The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-05-20
HUGE FRAUD is
LAID TO DEFUNCT
BANK OFFICERS
$1,750,000 Loss to Patrons
of Washington Trust Is
Held Criminal Act.
(Confinuad Erov,, poca nnoN
Continued From Page One)

the directors knew of the acts
purged' Morris?" Miller asked.
No, but in my opinion I thought
that there was fine point to be
decided as to whether the time of
giving notice Of default had not ex-
pired with the knowledge of the
directors, even before the bank went
into receivership."
Morris Needed the Money
Gender then corroborated
Downeys testimony regarding an
admission by Morris that he had
released mortgages totaling $4,000.
I'VE (Conder and Downey) asked
him why he did it, and he replied,
1 had to, because I needed the
money!" Gender said.
Il told him that he must make
restitution" Gender continued. Il
thought it was better to have a
bird in the hand. I knew he had
his home, which was valued at
SIPS and, at our suggestion, he
decided it to the trust"
At conclusion of Codner's teSti-
mony, a general discussion followed
regarding the possibility of tollect-'
ing on the bonds.
Cox announced at the conclusion
of the hearing that he would order
suit Immediately upon receipt of
information from the attorneys re-
garding legal points.
Losses Pass Million
In a summary handed to Cox
during the hearing the auditors list
ed acts Of the officers and directors,
with the note that losses specifically
accounted for totaled 81
Other losses mot specifically as
signed" amount to $3.50, 83116, bring
ing the total loss to 81 Isl ,O9241.
Among the charges are:
Permitting president to borrow
for himself and corporations in
which he was interested and to give
worthless paper, $48,565.02.
Permitting the president to sell
worthless paper to the bank, $154,-
377.33
Permitting the president to sell
worthless paper to the bank, $47,-
O72.42.
Relative BOrrOws Money
Permitting loans to corporations
in which directors we're interested
and accepting worthless paper, $685.
1851.
Permitting relatives of the presi-
dent (Irvin Morris, a brother) to
borrow for himself and for a corpar-
ton in which he was interested and
to give worthless paper, '$45, $40. rs.
authorizing dividends to be paid
contrary to law, $48,00."
Other acts for which specific loss
eS were not assigned include:
Carrying bad notes at face value.
omission of liabilities from the
records.
Permitting officers to pledge as
sets twice as collateral"
Reveals Large Payment
DOWney also was questioned
about specific act during his term
of receiverShip, in which payment
Of large sum Of money had been
made to the Fletcher American
National bank to release collateral
held on a loan.
In his final report, submitted re-
Gently, Downey explained that the
payment was made because it was
his opinion that the collateral was
of greater value than the amount
Of the loan.
He admitted from the stand that
no court authority had been given
for the payment.
DoWney also declared that Scott
Brewer, former president of the
State Savings and Trust Company,
owes a personal note for $4,000 to
the Washington bank. Brewer later
was connected with the State Saw
ings and Trust Company, also de-
funct, and now is associated with
a Louisville bank.