Evening star., 1909-05-08
HIS APPEAL OPPOSED
Governments Contention
Against Banker Walsh.
HIS DEFENSE RIDICULED
Claimed That He Did Not Act for
the Banks Interests.
LOSSES OF MANY MILLIONS
Claimed That Walsh Took Sic, 6,OOO,-
HIS DEFENSE RIDICULED
LOSSES OF MANY MILLIONS
Claimed That Walsh Took Sic, ,OOO,'
600 for Personal Speculation in
Enterprises Of Doubtful Value.

CHICAGO, May S.-Arguments OF the
government in opposition to the appeal
of the convicted banker, John r. Walsh.
to the United States circuit court OF ap-
peals are contained in the brief fled to-
day by Assistant District Attorney
Fletcher Dobbyns. in reply to the brief
filed by counsel for the defendant
month ago. Walsh is under a sentence
of five years Imprisonment for alleged
misapplication of the funds Of his bank.
the defunct Chicago National.
The Walsh banks-the Chicago Ma
tional, the Equitable Trust Company and
the Home Savings Bank-closed Decem-
Der 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 hnding
the defendant guilty on four counts was
returned. Judge Anderson sentenced
Walsh to Ave years at Fort Leavenwortn:
be heard by Judges Grosscup. Baker and
Seaman the last week In the month.
1t is said the Walsh failure caused
losses to himself. stockholders and others
aggregating $16,OoO.OOO.
Counsel for Walsh contended In their
brief that the loans made by Walsh ana
his purchases of bonds OF his own rail-
road with the banks money were legis-
mate transactions. made for the beneht
of the bank and without loss to the bank
Contention Of Government.
That counsel should seriously make
such statement Of fact in this court" re-
cites the government brief. "can be ex-
planned only by the necessities OF the
case We contend that the following facts
were established by overwhelming evil
dence:
THAT or December IS. 1905. the Chicago
National Bank was insolvent, and while
paying dividends at the rate of hrteen per
cent annually although 1t was not earning
them: that the notes made the subject of
criminal charges were OF kind absolutely
unknown to honest banking; that they
were secured by bonds that were un-
marketable and of little or no intrinsic
value; that they were never paid; that
they belonged to a class of transactions
that was chief factor in the destruction
of the bank. and in causing a loss TO tne
stockholders Of the entire value OF their
stock; that these loans were MAGE IN
utter disregard Of the interests OF the
banks personal enterprises; that the pro-
ceeds OF these notes were used as alleged
in the Indictment; that the bono pur.
chases which are the subject OF criminal
charges were not made in the usual course
of business; that these bonds were un-
marketable and worthless as bank assets;
that they contributed directly to the de-
struction Of the bank and to the loss to
the stockholders"
Loans and Bond Purchases.
1t is further alleged in the brief that
these pretended loans and bond purchases
were of such q fraudulent nature that
they created no obligation on the part
Of the bank to ray over the proceeds to
the parties to whom they were actually
paid" 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 enterprises and to
conceal the real nature of his act.
"Mr. Walsh says the brief. was en-
gagged in the promotion of large num-
ber of struggling enterprises which were
In desperate need Of funds Generally
speaking, his mode of procedure was: He
would learn of some enterprise that was
bankrupt or was to go into bankruptcy
and he would purchase 1t at very low
price. He would then organize corpora
ton and sell the enterprise to this cor
poration, taking in payment the capital
stock of the new corporation and sur
ficient number OF bonds which at their
face value would more than reimburse
him for the price he originally paid for
the property. II the enterprise was sue
cessfu1 Mr. Walsh made the profit and
the bank got It's interest on the bonds
II the enterprise snouIo !ali MT. Wdisn
lost nothing and the bank lost the amount
Of the investment.
When the banks closed Mr.. Walsh had
taken about $16.OOO.OOO 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 discovered until the ex-
haustive examination was made by the
experts who were put in control Of the
affairs of the banks by the controller Of
the currency
THE investigation developed the fact
that there was, Of course, no market for
the bonds which Walsh issued on his
a market about his banke where he placed
the bonds at anywhere from 30 to par.
In this way Mr.. Walsh would raise the
money to pay for a property by selling
its own bonds"