The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1909-05-13
GOVERNMENT W
WALSH'S CLEMENCY PLEA

Shlcago. Ma ll.-Arguments OF the
government in opposition to the at
tence of five years imprisonment for
alleged mfsapplication of the funds of
his bank, the defunct Chicago National,
TO obtain freedom on appeal to the
United States circuit court OF appeals,
are contained in the brief filed today
by Assistant District Attorney Dobyns
in reply to the brief filed by the counsel
for the defendant a month ago.
The Walsh banks. the Chicago Ma
tional. the Equitable Trust company
and the Home Savings, closed their
indicted two years later on 1913 counts,
A year later the case came to trial in
the United States district court and a
verdict finding the defendant guilty on
"a counts was returned.
Judge Anderson sentenced Walsh to
five years at Fort Leavenworth. The
appeal followed.
Oral argument will be heard by
Judges Grosscup. Baker and Seaman
the last week in the month.
1t Is said the Walsh failure caused
ers aggregating SIG, 900, 900.
Counsel for Walsh commended in their
br1ef that the loans made by Walsh and
MS purchase of bonds of his own rail-
roads With the banks money We're
legitimate transactions, made for the
liz VI Ilc DdLlh ana "l1nO1l1 iOGG 70
the bank.
That counsel should seriously make
such statement of fact to this court"
recltes the government brief. can be
explained only by the necessities Of
the case. We contend that the follow
ing facts We're established by the over
w%helming weight of the evidence.
Bank Mas Insolvent.
That on December 16, 1905, the Chi
cage Natlonal bank was insolvent and
While paying dividends at the rate of
10 per cent annually although it was
the subject of criminal charges we're
of a kind absolutely unknown to hon
est banking: that they We're secured
by bonds that We're u"nmarketabIe ane
or little or no intrinsic value; that they
were never paid; that they belonged to
a class of transactions tina was a
chief factor in the destruction of the
bank and in causing a loss to the
stockholders of the entire value of
!helr stock; that these loans were made
in utter disregard to the interests %
the bank for the sole benefit and adj
vantage of Mr.. Walsh and his personal
enterprises; that the proceeds OF these
notes were used as alleged in the in
which are the subject Of criminal
charges We're not made in the usual
course Of business; that these bonds
We're u~nmarketable and worthless as
bank assets; that they contributed di-
rectly to the destruction of the bank
and to the loss to the stockholders"
WaIsh's Methods.
Mr.. Walsh says the brief, wa,
engaged in the promotion Of a large
umber of struggling enterprises which
We're in desperate need Of funds. Gem
orally speaking. his mode Of procedure
was: He would learn OF some enter.
prise hat was bankrupt or about to-
go into bankruptcy and he would
purchase it at a low price. He would
then organize a corporation n sell
the enterprise to this corporation, taxi
ing in payment the capital stock of
the new corporation and a sufficient
number of bonds which at their face
value would more than reimburse him
for the price originally paid for the
property. II the enterprise was sue
cessful MIR. Walsh made the profit anC
the bnnk got its interest on the bonds.
II the enterprise did fail, Mr.. Walsh
lost nothing and the bank lost the
amount of the investment.
when II banks closed Mr.. Walsh
had taken about SIG, 600, 900 of their
funds for his personal speculation. vet
his name appeared nowhere upon the
books as debtor or borrower, and tho
true state of affairs was not discovered
until the exhaustive examination was
made by the experts who were put in
control of the affairs of the banks by
the comptroller of the CURRENCY"