The sun. [volume] (New York [N.Y.]) 1833-1916, 1911-06-24
ADVICE THAT RElCHMANN GOT
FROM CHIEF BANK EXAMINER
HCTCHINS AND OTHERS.

Evident That Former President Of Ger.
nesie Trust VIII Contend That .
False Report was Made the Bank.
Ing Department was Not Decei, ed.
II was made plain yesterday that the
defence Of Joseph B. Reichmann to the
charge that while president Of the Car
nesie Trust Company he made false re-
port to the State Banking Department
a. to the Carnegie's financial condition
will be that whatever Reichmann did was
on the advice OF the lawyers Of the COM
pany. with the approval Of the directors
and within the knowledge Of Chief Ex-
aminer Melvin Hutchins OF the Banding
Department. who not only was familiar
With the condition Of the company but
also had advised Mr.. Reichmann as TO
the continuance or reduction OF doubtful
loans. IL will be the contention Of the
defence tina: il a false report was made
IT would not have deceived the State
Banking Department. as Mr.. Hutchins
was familiar with the contingent liabilities
OF the company Of which the report said
there were none. The District Attorney
will try 70 show that the object Of the
report was not 40 much to fool the State
Banking Department. but 10 deceive the
public a. TO the tr,e condition Of the COM
pany, which as then very wabbly fnan-
cially.
Robert b Moorhead. who vas secre-
tary OF the Carnegie Trust Company, was
the frat witness when the trial was re-
sumed yes erday before Justice Davis
in the Supreme Court. Criminal Branch.
He testified that Eeichmann had told him
that Examiner Hutchns had informed
him tha, the loan Of 81 -. 600 by the North
ern Bans of which Joseph G.. Robin was
president. TO the Carnegie Trust should
be changed to a participation agreement
in loan OF S,l3,OOo which the Carnegie
Trust had made TO Joseph Marcus. II
was on the 81 20. 100 loan that City Cham
beriain Hvde was indicted. but 40 far his
name has not been mentioned in the pro-
ceedlngs.
MIR Moorhead said that on Septs mber 8.
1910. the minutes OF the meeting Of
August g.. at which the Carnegie Trust
directors authorized Reichmann to bor-
row Si3O.OOO from the Northern Bank,
were amended to make it appear that il
had been participation agreement
The minutee Of the meeting. Mr.. Moor
head said, were prepared hy the Law de-
partment OF the Carnegie Trust. and
Liston l.. Lewis OF the Arm Of Keener 4
Lewis. counsel for the company. was
present at most NEE tings. MIR. Moorhead
said that he didn't have anv conversation
with Bank Examiner Hutchins. but Reich
mann did Rcichmann had advised with
the lawyers and the directors OF the CON-
pany and also the State Banking Depart
ment about the report. the witness said.
and he WAS asked why the loan was
changed to . participation agreement.
so that il could be carried in the report
as a participation agreement he said.
Then the witness said that Reichmann
had said that Examiner Hutchins had told
him TO make the change. that the Banking
Department ordered the change and that
Hutchins had instructed him how to do
il, Hutchins also had said that IL the
loan was carried in the report the Car
negie probably would be closed
The Carnegie had given q demand note
to the Northern Bank for the $3.50. 900.
and the next witness. William l.. Brewer.
vice president of the Northern Bank.
sai that he saw Reichmann about two
weeks after the note was made and
that he gaze the note to Reichmann
who tore it up Brewer got IN exchange
for the note copy Of the p; rticipation
agreement. Mr. Brewer testified that
when he turned the note owe. % Reich
mann Lawyer Lewis of the carnegie
was present
L..
witness. said that he was = member of
the executive committee Of the Carnegie
Trust and he recalled the meeting al " hich
the $3.50, 600 loan was authorized. Moth
ing was said about participation agree
ment then. he said He admittsd tina, ne
drew up the participation agreement at
another meeting + Reichmann had
! followed his adv ice il would have been
q participation agreement in tn, first
place. he said He told Reichmann that
| the Carnegie should not appear a. bor-
rover OF money. Robin insisted that
the Carnegie should guarantee the Mar
Gus notes and also said that all collateral
for the Marcus loan. which amounted to
| OF the Public Bank. OF which Marcus was
pTteiueut. snouiu 10 pu' w WIN Ine
Northern Bank. Mr. Lewis said that il
was unfortunate that Robin insisted on
this MIR, Lewis said that he told Reich
mann that the participation agreement
could be dsted August IS, although il was
not made until September y. The witness
said he did not know that the report
which Reichmann signed said that the
Carnegie didn't owe any borrowed money
| Bank Examiner Hutchins told the
Jury that ReichmAnn telephoned TO him
on tho morning OF September and
asked him TO como around to the CarneR
Trust Offices that afternoon When
Hutchins got there Reichmann apollo
gized TO him for having sent for him
Reichmann said he was having Q little
trouble. and he told Hdtchins that he
had sold part Of tho Marcus loan to the
Carnegie bank for $50 900 and he did
not know how to carry II properly on the
books Hutchins said II was q simple
matter and explained how 1t could be
done so that II would show . net amount
due the Carnegie on the Marcus loan.
Then Mr.. Reichmann sent for Auditor
Ball OF tho company tho witness said.
and told him that Mr., Hutchins said
tina, il could be carried As q participat ion
agreement. He did not refer to the
transac ;ion in any other way"
Hutchins said that he talked With
Reichmann about other loans He wanted
10 know if any new loans had been made.
and Reichmann said there had not
Had YOU any know ledge OF this loan