New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-08-01
CHENEY MAKES CHARGES
AGAINST {. N. CROUT
Third Degree Forgery Alleged on
Part of Cashier of Union Bank
and Former Controller.
DISTRICT ATTORNEY TO ACT
Report Regarding Sooo,ooo
Loan Falsified, Cheney As
serts-Grout Angry
Cashier Denies It.

tne Union Bank. of Brooklyn, and James
r Ashley. its cashier. were charged WITH
forgery in the third degree yesterday py
orion Il. Cheney. formerly State super
,ntendent of Banking and now vice-pies-
;dent of the Pacific Bank, in the final
report of the Union Bank TO the state
Ranking Department. Assistant District
Attorney Mitchell May. of Kings County
said half an hour later that he would
call MIR. Cheney before him, and If evil
dence could be produced to substantlate
the charges they would be presented TO
the grand jury.
The charges came N the course OF an
investigation of the closing of the Union
Bank. OF Brooklyn, which is being con-
Quoted by the State Banking Depart
ment. with Assemblyman Louis Gold
stein as special counsel. Not only were
these charges made against Mr.. Grout
and Mr.. Ashley, but William j. hayes
a former exam ner for the state Bank
ins Department. testified that he, had
made reports to Clark Willlams' fcr-
rerlv state Superintendent of Banking
ord now president of the Windsor Trust
Company. showing that the jenkins
Trust Company and the Borough Bank
of BROOKLYN. should not have beea al
lowed TO reopen after the panic OF lD'
hut that Mr.. Williams had permitts1
the reopening of the two concerns de-
spite the reports. Hayes testified that
he had reported TO Clark Williams GRIM
inal actions in the proceedings for clos
ing the two banking institutions
When Mr.. Cheney made his charges
against Mr.. Grout and Mr., ashley ne
was testifying as 10 the discoveries made
in regard to the conduct of the olo
Mechanics and Traders Bank under the
presidency Of David A. Sullivan. and
70 the occurrences Immediately preced-
ing the closing of the Union Bank. into
which the Mechanics and Traders Bank
had been merged.
Asks About s5oo.ooo Loan.
(roioStein asked MI tnentN opVN' a
loan Of 100000 made by the Metropon-
tan Trust Company for the beneht OF
the Union Bank. NJ Cheney EXPLAINED
that the loan had been divided into three
parts, $500 900 going directly to the
Union Bank. while $4,000 went TO the
Shetland Company TO take up loan
with the Union Bank. and SI5.co went
70 the Onslow- Moore Company 70 take
up a loan with the Union Bank. The
Union Bank guaranteed all the loans, he
said.
The Banking Department had moth
ing 20 do with the loans Of the Metro
politan Trust Company to the Union
Bank" said Mr.. Cheney. The only time
the question was brought up was When
Lewis Cass Ledyard and liny FISK.
directors Of the Metropolitan Trust Com
panv. called on me on December ii. 1903,
with Judge O'Brien and Paul Grout TO
ask II the Metropolitan Trust Company
would exceed its authority if IL MADE
three loans for the benefit Of the Union
Bank amounting to 100000
The Union Bank was 10 9"Ho'eo'
the Shetland Company $4,000 and the
Onslow- Moore Company $4,000. The
Shetland Company and the Onslow-
Moore Company were to Gse the money
they got to take up loans they had with
the Union Bank The Union Bank g
TO guarantee all the loans. Arrange
nents had been made 10 borrow the
money on collateral, but the Metropoli-
tan Trust Company would not n Ike the
loan until the Banking Department had
construed the law.
His Permission Not Required.
Il telephoned for my counsel, Jordan
J. Rollins, and he came over at once.
said that as the two corporations
not been organized to make the loans
and as the money was to be used to pay
over 20 the bank on debts the Metropo-
Titan Trust Company could make the
Ions. There is nothing in the banking
law TO prevent a financial institution
from borrowing money on its assets. 1t
doesn't have TO ask the superintendent
OF Banking for permission.
After the quarterly report Of the
Union Bank was made to the department.
i'm March, 1910. called for daily reports
of the banks condition. a report Of the
condition Of the bank was published in
the Brooklyn papers on April .. | saw
that report on April 4. 1t was signed
by Edward NJ. Grout and James T.
Ashley.
Il called for an immediate meeting OF
the directors Of the bank at the Offices
~ the State Banking Department. and
at q O'Clock all were there with the ex-
ception Of Mr.. Dunelen. We waited
for him until 7:30. and then / called on
the directors for a solution Of the diff
culties Of the bank. No solution was -
fered. and I ordered the bank closed the
next morning"
did the loans TO the Shetland Com
pany and the Onslow-Moor Company
show in that report?" Goldstein asked.
They were not shown" Mr.. Cheney
replied.
THE Union Bank had guaranto d
those loans. had It not?' Goldstein asked.
1T had" said Mr.. Cheney.
Would you say that that port was
false?" Goldstein asked
1T was false in that respect Mr..
Cheney replied.
AS a lawyer. Mr.. Cheney what would
Jop ithat?" Goldstein asked