The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1919-05-31
Governor To Conduct an InveS.
tigatiOn Immediately.
Also VIII Look Into Operations
Before the Closing.
"STATION FOR CROOKEDNESS"
This Is Way Governor Terms
Promotion of Bank.
Wilson Says Cashier Is Trying
To Raise Money.

Kansas is to have a genuine probe
of the Kansas State bank failure at
Salina. Governor Allen expects to use
the machinery and power of his Of
flee to go to the bottom of the case
and the governor may direct such in
vest.gation as he deems fit. Nor does
the probe seem destined to stop with
the mere failure. A look is to be had
into operations while the bank was
known to be in a failing condition ana
not least-tne organization of a sue
cessor bank.
When Governor Allen returned to
Topeka from his eastern trip. he as
serted that he would give Immediate
attention to the Salna case. Some OF
the reports as to the operation of tho
bank had been sent to the governor
while he was in New York. 1t is with
in the province of the governor TO di-
rect such investigation as he may
deem advisable by the attorney gem
eral. The state bank commissioner is
appointed by the governor and such
records and information as are in his
possession may be placed at disposal
of investigators.
Richard j. Hopkins, attorney gem
eral. is now in Salina investigating the
case. Hopkins will probably return to
Topeka, Sunday. 1t is the intention OF
Governor Alien to confer with the at
torney general as soon as possible.
Until learn something of the true
situation out there. 1 do not know
just what course will be best to fol-
I low" Governor Allen said today. III
prosecutions are advisable the persons
who have been guilty of wrong doing
will be prosecuted. Just now. tho.
do not know exactly who these parties
are and do not know the details of the
mismanagement of the bank and its
affairs 1 expect to direct a thoro in
vestigation of the entire matter and
persons who have violated the law
will be prosecuted
! John Hunt. former assistant attor-
ney general. is in charge of the affairs
I of the defunct bank and is looking
after the legal problems surrounding
the cleaning up of more than 100000
worth of bad paper Attorney Gen
eral Hopkins will take such steps in
1.-The case as the governor may direct.
He will also report to Governor Allen
concerning conditions when he re-
turns from Salina.
Bank Department Knew?
That the bank was known by state
! departments to be in a shaky condi-
ton for many weeks before its doors
were closed is one of the rumors sur
J rounding the failure. Several days
ago Walter E. Wilson. state bank
commissioner. said that because of
! former trouble his department was
/ unusually diligent in watching for bad
paper.
/ The floating of bad paper began
about a month after Lefferdink
j bought into the bank in December and
! became its cashier Wilson stated.
/ According to the bank commissioner
| one of the first acts of Lefferdink was
to issue $125,000 worth of certificates
of deposit to other banks. using the
/ Kansas State banks credit. When
money was secured on the certificates
{ of deposit, Lefferdink and his asso-
ciates kept the funds. They kept the
1 records straight" Wilson explained.
by depositing their own notes in l!su
of the cash"
I When the s125, 900 transaction by
Lefferdink was discovered by the
state banking department. the cer-
tificates of deposit were protested.
But the bank continued to do busi-
ness.
! Money Used for Real Estate.
| I'VE had cleaned up all except $T6.-
/ 600 worth Of the old banks paper"
Wilson explained, land wanted TO
/ clean up this extra S125,0O0 thru
! Broker and his associates without
closing the bank and drawing on the
/ depositors' guaranty fund for tho
/ shortage. The money had been used
by Lefferdink and his friends in a
real estate deal in Texas and New
Z Mexico"
] 1t was while Commissioner Wilson
was waiting for Lefferdink and his
/ friends to make good their S125,OO0
/ transaction that Lefferdink is alleged
to have issued $150,000 worth of
! ninety-day sight drafts on his bank.
: Neither item has been cleaned up.
: Girls in Transaction.
Frenzied financial transa ctions seem
/ to have followed the early specula-
| tions of the bank cashier and his as
. sociates. One record gained by state
! departments show that a woman in the
| employ of Lefferdink in Salina issued
{ in her own name a $50. 900 certificate
| of deposit to a girl in the employ of
Felix Broeker in Kansas City. The
! flights in financial attitudes was con-
/ tinued by stenographers and clerks
and each month the bank accumulated
more bad paper.
Threatened with arrest, Lefferdink
! and Broker are said to have made
several trips in order to float deals
which would clean up the banks short
age. Altho a warrant had been issued