Los Angeles herald., 1909-10-06
JOHN R. WALSH
MUST SERVE FIVE
YEARS IN PRISON
VERDICT OF LOWER COURT IS
SUSTAINED
CAREER OF BANKER WAS ONE OF
FRENZlED FINANCE INDEED
Hypothecated $16,ooo,ooo of Deposits
in His Bank to Further His
Own Private Railroad
Schemes
LRv Associated Press. ]

[By Associated Press1
CHICAGO, oct. 5.-The verdict of the
trial court, which found John R. Walsh
guilty of misapplication of the funds
of the Chicago National bank, was al
firmed by the United States circuit
court of appeals here today.
Mr.. Walsh must serve the sentence of
five years Imprisonment imposed upon
him by the trial jury, save in the event
that the supreme court upsets the al
firmation of the verdict of guilty hand
ed down today.
Counsel for Mr.. Walsh in their appeal
laid stress on what they allege was a
lack of criminal intent on the part of
the defendant. In the very lengthy
brief which they filed much law was
quoted to show that the convicted bank
er had used the funds of the bank in
what he considered a legitimate man
ner.
Courts Opinion Brief
The opinion of the court of appeals.
written by Judge Humphrey and hand
ed down by Judge Grosscup, is brief
and confined almost wholly to the ques-
ton of criminal intent The allegation
that Juror Palmer was unduly intiu-
enced is dismissed with a word, and
but little more is wasted in eliminating
the allegation of Inconsistency in the
verdict.
AS 10 tll6 SuDSIdllCS VI NllC lllp1ttNt
charged in the various counts, says the
opinion, 1.-The verdict will not be dis
turbed. If the gravamen of the charge
in each count on which there has been
a verdict of guilty is the same, there is
a consistency in the verdict"
In the instructions given the jury by
Judge Anderson in the lower court the
higher tribunal finds no error
AS to the lack of criminal intent, the
opinion reads: "Under section 5209
there could be misaplication of bank
funds by an officer which would be in
nocent and not criminal, and there
could be misapplication which, under
the statutes, would be criminal. What
would show the difference between mis-
applications which were criminal and
those which were not, which would
show innocence or guilt, good faith or
bad faith, the court sought by instruc
tions carefully to define, and we think
did fairly define"
Thirty Days for Appeal
Counsel for Mr.. Walsh have thirty
days in which to file application for a
rehearing by the court of appeals.
Meanwhile he will be at liberty under
his present bond of $4,000.
The rise and fall of the fortunes of
John R. Walsh, who is now ~ years of
age, form an interesting chapter in the
history of Americans who have risen
from obScur1ty to power.
The three Walsh banks-the Chicago
National, the Equitable Trust company
and the Home Savings bank-were
closed by the comptroller of the curren-
cy December IS, 1905, nearly four years
ago.
At that time Walsh not only owned
these institutions, and the Chicago
Chronicle, but owned ALL or nearly all,
Of the stock of the following COM
panies:
Owned Many Companies
The Acme Gas company, Bedford
Belt Railway company, Bedford Quar-
ries compny. Chicgo Southern Railway
company, Chicago Wharfing and Stor-
age company, Indiana Southern Coal
company, Illinois Southern Railway
company Lake Michigan Car Ferry
Transportation company, Mount Olive
and Stanton Coal company, Ohio Quar-
ries company of Ohio, Ohio Quarries
company of Illinois, Southern Indiana
Coal compny, Southern Indiana Rail
way company, Southern Missouri Rail-
way company, Wisconsin & Michigan
Railway company.
According to the brief of the gov
ernment on the appeal all of these
companies were bankrupt, or on the
verge of it when bought by Walsh for
little or nothing. Their securities were
unmarketable and virtually worth
less.
Then, it is alleged, Walsh formed
corporations to buy these companies
from himself, taking in payment stock
of the new corporations and enough of
their bonds to repay himself at their
face value for the sums he actually
paid for them. In this way, accord
ing to the prosecution, he obtained for
nothing stocks and bonds to the face
value of $30,000O00..
Dreamed of Great System
Walsh dreamed a great deal of a
railway system to be pieced together
from his scattered purchases which
would reach from the Mississippi to the
Ohio, through Illinois, Indiana, Wis
consin and Michigan to Duluth and
Superior.
The quarries and coal mines were to
furnish much of the traffic.
To obtain funds Walsh had resource
to the funds in his banks In cover
ing up these loans, it is alleged, he
used memorandum notes signed with
the names of clerks who We're not
consulted in the matter. There was
nothing on the books to show Walsh
had received the loans. Even Fred
Blount the vice president is said to
have been ignorant on this point
For collateral Walsh deposited the
securities OF his various enterprises.
For two years, it was charged Walsh
ignored the demands OF the comptroller
of the currency that he place his
banks on a firmer foundation, and
when the crash came It was discov-
held were those of Walsh properties
OF the $25,OO0,0OO deposits $4,000, 900
were represented by the paper and Sc
curitie6 of the Walsh enterprises