Farmers & Merchants State Bank - Fredericksburg, VA

Bank Information

Episode Type: Suspension → Closure
Bank Type: state
Start Date: August 1, 1945*
Location: Fredericksburg, Virginia (38.299, -77.487)

Metadata

Model: gpt-5-mini
Short Digest: 2dd72668

Response Measures

None

Description

Article (Evening Star, 1947-04-18) describes the Fredericksburg bank being put into receivership in August 1945 after embezzlement/misapplication of funds by bank officers and subsequently going into bankruptcy. No run is mentioned; the cause is bank-specific adverse information (embezzlement).

Events (2)

1. August 1, 1945* Receivership

Newspaper Excerpt: After the bank's closing was put into receivership in August, 1945, by the insurance company and went into bankruptcy.
Source: newspapers

2. August 1, 1945* Suspension

Cause: Bank Specific Adverse Info
Cause Details: Embezzlement and misapplication of substantial bank funds by officers (vice president convicted; president implicated).
Newspaper Excerpt: After the bank's closing was put into receivership in August, 1945, by the insurance company and went into bankruptcy.
Source: newspapers

Newspaper Articles (1)

1. April 18, 1947 Evening Star Washington, DC

Article from Evening Star, April 18, 1947

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Article Text

Defense to End Today In Virginia Bank Cas By the Associated Press RICHMOND, Va., April 18.Arguments for the remaining six of nine defendants in the Fredericksburg bank funds case, which opened today with counsel pleading for Harry L. Lamson, Washington real estate operator, are expected to be completed today and Government rebuttal is expected to begin Monday. Heard yesterday were arguments in behalf of Hugh N. Rakes, Leesburg dairy operator; his wife, Mrs. Lillian C. Rakes, and Paul Karsten, a vice president of the Farmers & Merchants State Bank of Fredericksburg. The defendants face charges of aiding and abetting in misapplication of some $435,000 from the Fredericksburg bank. In his summation of the defense of Rakes yesterday, W. R. Allcott, his attorney, pitcured the defendant as a self-educated man whose involved financial affairs were guided by a group of bankers. Referring to the financial transactions which led to the closing of the Fredericksburg bank, Mr. Allcott declared that no depositor or stockholder, except the director-stockholders, stood to lose a penny by the bank's closing. The bank directors, he said, were responsible for the FDIC putting the bank into liquidation. Rakes was established as a man of means, especially by a $1,000,000 loan negotiated through the Jefferson Standard Life Insurance Co. and deposited in the Fredericksburg bank. This loan, James B. Morgan of Leesburg. the other member of counsel for Rakes and his wife, said cost Rakes $50,000 in fees to William Reeves Gardner, vice president of the defunct bank now serving a seven-year prison term for embezzlement, and John F. Gouldman, jr., the Fredericksburg bank president. After the bank's closing was put into receivership in August, 1945, by the insurance company and went into bankruptcy.