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Mismanagement Charged By Bank's Stockholders
Charging that the closed Franklin Savings and Trust Company failed because of "gross mismanagement and breach of trust," committee of stockholders of the bank issued statement to stockholders setting forth evidence of the alleged mismanagement. The group, headed by John D. Houston, who precipitated the city scandal last spring, plans to form "protective committee' to seek restitution of losses in the bank. The committee's said "The interested as or depositors, at their own time and expense, have made some into the condition of the Franklin Savings and Trust They believe the failure of the bank due to gross and breach of trust on the part of the officers and directors. While the effigy of Benjamin Franklin adorned the bank's stationery, and directors apparently deserted the probity Poor Richard for the methods of group of children playing with tin money would have shown infinitely more discretion. "There is evidence that some of the directors withdrew substantial sums from the bank few days before It closed. and there is no evidence that they any protest against the bank's acceptance of the funds of trusting depositors when they crash imminent. Some of the directors are substantial from the bank and the loans not been "The largest are in with dealings with: (1) M. Parrish, Inc. (now in receivhands). Bardolph is president, and Friedman, treasurer; (2) H. Kellerman (one item this indebtedness to the Franklin is represented by second mortgage in the sum of $100,000) (3) Herman Friedman, on demand notes. these three claims is approximately $499,000. "At the time of closing, the bank carried as assets one item of 'cash collections' in the amount of $66,000 and one of 'country collections' totalling $53,000. These are made up. for the most part, of checks that the bank paid when the makers of the checks no on deposit, or drafts and returned unpaid. In one an overdraft of $10,000 was adjusted by taking check on the Franklin for the same when the drawer had no funds on deposit with which were not charged back against the accounts of the of the paper, but carried as cash items, and counted as cash. They simply overdrafts and unsecured. "While there are rumors that persons connected with various "rackets" had dealings with the Franklin, the only evidence 80 far is that relating to the "numbers" racket as by the "investment" bankoperated and otherwise, mostly of the New York city variety. The investment account of the Franklin shows securities at cost of $387,148 and these apparently have of something better than 25 cents on the dollar. "As illustrative of the securities the bank's show: M Government of Peru 7s purchased at of $26,000. "15 M Mortgage Bank of Jugoslavia purchased at cost of $13,360. "10 M Department of Cundinamarco 61/28 purchased at cost of $9,500. "10 M City of Brisbane 58 purchased at cost of $9,425. "20 M Florida L. 5s purchased at cost of $19,450. M Keystone Athletic Club 68 purchased cost of $4,950. M Ellis Coal Company purchased at cost of $35,000. "350 shares Ellis Coal Company common purchased at cost of $28,864. "The bank owned United States Government securities to the extent of $450. "The undersigned believe that the official of the state department of banking in possession of the Franklin and Trust Company, George F. Jr., is thorand If he has the co-operation of every right stockholder and dethe of liquidation can be and the expense reduced. The of this comis to inquire whether you are assist in the formation of permanent committee of stockholders, to the end of that restitution may be sought and punishment meted out to those guilty of illegal banking practices. "John D. Houston, "Geo. R. McAleenan, The printed statement of the bank. dated June 30, 1931, showed the following officers: Charles Bardolph, president: C. Mills, vice president; R. Armstrong, vice president and treasurer; William L. Crawford, secretary; W. Arlow, sistant secretary. The directors are given as F. Kress. chairman of the board, president, Kress Box Company: T. Charles A. Bardolph: W. J. Bell, real estate; E. Blasdell, secretarytreasurer, Reliance Steel Casting Company Canfield, president, Barnes Laundry Company; Charles F. Gardner, vice president, PeoplesPittsburgh Trust Company; R. T. McCready, Mills, Mills of John E. president, Springfield Foundry Company.
