Los Angeles herald., 1909-05-09
FIGHT BEGINS TO
LIBERATE WALSH
GOVERNMENT FILES ANSWER
TO C0NVICT'S APPEAL
FORMER BANKER AND MAGNATE
DEMANDS FREEDOM
Federal Prosecutors Brief Contains
Arguments to Refute Statements
Made by Defense-lnterest-
ing Battle Promised

CHICAGO, May s.-Arguments of
the government in opposition to the
attempt of John R. Walsh, under SEN
tence of five years Imprisonment for
alleged misapplication of the funds of
his bank, the defunct Chicago Ma
tional, to obtain freedom by appeal to
the United States circuit court OF ap-
peals, 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 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 dis
trict court and a verdict finding the
defendant guilty on fifty-four counts
was rendered. Judge Anderson SEN
fenced Walsh to five years at Fort
Leavenworth. The appeal followed.
Oral arguments will be heard by
Judges Grosscup, Baker and Seaman
the last week in the month. 1t is
said that the Walsh failure caused
losses to himself, stockholders and
others aggregating $16,0O0,0O0 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
recited the government brief, "can be
explained only by the necessities of
the case
Intention Not Bona Eide
The brief states that Mr.. Walsh's
intention as president of the bank was
not in good faith to make good loans
and investments of 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
engaged in the promotion of large
number of struggling enterprises
which were in desperate need of funds.
Generally speaking, his mode of pro-
cedure was;
HE would learn of some enterprise
that was bankrupt, or about to go
into bankruptcy, and he would pur-
chase it 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
the bank got its interest on the bonds
If the enterprise did fail, Mr.. Walsh
lost nothing and the bank lost the
amount of the investment.
"When the banks closed Mr.. Walsh
had taken about $16,000000 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
nut in control of the affairs of the
banks by the comptroller of the cur
rency.
"The investigation developed the
fact that there, was, of course, no
market for the bonds which Walsh is
sued 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.
I'm this way Mr.. Walsh would raise
the money 10 pay for a property by
selling its own bonds"