Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1910-07-17
A SENSATIONAL BANK
L00TING CASE ENDED

Grand Forks, N. D.. July 16.-The
sentence Of President Rhaders and
cashier Flohren of the Peoples State
bank ends one of the sensational cases
of bank looting in the state.
The Peoples State bank was or
ganized at Lakota on Nov. ), 1892,
the stockholders being +. A. Rhaders.
Merritt and several others closely as
soclated with the former in business.
The capital stock of the bank was the
very small sum of $500.
About ten years ago S. A. Floren.
then of Minneapolis, came to Lakota
and became cashier of the bank, Mr..
Merritt withdrawing and removing to
another state. Later the health OF
Mr.. Rhaders failed considerably and
the business of the bank was largely
transacted by Mr.. Floren.
Upon the closing of the bank In
January of this year, action was COM
menced before Judge Templeton OF
the district court asking that the
institution be dissolved and that it
forfeit it's charter, and in these pro-
ceedings Judge Templeton appointed
George A. Kellogg of Lakota as re-
ceiver.
Immediately after the failure, Mr..
Floren was arrested OH three separ-
ate charges of falsifying the records,
and forgery, and Mr.. Rhaders was ar
rested on the charge Of forgery, these
charges being based upon his state
ments made to the state banking
board. On July 6 additional COM
plants were filed against Floren, he
being charged this time with receiving
on three different occasions, three
separate deposits after the bank be-
came insolvent, while Mr.. Raiders
was charged with one offense of a
similar nature. Both defendants waiv-
ed examination and at the opening Of
the term of the district court this
week both entered their pleas of gull
ty.
The failure of the institution was
extremely disastrous, and the deposit
tors will receive only about twenty
five per cent. The books showed that
on the day Of closing there should
have been S14,467 in cash on hand,
when as a matter of fact there was
but $2,774. Further examinations of
the books showed that the process of
looting had been in progress for A
period of more than eight years prior
to the time its doors were closed;
the method by which this was accom-
plished and concealed was systematic
cally undertaking the liabilities of
the bank in the footings as the liabil-
ity of the bank; the method was ex-
ceedingly crude but served it's pur-
pose in the absence Of supervision by
the banking officers and directors.
In 1902 the shortage of the bank
was first found by the expert account
ants, being $4,000; in 1908 it had in
creased to $4,000; in 1904 to $4,000;
in 1905 to $11 900, and in 1907 to $20,
OOOO. The year of 1908 ended with an
increased shortage of $4,000, making
the total amount of the shortage Jan
/, 1909, 100000. From that time for
ward the increase was rapid; on July
"a. 1909, $1,000 appears to have been
taken from the vault in the bank; on
September 10, another $1,000 was re-
moved; on September % $1,000 more
disappeared; on OctcNcr 5000, and
on October Is. $4,000 was removed
Five days later $4,000 additional ap
pears to have been taken out. The
total for that year was $4,000 of the
banks assets which disappeared.