The Bridgeport times and evening farmer., 1919-10-08
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- ton of the Bank of North Dakota by State Auditor Karl R. Kositzky, to 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, 2,000 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 waiving of preliminary ex- aminations by H. J. Hagen, President, and F. R. 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 deceiving a Deputy Bank Examiner as to the actual condition of the Institution. They were placed under $5,0O0 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 sible political effect of the closing of the bank were outlined today.
 The bank will go to the Supreme Court on 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 re- ceiver. This will make it necessary for the Attorney-Genera1 and Secre- tary of State, who are majority mem bers of the Banking Board, to jus tify their official actions in court, provided the Court grants the applf- 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 permanent receiver. This is the procedure required by law in the liquidation of an insolvent bank.
 When Auditor Kositzky, in compli- ance with the Attorney Generals de- mand, went into the Bank of North Dakota to make an examination he l was resisted by J. R. Waters, man ager of the bank, and former State Bank Examiner. Mir. 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.
 '.It is essential for the interests of the taxpayers of North Dakota that there be an immediate examination n torney General Langer advised Audi tor Kositzky in his letter of com plaint.
 'eUnder the law 1t is your duty to make an examination. I have infor- nation that the Bank of North Da-
 kota has become mixed up with the Scandinavian American Bank of Far
 go now in the hands of re- ceiver.
 "As Attorney General I make for
 nal demand that you, as State Audi tor, intrusted with the safeguardtng of the taxpayers money, proceed Inn mediately to ascertain to what ille- gal purposes, if anys those now in control of the Bank of North Dakota have diverted the money intrusted to their care.'
 The Bank of North Dakota Is an Institution founded by the Nonpar- tisan League State Administration. IL Is under the management 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 l examiners would enter the bank, thus permitting the bank, 1t is said, to prepare it's records to disguise it's
 approximately S16,000,0O0, as the funds he deposited in the State Bank
 The bank redeposits with private banks much of it's funds. According to Manager Waters, the State Bank had about $1S3,000 on deposit with the Fargo Bank when it was closed. The Nonpartisan League officials and their newspapers continue to as- sert that the State officers have closed the Fargo bank for political purposes only. Governor Frazier has | issued a statement to the effect that l he will do all in his power to stop the | Banking Board officers from continu- l ing their course, and the leading | Nonpartisan League newspaper in
 Fargo asserts that "the moose is rap idly tightening around the Attor- | ney Generals official neck