Opinion ID: 1473033
Heading Depth: 1
Heading Rank: 3

Heading: Outline of the Alleged Scheme to Defraud.

Text: The main parts of the scheme as set out in count 1 of the indictment were: That William H. Gold should be president of the Southern Minnesota Bank; Glenn W. Gold, Donald W. Gold, and William G. M. Smith, vice presidents; that the same parties and Guy Huston and John E. Huston should be directors; that the Guy Huston Company should be the fiscal agency of the bank for the sale of its stock and bonds, and for sending out letters quoting false and fictitious prices on the securities. That there should be formed a corporation to be known as the Farmers Fund, Incorporated, for the pretended purpose of dealing in real estate and personal property, but in fact for taking the title to lands which had been acquired by the bank, thereby causing the assets of the bank falsely to appear to be in a liquid condition and the bank to appear to be in a better condition than it in fact was. That the stock of the bank should be increased from 18,000 shares to 30,000 shares. That false representations should be made to the Farm Loan Board that the business of the bank required the increase of the stock as a basis for the further issuance and sale of bonds as provided by the Farm Loan Act. That the Guy Huston Company should arrange with various brokerage firms to furnish them with the new stock of the bank, to be sold to the persons to be defrauded, at a price of not less than $158.50 per share, which said price per share was largely in excess of the yield value of said stock, and known by defendants so to be; that this was done for the purpose of appropriating to the use of defendants and divers other parties a large share of the proceeds of the sales. That the defendants should make representations to the persons to be defrauded in the following particulars, all of which were false to the knowledge of the defendants: (1) That the bank was earning large sums of money; that the bank would pay large dividends out of profits; that the purchase of the stock of the bank would be a safe and profitable investment; that a dividend of 10 per cent. per annum would be paid; that the stock would greatly increase in value; (2) That the investments of the bank would be restricted to banking property, government and Land Bank bonds, long term first mortgages on agricultural land not exceeding 50 per cent. of the land value and 20 per cent. of the improvements, and subject to other restrictions as provided by the Farm Loan Act.