The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1921-02-16
TRANSFORMED
OUT OF STATE
BANK; CHARGED
Hearing Before House 1nvesti-
CATION Committee Takes Up
Leith Matter
QUEER DEALS GONE INTO
Lofthus, Cathro, Brinton Are
on Witness Stand-$11, 900
Check Shown
QUEER DEALS GONE INTO

on witness Stand-Sll ,UUO
Check Shown
Evidence designed to show that the
Peoples State Bank of Leith, now
closed, obtained a large part of its
capital stock through the Bank of
North Dakota through the medium of
the Scandinavian-Amer bank at
Fargo, that draft for $4,000 o. the
Bank Of North Dakota had been used
at the time Of the last regular ex
animation Of the Scandinavian-Amer-
ican bank Of Fargo when the bank
which drew the draft had little money
in the state bank, and further testi-
mony by J. w. Brinton on a check
amounting to approximately $11 900
which he said he drew on bank in
which he had practically no>funds 10
cover up a shortage in the Scandi-
navian-American bank, with the
knowledge and approval Of O. T.. Lof-
thus and William Lemke, was brought
out at the hearing of the house in
vestigation committee today.
The witnesses for the session in the
courthouse were O. E. Lofthus, state
examiner; F. w. Cathro, director-gen-
eral OF the Bank of North Dakota,
and J. w. BrintOn, who had returned
from St. Paul.
Attorney John Sullivan inquired in.
to the Peoples State Bank at Leith, in
opening the hearing. He said that
I'VE want to show that the Bank Of
North Dakota not only furnished a
substantial portion of the deposits and
bills payable, but we also have sus
picion that the Bank Of North Da-
kota furnished large part of the cap
ita stoc>z in this bank" The prin-
opal incorporation, he said, was J. l.
Cahill, former state senator, now
member of the Board of Administra-
ton and candidate for the nomination
for secretary of state with Nonparti-
san league endorsement.
The transaction at the time of the
last examination of the Scandinavian.
American bank was to the effect that
the cashier of a bank at Prosper con-
trolled by the. Scandinavian-Ameri
bank was forced to make draft for
$22, 900 on the Bank of North Dakota,
when the bank had little money in the
bank, and place it in the Scandinavian
American bank at Fargo in exchange
for $4,000 of notes until the examina-
ton was completed, Dec. 20, 1920
Check is Produced.
Brinton produced the much discuss
ed "$11 100 check which he brought
back from st. Paul. The exact amount
was for $1O,4l91O, signed by J. w.
Brinton, general manager on a Minnie
apolis bank in which he had little
money. The check was placed in the
Scandinavian-American bank at the
time of the LANCER supreme court
case. 1t was made payable to o. E.
Lofthus Brinton said he had talked
with Lemke about the obligation, that
he thought the suggestion that he give
the check was made by Lofthus IN
the presence Of Lofthus and Mr..
Thatcher, and they were to hold the
check until he could make it good.
During F. w. Cathro's examination,
he admitted that $500 had been paid
to Jack Hastings, former financial
manager of the Nonpartisan league,
after Hastings had agreed to sell
bonds on commission. Cathro had
been charged with embezzlement IN
connection with this and denied that
it was anything but legitimate.
Tracing Stock Deal.
The records produced by Sullivan
showed that ). l. Cahill had borrowed
about S416 from the Peoples State
bank. Records also showed collateral
nut in the Bank OF North Dakota by
the Scandiaavian-American bank IN
cluded three certificates of deposit ls-
sued by the Peoples State bank OF
Leith to ]. /. Cahill, one Emsch ana
Adolph Zeller, totalling $14,539.Sl,
which, Mr.. Sullivan pointed out, wouia
indicate the Peoples State bank Is
sued these certificates to these three
men, who sent them to the Scandi1a.
nian-American bank, which turned
them into the Bank of ONrth Dakota
as collateral.
"Does it seem reasonable" asked
Mr.. Sullivan, that a man would Dor
row s41t at 10 per cent interest from
a hank from which he had certificate
of deposit for $4,S46.61?" referring to
theCahill loan and certificate.
1T isn't likely replied the exam
iner. .,. e. :.
Records also indicated that 50 a
share was paid in organization work
on the Leith bank and that Jack Hast
ings was a stockholser, but no ln1or-
nation could be given by the Witness
he said. as to who got the 20 snare
Eve find $4,000 of paper OF capltai i,
stock notes in the Leith bank ltse1t, T.
said Mr.. Sullivan. 1--WE lind sl4'Vvo
< odd in the Bank of North Dakota IN
other paper. 1t is a reasonapIe con
clusion then, is it not, that the ba1h
of North Dakota furnished IN 1act'
$4,000 used as capital stock III
the Leith bank?'
Qualities Statement.
eyes" replied Mr.. Lofthus. lneh
he qualified the statement by saying
he understood the paper in the BANK
of North Dakota was two to one Sc
curity, and in that event it would oe
$1,000 furnished by the Bank OF North
Dakota. ., ,,,-
=, The capital stock of the Lelth oahh
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