The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1909-05-09
WALSH CASE IN
FEDERAL COURT
Aged Banker Has Hopes of
Escaping Term in United
States Prison.
SEEKS TO PERFECT APPEAL
ARGUMENT WILL BE HEARD BY
BENCH OF THREE JUDGES.

Chicago, Nay arguments of the
government in opposition to the at
tempt of John r Walsh. under sem
tence to five years Imprisonment for
alleged mfsapplicatiOn Of the funds of
his bank. the defunct Chicago National
to obtain freedom Of appeal to the
United States circuit court of appeals
are contained in the brief filed today by
Assistant District Attorney Fletcher
Dobyns. in reply to the brief filed by
counsel for the defendant a month ago.
The Walsh banks. the Chicago Nation
al, the Equitable Trust company and
the Home Savings, closed their doors
Dec. IS, 1905 Walsh was indicted two
years later on 1S2 counts. A year later
the case came TO trial i'm the United
States district court, and d verdict find
ing the defendant guilty on fifty-four
counts was rendered. Judge Anderson
sentenced Walsh to FIVE years at Fort
LeavenwOrth.
The appeal followed. Oral arguments
will be heard by Judges Grosscup, Ba-
ker and Seaman the last week in the
month.
Losses of st6,ooo.ooo.
It is said that the Walsh failure
caused losses to himself, stockholders
and others 2ggregating $4,000 600.
Counsel 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
-r,ln w h. e
case
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 rath-
er to get the funds Of the bank to pro-
mote his personal enterprises and to
conceal the real nature Of his act.
Mr.. Walsh" says the brief, was en-
gagged in the promotion Of a large
number of struggling enterprises which
we're in desperate need Of funds. Cen
orally speaking, his mode Of procedure
was:
Method of Walsh.
He would learn Of some enterprise
that was bankrupt, or about to 20 into
bankruptcy, and he would purchase it
at a low price. He would then organ
iZe corporation and sell the enterprise
to this corporation, taking in payment
the capital stock Of the new corpora
ton and a sufficient number of bonds
which at their face value would more
than reimburse him for the price orig
inaily paid for the property. If the en-
terprise was successful Mr. Walsh
made the profit and the Xix got its
interest on the bonds If the enterprise
did fail, Mr.. Walsh lost nothing and
the bank lost the amount of the invest
ment.
when the banks closed Mr.. Walsh
had taken about S16,OOOOOO of their
funds for his personal speculation, vet
his name appeared nowhere on the
books as debtor OF 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.
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
90 to par In this way Mr. Walsh would
raise the money to pay for a property
by selling its own bonds"