-
post with the bank q sum equal to
the mount named In the certified
checks.
For such an ofense the federal
statutes provide a penalty of not less
fine OF not more than $4,000 or both.
Heinze's Position.
Edward Lauterback, Heinze's coun-
sci, made the following statement:
"The Indictment Is based o. *
tification of Is checks, amo".
something over $400. 900,
Otto Heinze & Co. on th@
October last. Before
was made r. Augusta
tanned the discount Of "a
900, secured by abundant
change collateral, worth atN
ket rates of that day more thA
900, and drew his check for
to the credit of Otto Heinze q Coz
amount of which should have b
passed to their credit, as / think
was. There certainly was no wilfuA
intent within the statute to overcertifyE
any check, not even to the extent that
overcertification Is practiced every day
In Wall street by all the banks as q
matter OF business necessity. On the
contrary, as l have stated, there was
far more than the amount of the
checks standing to the credit Of the
account OF the drawers of the checks
when they were certified. 1 believe
that IL the grand jury could have un-
derstood the situation correctly no in
dictment would have beer found"
Aftermath of Collapse.
The indictment of Heinze by the fed
erai grand jury which has been inves-
tigating the Mercantile and other
banks identified with the Heinze and
Charles w. Morse institutions is the
aftermath of the collapse of the Heinze
pool in United Copper and which
brought about the suspension of Gross
81 Kleberg, stock brokers, and subse-
quently resulted In the resignation of
- Nd6 III ltOff lit UTtals
dency n the retirement Of the direc-
tors OF the Mercantile National bank
after an examination into the institu-
ton had been made by the clearing
house committee. Heinze declared az
the time that he had been betrayed
by his friends In the United Copper
pool.
Betrayed by Friends.
The troubles of Augustus Heinze be-
gan with the bull campaign started
by Otto Heinze 81 Co., and associates
In the stock OF the United Copper COM
paJy which Mr.. Heinze had organized
and developed after his long fight with
the A~malgamated Copper interests In
Montana. The stock was selling about
$50 when a mysterious selling was de-
tected. Believing ii to be an effort to
raid the stock by short selling, Otto
Heinze q Co, gave unlimited buying
orders 10 various brokers. believing that
when the time came the bear operators
would be unable to cover their con-
tracts except at such prices as the
Helnzes dictated. Heavy selling OF
copper continued and to purchase the
stock offered Otto HeinZe & Co. were
forced TO draw checks for large
amount to various brokers. When the
source of the selling was ascertaiued
the HeinZes declared that they had
been betrayed by friends. The United
Copper stock siumped and Gross & Kle.
pSt 81, 5'oSh UohcIS, suspended, Claim
ing that Otto Heinze az Co. failed tc
take up the stock of the United Copper
company which had been bought for
them. A crisis was provoked I'm the
affairs OF the Mercantile National banh
n the clearing house association made
an examination following which Heinxa
withdrew from the institution as an of.
ficer, but with his friends still maintain
Ing a stock control, which he had pur-
chased several months before from Ed
win Gould. Their have been reports
recently I'm the financial district that
he Gould interests would again re-
sumo control of the Mercantile.