15828. Fidelity Funding company (New York, NY)

Bank Information

Episode Type
Suspension → Closure
Bank Type
state
Start Date
December 8, 1908
Location
New York, New York (40.714, -74.006)

Metadata

Model
gpt-5-mini
Short Digest
1d6aa183

Response Measures

None

Description

The Fidelity Funding Company of New York was placed in receivership and treated as a bankrupt concern due to alleged massive fraud/mismanagement by its president P. J. Kieran. Newspaper accounts describe receivers named by state and federal courts and ongoing bankruptcy/receiver hearings. There is no mention of depositor runs; the event is a failure/receivership (permanent closure).

Events (2)
1. December 8, 1908 Receivership
Newspaper Excerpt
Receiver Gilroy declares ... the Fidelity Funding company ... in the hands of a receiver; receivers for the company have been named by both state and federal courts (Feb 1909). (articles Dec 8–Feb 5 describe receivership and federal/state hearings).
Source
newspapers
2. December 8, 1908 Suspension
Cause
Bank Specific Adverse Info
Cause Details
Alleged large-scale fraud, missing books and tangled finances under president P. J. Kieran leading to insolvency and appointment of a receiver; massive liabilities reported ($4.5M to $6.1M) and bankruptcy proceedings begun.
Newspaper Excerpt
the funding company is in the hands of a receiver
Source
newspapers

Newspaper Articles (10)
1. December 8, 1908 The Marion Daily Mirror Marion, OH
Article from The Marion Daily Mirror, December 8, 1908

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Article Text

# NUNS AND PRIESTS Continued from Page One. exceedingly tangled condition, is asserted by the receiver, Thomas F. Gikoy, jr. According to Receiver Gilroy, the company's liabilities will agregate not less than $4,500,000, with practically no assets. Its creditors include at least 50 churches, seminaries, colleges and many priests and nuns. These are located all over the country, from New England states to Oregon. Chief among the company's creditors is St. Mary's academy, of Nauvoo, Ill., which is involved for at least $500,000. "I cannot give even an approximate idea of the company's affairs at this time," said Receiver Gilroy, "as some of the most important books and papers are missing. I understand that President Kieran claimed them as his personal property. His lawyer, Bainbridge Colby, has promised to produce these books and papers." As explained by the receiver, most of the Fidelity Funding company's loans were to run for 20 years. In addition to these loans the company also issued life insurance against the lives of priests and nuns. A rate of interest ranging from 8 to 9 per cent was charged for both loan and insurance. The Fidelity Funding company, it seems, also sold its bonds to representatives of the Catholic church. These are secured, according to the receiver, by mortgages on property, but how much may be recovered from this source it is as yet impossible to say. In adidtion to the Fidelity Funding company, Kieran also conducted a number of subsidiary companies. These were the Columbia Construction company, Federal Construction company, McBride Studio company and the Western Illinois and Iowa Railroad company. All these, Receiver Gilroy declares were financed by funds from the Fidelity Funding company, though in no way allied, but are not asserted to be involved in the Fidelity Funding company's troubles. The authorized capital of the Fidelity Funding company was $5,000,000 and $2,500,000 surplus. Of this amont not more than about $100,000 was actually paid, the receiver states the buyers of the stockon being for the most part priests and nuns. Former Secretary of the Treasury Leslien M. Shaw is down on the company's books as having made a loan of $60,000 to Kieran. This is secured. Mr. Shaw also purchased $10,000 of the company's stock the books show. The present head of the company is Duncan H. Sill, and among its former directors were the Rev. Mr. Lanigan, vicar general of the Buffalo diocese, and Rev. Mr. Fletcher, pastor of the Baltimore cathedral. The receiver declares that he contemplates bringing suits agregating $500,000 against a number of banks and financial Institutions on the ground that heavy bonuses were charged for loans made to the Fidelity Funding company. The receiver also announced his intention to proceed against other banks, which he alleges loaned sums of money to Kieran on collateral which belonged to the Fidelity Funding company. Cleveland, O., Dec. 8. Statement made here Monday that Catholic churches in Cleveland would be involved in the failure of the Fidelity Funding company of New York were denied later by church officals. One church, St. Thomas Aquinas, borrowed $10,000 from a Pittsburg bank through President P. J. Kieran. The church's transactions were with the bank only. Washington, Dec. 8.-P. J. Kieran, former president of the Fidelity Funding company, when seen last night denied many of the statements made by Receiver Gilroy in regard to the affairs of the company. He said the company, it will be found, has a surplus of $400,000, the assets amounting to $3,990,000, and the liabilities to only $3,500,000.

2. December 10, 1908 Los Angeles Herald Los Angeles, CA
Article from Los Angeles Herald, December 10, 1908

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CARNEGIE COMPANY SAYS NOTES ARE WELL SECURED NEW YORK, Dec. 9.-In connection with suits brought today against makers of notes to P. J. Kieran, former president of the Fidelity Funding company, it was said by the Carnegie Trust company of this city that it holds $410,000 of the notes of various Catholic societies which were discounted by the Fidelity Funding company. These notes, the statement issued by the Carnegie Trust company says, are secured by $600,000 worth of collateral, and the trust company is awaiting the action of the receiver before attempting to recover. Thomas F. Gilroy, the receiver, has requested the Carnegie company to surrender some of its collateral on the ground that the value of the collateral exceeds the notes it holds by about $200,000, but the company declined.

3. December 10, 1908 Omaha Daily Bee Omaha, NE
Article from Omaha Daily Bee, December 10, 1908

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Article Text

MOVEMENTS OF OCEAN STEAMSHIPS. Port. Sailed. Arrived. California NEW YORK K. Wilhelm II. Mesaba NEW YORK Ryndam Moltke. Statendam NEW YORK Cretic NEW YORK Regina d'Italia. K. A. Victoria NEW YORK P. F. Wilhelm NEW YORK QUEENSTOWN Campania QUEENSTOWN Haverford QUEENSTOWN Ivernia GIBRALTAR Caronia PHILADELPHIA Merion LIBAU Korea MARSEILLES Madonna. SEARCH FOR KIERAN FAILS Detective Shadowing President of Funding Company Loses Track of Man in Philadelphia. NEW YORK, Dec. 9.-The search by the police for P. J. Kieran, president of the Fidelity Funding company of this city, who is charged with larceny and false pretense by a charitable institution of the Catholic church at Pittsburg, continued today. The funding company is in the hands of a receiver who is very anxious to have Kieran come to this city and straighten out its tangled finances. Kieran left Washington yesterday and was followed by a detective, who lost trace of him at North Philadelphia, where Kieran is said to have left the train. PITTSBURG, Dec. 9.-Four suits brought by eastern banks against the makers of notes. discounted by P. J. Kieran of the Fidelity Funding company of New York, have been entered in the federal court here. The amounts, including protest fees, will reach nearly $60,000.

4. December 11, 1908 The Birmingham Age-Herald Birmingham, AL
Article from The Birmingham Age-Herald, December 11, 1908

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KIERAN IS STILL MUCH WANTED New York, December 10.-Thomas F. Gilroy, Jr., receiver for the Fidelity Funding company, received no word today of the whereabouts of the former president of the company, P. J. Kieran, and Bainbridge Colby, counsel for Kieran, had nothing to say about his client's movements . Eight local banks and trust companies are involved in the wreck of the Fidelity Funding company, and in the financial difficulties of Kieran to the extent of a total of more than $1,250,000, according to a statement made today by a banker. who is thoroughly familiar with the company's business. All are amply secured and no eventual losses are looked for.

5. December 12, 1908 Waterbury Evening Democrat Waterbury, CT
Article from Waterbury Evening Democrat, December 12, 1908

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Article Text

PRESIDENT STILL MISSING Referee Gilroy Denies All Knowledge of Alleged Offer to Return and Explain $5,000,000 Failure on Condition of Immunity From Prosecution. Many Catholic Churches and Seminaries Are Represented at the Hearing, and Priests Tell of Transactions. New York, Dec. 12.-Federal Referee Peter B. Olney heard evidence to determine whether the affairs of the Fidelity Funding company, whose expresident, Patrick J. Kieran, is still missing, are to be straightened out by a federal or state court receiver. Many Catholic seminaries, colleges and other institutions were represented at the hearing, and priests were present to tell of their transactions and to learn something about the failure of the company, with liabilities of more than $5,000,000. It was reported that Kieran had agreed to return and explain the mystery over the whereabouts of the assets, provided he was given immunity from prosecution, and that collateral of the Fidelity Funding company worth $500,000 had been deposited with the Mutual Life Insurance company by George W. Young of the Windsor Trust company. State Receiver Thomas F. Gilroy, Jr., denied all knowledge of the alleged compromise offer from Kieran. He said he was still hunting the missing man and his private secretary, Mrs. Lorena W. Davis. President Charles A. Peabody of the Mutual Life declared the company did not hold any paper of the Fidelity company. Asked to explain his connection with the collateral deposit, as secretary for bis notes, Mr. Young of the Windsor Trust company said: "I never gave notes to that amount and never handled any of the securities of the Fidelity through my personal account. I know a syndicate was organized to buy the United States Mortgage and Trust company from the Mutual, but the plan fell through. "With another party I now hold 1,200 of the 20,000 shares. but they came to us for a consideration from George Cumming the originator of the syndicate idea. If Kieran operated with him I am not acquainted with the facts." One of the directors who tried to reorganize the company made this admission: "I held only one share when I was made a director. It was understood that I was to serve but three days. A number of us who were acquainted with Kieran were taken in because we were all under one roof and it would facilitate securing a quorum."

6. December 30, 1908 The Citizen Honesdale, PA
Article from The Citizen, December 30, 1908

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Article Text

Receiver Says Funding Co. Owes $6,174,805. TOTAL ASSETS OF $24,000. Federal Receiver Applied For by Representatives of Catholic Seminaries and Churches That Are Heavy Losers. New York. Dec. 29.-Referee Peter B. Olney held another hearing today on the application by representatives of Catholic colleges. seminaries and churches for a federal receiver for the Fidelity Funding company instead of Thomas F. Gilroy. the state receiver. The Fidelity Funding company. of which Patrick J. Keiran was the head, is alleged to have swindled various priests and nuns and Catholic institutions throughout the country. The creditors hold dishonored drafts on the $ company executed by the St. Mary's academy of Nauvoo, III., and indorsed by Keiran, and they want a federal receiver. Mr. Gilroy said that the total obligae tions of the defunct company. as they appeared in the books, were $6,174,805. including $1,713,218 in notes outstanding. of which the company was either the indorser or the maker. Mr. Gilroy said also that additional liabilities might develop later in the shape of possible claims of customers whose notes had been used by the company without authority. "What assets do the company's books show?" asked Frank Crocker. attorney for the petitioners. "I should say about $24,000." Frank J. Van Orten, a clerk employed by the Windsor Trust company. testified that the Fidelity Funding company owed the Windsor Trust company $290,000 through notes of third parties given to the Windsor and the Empire Trust company. aggregating about $700.000. Myron Brown. assistant secretary of the Empire Trust company, told of the transactions between his company [and the Keiran company. R Mr. Brown said that the Empire Trust company paid over to Keiran k for the Fidelity company about $500,e 000 for collateral notes. made out by a d third party to the Fidelity company. The Windsor Trust company, the witd ness said. was a participant in the transactions between the Empire and ir Fidelity companies to the amount of n about $143,000. e, Receiver Gilroy explained that the ocompany would take up notes and get e other notes for renewals: then. the re1ceiver said. the notes taken up would y be misused and the money for them e applied to personal use by Keiran. of It appeared from his testimony that a large number of trust companies S and other financial concerns in New e York had fallen victims to the funding m company's methods

7. February 2, 1909 The Barre Daily Times Barre, VT
Article from The Barre Daily Times, February 2, 1909

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KEIRAN ON THE STAND. He Tells of Business Methods of His Company. New York, Feb. 2.-Business methods followed by the Fidelity Funding company were described yesterday by Patrick Keiran, former president of the new bankrupt concern, at a hearing before Referee Peter B. Olney to determine whether the company is amenable to the federal bankruptcy law. Receivers for the company have been named by both state and federal courts. Mr. Keiran said that the company loaned money to Catholic churches and institutions, took mortgages on the property and also took as collateral life insurance policies on members of the congregation, assigned to the company. On being requested to give one actual transaction, Mr. Keiran told, of the application of St. Joseph's congregation of Milwaukee for a loan of $150,000. "We gave them immediately $75,000, for which we took their notes," he testified. "These notes we immediately sold to the Wisconsin National Bank of Milwaukee. Later we took a mortgage on the property, called in the notes and issued our own bonds on the mortgage which we deposited with the Western Trust and Savings Bank of Chicago as trustee." Interest was charged at from 4 to 4½ per cent. on the mortgages, the witness said, but at 8 to 8½ per cent. on the notes-this latter to cover the cost of the first premiums on the life insurance policies. These policies are always insisted upon, he declared. Asked as to the company's working capital, Mr. Keiran said that when he went with the company in 1905 its original working capital of $20,000 had been lost in the business. "Inside of a year, however," the witness continued, "we had $60,000 working capital." At the conclusion of the examination of Keiran, the case was closed. Referee Olney ordered that briefs be submitted oy Wednesday.

8. February 4, 1909 The Birmingham Age-Herald Birmingham, AL
Article from The Birmingham Age-Herald, February 4, 1909

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Article Text

Examining Kieran's Books. New York, February 3.-In order to give Federal Receiver Morris of the bankrupt Fidelity Funding company time to examine the personal account books of P. J. Kieran, the company's former president, before proceeding with his inquiry into the company's affairs, the hearing in the matter before Federal Commissioner Alexander, when called today was immediately adjourned until Friday, February 5

9. February 5, 1909 The Barre Daily Times Barre, VT
Article from The Barre Daily Times, February 5, 1909

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DENIES USING COMPANY FUNDS. Patrick J. Keiran at a Hearing Before Receiver, New York, Feb. 5.-Denial that he had ever in any way used the funds of the Fidelity Funding company to further his personal interests was made by Patrick J. Keiran, former president of the bankrupt concern, on the witness stand at a hearing before State Receiver Gilroy yesterday. Mr. Keiran, under examination by the receiver, was questioned with regard to his personal relations with the Fidelity Funding company. Asked if he ever had bought any stocks or other securities for his personal account for which he used the funds of the Fidelity company, Mr. Keiran replied: "I used no funds of the Fidelity to pay for any stock, or any interest what. ever in any trust company, bank, insurance company, or any kind fo a concern, nor did I ever borrow any money or securities for such purpose from the company. The shoe was on the other foot; I was continually lending the company stock, money and credit, to further the company's interests."

10. February 5, 1909 The Bemidji Daily Pioneer Bemidji, MN
Article from The Bemidji Daily Pioneer, February 5, 1909

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QUESTIONED BY RECEIVER Kieran Denies Using Company Funds for Personal Ends. New York, Feb. 5.-Denial that he had ever in any way used the funds of the Fidelity Funding company to further his personal interests was made by Patrick J. Kieran, former president of the bankrupt concern, on the witness stand at a hearing before State Receiver Gilroy. Mr. Kieran, under examination by the receiver, was questioned with regard to his personal relations with the Fidelity Funding company. Asked if he ever had bought any stocks or other securities for his personal account for which he used the funds of the Fidelity. company Mr. Kieran replied: "I used no funds of the Fidelity to pay for any stock or interest whatever in any trust company, bank, insurance company or any kind of concern, nor did I ever borrow any money or securities for such purposes from the company. The shoe was on the other foot; I was continually lending the company stock, money and credit to further the company's interests."