The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1909-05-08
WAYS OF WALSH
Government Files a Brief in the
Financier's Case
In Which Appeals From the
Courts Decision.
HE TOOK S16,OOO,OOO
From the Banks Under His Con.
troll, 1t Is Alleged,
And Used Tt for Promoting His
Private Enterprises.

Chicago, May s.-Arguments of the
government in opposition to the at
tempt Of John r. Walsh, under sem
tence of five years Imprisonment for
alleged misapplication of he 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 Fletcher
Dobbins, in reply to the brief filed by
counsel for the defendant a month
ago.
The Walsh banks, the Chicago Ma
tional, the Equitable Trust company,
and the Home Savings, closed their
doors December Is, 1905. Walsh was
indicted two years later. on 1872 counts.
A year later the case came to trial in
the United States district court, and
a verdict finding the defendant guilty
on 81 counts was rendered. Judge An
at Fort Leavenworth. The appeal fol-
lowed. Oral arguments will be heard
by Judges Grosscup, Baker and Seaman,
the last week in the month.
It Is said that the Walsh failure
caused losses to himself, stockholders
and others aggregating s16,000,0o0. Coun-
sci for Walsh contended In their brief
that the loans made by Walsh and his
purchases of bonds of his own railroad
with the banks money were legitimate
transactions, made for the benefit of
the bank and without loss to the bank.
THAT counsel should seriously make
such statement of fact to this court
recites the government brief, "can be
explained only by the necessities OF the
case.
Walsh Was a Promoter.
The brief contends that Mr.. Walsh's
intention was not, as president of the
bank, in good faith to make good
loans and investments for the bank.
but rather to get the funds OF the
bank to promote his personal enter
prises and to conceal the real nature
of his act.
mir. walsh says the brief, twas
engaged in the promotion of large
number of struggling enterprises which
were in desperate needs Of funds. Cen
orally speaking, his mode of procedure
was:
HE would learn of some enterprise
that was bankrupt, or about to go into
bankruptcy. and he would purchase 1t
at low price. He would then organ
lie q corporation and sell the enter
prise to this corporation, taking dn
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. If the
enterprise was successful, Mr.. Walsh
made the profit and the bank got its
interest on the bonds. If the enter
prise failed, Mr.. Walsh lost nothing
and the bank lost the amount of the
investment.
Took Out $16,OO0.O00.
when the banks closed Mr.. Walsh
had taken about $16,000,000 of their
funds for his personal speculation, yet
his name appeared nowhere upon the
books as debtor or borrower. and the
true state of affairs was not discov-
cred 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.
1.-The investigation developed the fact
that there was of course. no market for
the bonds which Walsh issued on his
struggling enterprises and that he made
a. market out of his bank where he
placed the bonds at anywhere from 80
to par. In this way Mr.. Walsh would
raise the money to pay for property
by selling its own bonds"