Douglas daily dispatch., 1927-07-21
BANK SNINDLE
is REVEALED
BY INDICTMENT

PORTLAND, Ore, July 20 R)-
Emery Olmstead, former president OF
the defunct Northwestern National
Bank of Portland, was secretly in
dicted today by the federal grand
jury on charge of misapplication OF
banks funds. The amount involved
in the case, according to the lndict-
ment. is S796,O00. Oimstead was ar
rested and held on 100000 bond.
A conviction on the charges car
ries federal penitentiary sentence
of five years, or a fine OF $4,000 or
both.
1t is charged by the government
that Olmstead, in his capacity OF
president of the institution, aided
and abetted Wheeler in the "kiting"
Of checks between Pennsylvania
bank in which Wheeler. is said to
have an account, and the Northwest
ern National. This alleged "kiting'
lof checks is said to have reached
$11 100000, it was reported tonight.
Wheeler, the government charges,
as head of the Portland Telegram.
the Wheeler Olmstead company, and
-
was constantly in need OF funds with
which to carry on the losing con-
Germs two Of which went into bank
ruptcy within month after the
closing of the Northwestern National
Bank
He would write checks, the gov
ernment charges, on the Pennsylvania
bank in which he had an account.
The checks, the government goes on
to assert, would be far greater than
the amount deposited in the eastern
banking house.
Olmstead says the government,
would authorize the issuance of GER
titled checks during the period the
check was in transit to Pennsylvania.
Wheeler, according to indictment,
would have the money posted 10 his
account.
When the check on the Pennsyl-
vallia bank would return, the gov
ernment says, another larger check
would be written by Wheeler, and
rushed back to the Pennsylvania
bank
In this fashion, the government
asserts, steady stream of reputedly
valueless checks would be floating"
back and forth between the North
western bank and the Pennsylvania
bank
The reputed activities of Wheeler
and OlmStead extended over virtually
one year, ending with the removal of
Olmstead from the presidency of the
bank on March 1, the government
alleges.
Then the sum total of the checks
was discovered, says the government.
It aggregated $11,O0O,000 Out OF
this figure was realized, says the in
dictnlent, $79600O
Bank examiners Immediately start
ed work, checking the records of the
bank. They began their report to
the grand jury last Wednesday and
it continued until this morning.
Officers OF the bank were also
called upon to testify before the
grand jury. None Of them, the dis
trlct attorneys office stated, had any
knowledge Of the case.
The affairs of the Northwestern
National Bank on March last were
taken over by the First National ana
United States National, Banks and
officials of the Portland Clearing
House association, following heavy
runs on the institution which were
credited to rumors that banks con-
dltions were unsouId.
A secret Indictment had been re-
turned against TIE Two men earlier
in the day. Olrnstead was arrested
at his home here and Wheeler was
arrested at his office.
When brought to the narshals Of
flee both Wheeler and Olmstead said
they had nothing to say at this
time. Olnstead, however, said later
that "tllis will give me an oppor-
tunity to vindicate myself and to
explain many things relative to the
operation Of the bank which should
be known
The maximum penalty provided by
federal statute upon conviction or
charges OF violation Of the national
banking act is five years i'll fed
eral penitentiary and fine of $4,000
or both. There is no minimum
penalty.