Republican farmer., 1919-10-10
EXAMINE ONE
 MORE BANK IN
 NORTH DAKOTA
Closing of Bank in Fargo Leads to Inquiry Into Dealings of Associate
 in Bismarck.

Fargo, N. D., Oct. S.-An examina- tion of the Bank of North Dakota by State Auditor Karl R. Kositzky, 10 determine what moneys, if any. have been diverted to illegal purposes" was commenced this afternoon at Bismarck, the State capital, at the in stance of the Attorney General Will liam Langer.
 The examination grows out of the closing at Fargo of the Scandinavian American Bank. which made loans amounting to $432, ,OO0 to the Nation al Non-Partisan League and three subsidiary corporations, and which have been termed by the State Bank ing Board to be excessive and with out sound security.
 Other developments during the day in connection with the bank closing were the waNing of preliminary ex- aminations by H. J. Hagen, President, and F. P. Sherman, cashier. They were held for trial before the Case County District Court in Novem- Der.
 Each officer is accused of falsifying the bank records for the purpose Of dece:ving a Deputy Bank Examiner as to the actual condition of the Institution. They were placed under $5 900 bonds each.
 Defensive measures taken by Di- rectors of the bank and officers of the Nonpartisan League who have mutual interests because of the pos sibIe political effect of the closing of the bank were outlined today.
 The bank will go to the Supreme Court on a writ of certiorari, and would require members of the Bank ing Board to certify to the Court the record on which they have acted in closing the bank and ordering a re- ceiver This will make it necessary for the Attorney General and Secre- tary of State, who are majority mem bers of the Bsnking Board, to jus tify their official actions in court, provided the Court grants the appli cation. which will probably be filed today. Another court procedure yes terday was that of the Attorney General, who applied in the Cass County District Court for the ap- pointment of a perma nent receiver. This is the procedure required by law in the liquidation of an insolvent bank
 When Auditor Kosttzky, in compli- ance with the Attorney Generals de- mand, went into the Bank of North Dakota to make an examination he was resisted by J. R. Waters, man. ager of the bank, and former State Bank Examiner. MT. Waters returned to the bank about an hour after the State Auditor and four accountants had taken possession, and there was a hot exchange of words.
 Kositzky is one of the three Non partisan League state officials who re- gently declared themselves opposed to the league leaders.
 Tt is essential for the interests of the taxpayers of North Dakota that there be an immediate examination of the Bank of North Dakota" At torney General Langer advised Audi tor Kositzky in his letter of com plaint.
 ''Under the law it is your duty to make an examination. I have infor nation that the Bank of North Da- lota has become mixed up with the Scandinavian American Bank Of Far go now ill the hands of a re- ceiver.
 "As Attorney General I make for nal demand that you, as State Audi tor, intrusted with the safeguarding of the taxpayers money, proceed inn mediately to ascertain to what ille gal purposes, if any. those now in cOnlrOl Ol tfle bdnh oi -Noi LII bdkOla have diverted the money intrusted to their care.''
 The Bank of North Dakota is an institution founded by the Nonpar tisan League State Administration. T. is under the nlaa cement of MT. Wa ters, former Bank Examiner, who | was charged by the State Banking Board with having given the Scan | dinavian American Bank of Fargo | advance information as to the time examiners would enter the bank, thus | permitting the bank, it is said, to prepare it's records to disguise it's | actual condition. It has control of | approximately s16,o0o.ooo, as the hank law requires that all public