The Bon Homme County independent. [volume] (Tabor, S.D.) 1904-1913, 1909-05-13
GOVERNMENT ANSWERS
WALSH'S CLEMENCY PLEA

Chicago, May 11.-Arguments OF the
government in opposition to the at
tempt of John r. Walsh, under SEN
tence of five years Imprisonment for
alleged misapplication 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 h Home Savings, closed their
doors December Is, 1905. Walsh was
indicted w 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,
81 counts was returned.
Judge Anderson sentenced Walsh to
hVe years at Fort Leayenworth. The
appeal followed.
Oral argument will be heard by
Judges Grosscup, Baker and Seaman
the last week in the month. 81"
1t Is said the Walsh failure caused
losses to himself, stockholders and 9TH
ers aggregating SIC, 900, 900.
Counsel for Walsh commended in their
brief that h loans made by Walsh and
his purchase of bonds Of his own rail-
roads with the banks money were
legitimate transactions, made for the
Denent or the bank and without loss to
the bank. II.
That counsel should seriously make,
such statement OF fact to his court"
recites the government brief, car be
explained only by the necessities of
the case. We contend that the follow
ing facts were established by the over
whelming weight of the evidence.
Bank Was I~nsoIvent.
That on December 16, 1905, the Chi
cage National bank was insolvent and
while paying dividends at the rate OF
10 per cent annually although it was
not earning them; that the notes made
the subject Of criminal charges were
OF a kind absolutely unknown to hon
est banking; that they were secured
by bonds that were u~nmarketable and
or little or no intrinsic value; thai they
were paid; that they belonged to
a class of transactions that was a
chief factor in the destruction of the
ank and in causing a loss to the
stockholders of the entire value of
their stock; that these loans were made
In utter disregard to the interests of
the bank for the sole benefit and ad-
vantage of Mr.. Walsh and his personal
enterprises; that the proceeds of these
notes We're used as alleged in the in
dictment; that the bond purchases
which are the subject OF criminal
charges were not made in the usual
course Of business; that these bonds
were unmarketable and worthless as
bank assets: that they contributed d.
rectly to the destruction of the bank
and to the loss to the stockholders"
WaIsh's Methods.
Mr.. Walsh says the brief, was
engaged in the promotion of a large
number of struggling enterprises which
were in desperate need of funds. Gen
orally speaking, his mode OF procedure
was: He would learn of some enter
prise that vas bankrupt or about to
go int bankruptcy and he would
purchase 1t at a low price. He would
then organize a corporation and sell
the enterprise to this corporation, TAX
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. If the enterprise was sue
cessful Mr.. Walsh made the profit and
h bank got its interest on the bonds.
If the enterprise did fail, Mr.. Walsh
lost nothing and the bank lost the
amoun of the investment.
"When the banks closed Mr.. Walsh
had taken about SIS, 900, 900 OF their
funds for his personal speculation, yet
his name appeared nowhere upon the
books as debtor or borrower, and thd
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
H. 49, -