The Nonpartisan Leader Newspaper, October 27, 1919, Page 4

$10,000 Gone From Bank——Who Got Tt Securltles of Wrecked Bank Vanish Into Thin Air While Farmers’ Enemies Are in Charge—Who Is Responsible? BY STAFF CORRESPONDENT HIS is a “mystery story.” It is a record of cold, hard facts, taken from court records and official documents. But it is as remarkable a case as ever Sherlock Holmes was called up- on to solve. Search through the volumes of mystery novels and there is not to be found a more bafiling set of circumstances. Who got the missing $10,000? Who was responsible for the loss? Read this account of the facts in the Scandina- vian-American case. Then, Mr. Reader and Mrs. Reader, see what YOU think about it. See 1£ YOU can answer these questions. On the morning of September 27, 1919, a deputy bank examiner named P. E. Halldorson suddenly appeared at the Scandinavian-American bank at Fargo, N. D. Halldorson had been sent to Fargo at the instance of Attorney General William Lang- er and Secretary of State Thomas Hall, both of whom were members of the North Dakota state banking board. The North Dakota banking board shares with the state bank examiner supervisory powers over state banks, trust companies, etc. It also has authority to grant or refuse licenses to companies desiring to sell stock in North Dakota. A short time before Halldorson appeared at Far- go a-company owning land in Florida, in which it proposed to grow sisal, to be used in.making binder twine, had applied for permission to sell its stock. in North Dakota. At the next meeting of the banking board Hall and Langer proposed that State Bank Examiner O. E. Lofthus be sent to Florida to investigate this company. Governor Frazier, the third member of the banking board, agreed to this, and Lofthus started his trip. Langer. then announced that a stockholder in a savings and loan company at Fargo had complained that he was being defrauded out of several thou- sand dollars in securities, and suggested that Halldorson, Lofthus’ deputy, be sent to look into this matter while Lofthus was out of the state. It was also suggested that some other Fargo banks might be mixed up in the deal, so a resolution was passed author- izing Halldorson to look into other banks in this connection at the same time. Then the meeting of the state banking board was adjourned. DID HALLDORSON EVER GO TO LOAN COMPANY? Halldorson went to Far- go. Accounts differ as to whether he ever went to the office of the savings and loan company at all; at any rate the stockhold- er who claims to have been defrauded has never re- ceived any satisfaction on this score. But Halldor- son did appear in the Scandinavian - American bank the morning of Sep- tember 27 and started to check its securities. The Scandinavian-American bank, known as the farmers’ : bank of Fargo, had made - large loans on farmers’ notes, with - post-dated Nonpartisan league checks as collateral. It had also made many other loans to individuals in no way ' connected with the League. Attorney General Langer and Secretary of State Hall had for months past been attacking the Nonpartisan league, using all conceivable tactics. The course followed by them in the Scandinavian-American bank case makes it clear that the sending of Lofthus out of the state and the sending of Halldorson to Fargo under the guise of investigating a savings and loan com- pany were only a part of -a general scheme to get temporary control of the Scandinavian-American, with what results will be seen later. Halldorson, in starting to make his examination, called upon Cashier P. R. Sherman of the bank to make the check with him. There was nearly $2,500,000 worth of collateral securities in the bank’s vaults. Loans outstanding were a little more than $1,000,000. Among the first securities checked: over by Hall- dorson and Sherman were 85 first mortgage bonds, - in denominations of $500 each, or $42,5600 in all, collateral on a line of credit known as the “Hag— erty loans”—loans made to private financxers in which the Nonpartisan league was in no degree interested. Halldorson counted the bonds and ac- knowledged their presence in his report, stating in this connection: “ % * %= the bank holds $42,000 in first- class mortgage bonds given by the Great West- ern Livestock company, which, by the way, is a signer on part of the notes constituting this line, and the original issue of which, com- prising $95,000 worth of bonds, is made against 5,000 acres of Michigan timber land.” 3 Halldorson checked -other securities. Then he made his report. In spite of the fact that the col- lateral on hand -amounted to between two and two ANOTHER HAT IN THE R\ING' —Drawn expressly for the Leader by W. C. Morris. Back in 1912, when the presidential situation‘ was far from satisfactory, Colonel Theodore Roosevelt announced that his “hat was in the ring.” Teddy sombrero, not.the tall silk hat of the Wall street favontes, but the plain, sun- bleached straw hat of the farmer, appeared in the political ring in North Dakota. And lt’s there still, and it’s there in other states, and there to stay. \ gide of it, although Morris doesn’t show lelere, is the cap of the worker. [ Four years later another hat, not the And right along- and one-half times the amount of loans, Halldorson recommended that the bank be closed. A hastily called meeting of the state banking board at Bis- marck ordered the closing and named Halldorson as temporary receiver, on the ground that Lofthus, who was required by law to take charge of any bank presumed to be insolvent, was out of the state at the time. Governor Frazier voted “no” but he was in the minority and the bank was closed October 2. LANGER’S AIDE AND FRIEND HAS FREE ACCESS TO BANK Under the temporary receivership Halldorson apparently acted as merely a straw man. He was supposed to have put up a bond of $100,000 with the Fidelity & Casualty company of New York City, but no record of the bond could be found in' Fargo. Assistant Attorney General Albert E. - Sheets Jr., Langer’s deputy, and his friend, John Pollock of the law firm of Pollock & Pollock, neith- er under bond to protect the bank’s property, rang- ed undisturbed through the files and records of the bank. Unmolested by the temporary receiver they abstracted whatever they chose, and took it to Pollock & Pollock’s office or sent it out of the city. The vault doors remained open, with nearly $2,600,000 worth of securities open’to anybod? within the bank’s doors. An affidavit executed by Cashier Sherman and by N. J. Brevig, G. O. Bjore, F. C. Heaton and Jane Nystrom, other employes of the bank, sets forth that Pollock and: Sheets “went _ into the vaults in which securities were\kept -and stayed there several hours at a time and removed documents and ' took them out of the bank without giving any receipt to Mr. Halldorson for the same and that it was im- possible for Mr. Halldor- son to know. what they . were doing and what they were removing from the bank;” also, that “vaults were left open and acces- sible by all of the em- ployes as well as to said Sheets and Pollock.” Meanwhlle the directors and stockholfiers of the bank were not idle. They kept the tele- graph wires to Florida hot and finally located Bank Ex- aminer Lofthus, who had been sent on-his wild-goose chase, and told him what had hap- pened. Lofthus returned and applied to the supreme court to be put in charge of the closed bank. The supreme court granted him permission, as under the state law the . bank examiner and not the banking board has authority to take charge of any bank sup- posed to be insolvent, the ex- cuse on which Langer and Hall had ordered the Seandi- navian-American closed. _ Lofthus’ first action on Oc- tober 8, in assuming charge of the bank, was to serve notice on Langer, Hall, Halldorson, Sheets and Pollock & Pollock that they would be held re- sponsible for all property re- moved from the bank. Langer rushed to the supreme court, seeking an order to permit him to retain the property in his possession. This' permission was refused. 7 Pollock & Pollock started to return papers that they had taken from the bank. These were principally records and correspondence files. Still Langer; in the face of . - the ruling of.. the supreme court, delayed the return of £ (Contmued on: 'page 12)