First National Bank (Marion, IN)

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The Indianapolis Times investigated the guardianship affairs of those veterans, now wards of the court with banks for parents, and found estates dwindling over a period of years from large balances to pin-money. The Times will show in this series on the affairs of patients and former patients of the Marion hospital for veterans that one estate alone dropped from a $5,000 bank balance to FOURTEEN CENTS and several bonds of doubtful value. It will show that it was necessary for one closed bank to lend money to the guardianship it held in trust, in order that court reports might be made to balance without the sale of doubtful holdings. It will show that court reports on the condition of the finances of the veterans' estates were sworn to by banks but that the true values of the securities held in the veterans' estates were not divulged. Change Charged Investments of thousands of dollars were made without court order. In some cases, the securities were purchased two and three years before the circuit court of Grant county knew of the purchase. The series will relate how the Grant Trust and Savings Company, a closed institution, bought bonds in one company when reports of that company showed that it had not paid taxes for two and one-half years and had sustained a net loss the year bonds were purchased, of $14,000. It will show, however, that officers of the Grant Trust in petitioning Grant circuit court for the right to invest. declared the investment "safe and sound and without hazard." Wholesale transfers of mortgages to veterans' estates will be shown to have been made on one day by the Grant Trust Company. One month later, the Grant Trust was merged with the First National bank of Marion (now a closed institution.) The mortgages in some cases still remain unpaid. It will be shown by court records that loans were made to a beer importer of Marion at that time, an official in the bank where the trust was held. Aproval of the purchase of securities for the veterans was given by the court in some cases and some of those securities are never shown again as having been bought or transferred, in the guardianship records of the Grant circuit court. The series will trace operations of one trust officer, who also was listed as secretary, as being in direct contact with these estates of veterans through three banks. Laxity Is Hinted It will charge that he had knowledge of investments from as far back as 1922 and 1923 until the present day. Present state of these investments indicates that the circuit court was lax in investigations before giving approval to the purchase of securities for the estate of the veterans. It will be shown that up to the time of The Times' investigation, Circuit Judge O. D. Clawson never had ordered an audit of the books of the Grant Trust. The Grant Trust is in receivership in his court. Much of the frozen assets and losses to the estates of the incompetent men occurred during the business years of the Grant Trust and up to November, 1930. It will be shown that those anemic investments were taken over in the merger of the Grant Trust and the First National of Marion (now in receivership) It will be shown that records of some estates have come to the attention of the United States district attorney in the guardianship estates, but no action has been taken. While on one hand, the guardianships have been depleted in one closed bank by insecure investments it will be shown that in the Marion National bank (now in liquidation) the securities, or declared main liability, were adequate and safe, but that the wards were permitted seemingly extravagant expenditures. One veteran was permitted to buy eight watches and five watch chains in ten years' time by the

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circuit court records include a $15 lounging robe and a $9 shirt. One ward was forced to pay for being locked up in a Pennsylvania jail, out of the funds in his estate in Indiana. It will be shown how one ward was permitted to spend $426.45 in clothing in a period of approximately eighteen months. Vouchers on record in the county clerk's office are shown to be inconsistent as to signatures and in turn do not coincide with the checks issued on those vouchers and held in the old Marion National bank and now in the guardianship records of the Marion National of Marion (the new bank and new guardian of the trusts). Procedure Is Studied In one case, a veteran scrawled his name on a voucher at one time on one day and then on the same day could not write his name and merely made a mark "X." Proper bank procedure is to have signatures made with a mark done only above the signature of witnesses. No witness attested to the mark made by the veteran who could not sign his name at one time and then could sign it at another on the same day. In some cases, the court records show unsigned vouchers charged to the estate. Checks in bank accounts of the wards show no indorsements in some cases. Securities in Default In turn, it will be shown that in the regional bureau of the United States veterans' administration in Indianapolis, twelve groups of securities purchased for veterans during the regime of the closed Grant Trust, are listed as defaulted and in some instances on deposit for protection of the bondholders. It will be shown that the succeeding or substitute guardian of the Grant Trust, the First National of Marion (now in receivership). purchased securities without first obtaining a court order for the investment. Early records of the guardianships of the insane veterans show trust officers and other bank officials petitioning to have veterans declared insane and then accepting the guardianship immediately afterward. It will be shown that although one veteran was declared by doctors to be of such ill health that it would be injurious for him to appear in court, that within a short time after the insanity verdict, he was purchasing clothing and spending money in shops of Marion. The Times will show an interiocking of directorships between some of the closed banks and corporations to which purported loans were made out of the veterans' funds. 'Hands Off,' Is Charge The investigation will disclose mortgage loans being made to employes of the Grant Trust out of the guardianships in that bank. According to newspaper reporters of Marion, officers of one of the closed banks asked Marion newspapers to pursue a "hands off" policy. It will be shown attorneys in the regional office of the veterans' bureau in Indianapolis investigated the guardianships in the Grant Trust as far back as the spring of 1933 in an effort to recover alleged losses to the estates. On the other hand, it will be shown that the Veterans of Foreign Wars of Marion took an active interest with Congressman Glenn Griswold in agitating for a true accounting and restoration of the finances of the trusts. (Next-Bonds and Bathrobes.)

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ILL VETERAN'S

FUNDS VANISH,

RECORDS SHOW

Lists Reveal Investments Not Made, Yet Estate Loses Value.

(Continued From Page One) of today would not be worth more than $12,000, and that in 1930 the appraised value set was high.

Listed at Face Value In the final report of George W. Rauch, conservator and receiver of the First National of Marion (the bank succeeding as trustee of the veteran's estate) the securities are listed at face value. The Cosmopolitan bonds are listed by the veterans' bureau as being in default. Robert P. Kiley, now beer importer of Marion and an appointee of the administration of Governor Paul V. McNutt, was treasurer of the Citizens Trust and Savings Company when Case 1976 became a ward of the bank. Mr. Kiley requested the insanity hearing in a petition on file, accepted the guardianship of Case 1976 for the bank, and on Jan. 25, 1925, signed the first report of the handling of the funds of the insane ward. Mr. Kiley was president of the Marion Title and Loan Company which assigned mortgage loans to the Grant Trust, which invested the same in the trust funds of veterans.

Shown as Treasurer In the 1930 Marion directory Mr. Kiley is shown as the treasurer of the Grant Trust, succeeding guardian of veterans' funds after the merger with the Citizens Trust. Then up to the time that the First National of Marion (the old bank) went into receivership, Mr. Kiley is shown as director of that institution. Request for the stockholders' list of the First National in Marion (the new institution) was refused The Times by Mr. Rauch, candidate for senatorial nomination on the Democratic ticket, on the premise that he "did not desire to embarrass stockholders." Mr. Rauch is receiver for the old First National. Mr. Kiley is not shown as director or officer of the new First National in Marion.

A Peacock Who Strutted The guardianship case history of No. 2347 is that of a peacock who strutted and got away with it. Case 2347-let's call him John-liked good clothing, and got them. He's in Poland now, being the big frog in the little Polish puddle of a town.

As far as the United States is concerned, he's still of unsound mind and his estate is held in trust by the Marion National bank of Marion.

But while he was under guardianship to the old Marion National bank, he was able to get $45 overcoats, $40 suits, $11.35 shoes, $1 hose, $2 ties. Then he was discharged from the veterans' hospital at Marion to go back to Poland.

Expenditures Approved John had it in his mind to return to Poland, or at least he may be credited with it, for the old Marion National bank's trust department approved the following expenditures in September and October: $10 oxfords, two pajamas, $3.50; three handkerchiefs, $1; four men's hose, $4; one suit, $40; one hat, $5; two ties, $3.50. Then on April 20, 1931, Case 2347 bought his "going-away" garb. The total came to $311.60 at Price-Hutchins Clothing Company, by the time he finished buying in May, 1931.

Itemized the bill runs like this: One suit, $29.50; extra pants, $5.50; one topcoat, $30; one Gladstone, $25; one trunk, $40; one traveler's set, $5; one overcoat, $35; one suit and extra pants, $25; one hat, $10; one cap, $2; three suits of pajamas, one $5, one $9.75; four

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also petitioned for an insanity decree of 1995 as far back as May 27, 1922, for the Citizens Trust and Savings company and then signed for the Citizens bank the formal acceptance of guardianship of the insane man from whose estate the records show he borrowed $360 in 1931. Mr. Kiley was president of the Marion Title and Loan company in 1930. The company floated bonds and acted as trustee of securities which were transferred to the trusts of insane veterans on purchases made by the Grant Trust and Savings company as guardian. Also Shown As Treasurer The bonds, in some instances, later were defaulted in interest. He also is shown as treasurer of the Grant Trust, now in receivership, in the 1930 Marion city directory. With $9,500 alleged bad investments in a suit filed against the Grant Trust and Savings company in November, 1933, in Case 2022 it was necesary in the current court report filed Feb. 6, 1933, for the First National of Marion now in receivership) to lend the estate of Case 2022 the amount of $5.18 in order that the court report could be balanced. Interest had been defaulted. it is asserted, in most of the $9,500 in securities which Case 2022 had during the longevity of the Grant Trust. The veteran's cash balance had ebbed. The trust department of the First National of Marion in preference to selling the few good securities, or taking a loss through a sale, was compelled to loan the veteran the $5.18 to make the court report. In a report previous to 1933 it was necessary also to loan $12.72 to the ward in order that the guardian, the bank, could make the court report. (Next: The War Veteran With Eight Watches.)

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trusts of insane ex-soldiers

B. W Breedlove chief attorney of the Indianapolis bureau. says his records show in trusts held at one time by the Grant Trust and Savings Company, now in receivership, that the above amount of investments are shown on the present guardianship records against $167,696 in properly invested funds. Indiana's law on guardianships provides that trusts should be managed "for the best interests of his ward." "The degree of care to be exercised by guardians is the same as prudent persons exercise in their own affairs," cites a case, Wainwright VS. Burroughs, 27 N. E. "It is the duty of a guardian as far as practicable to keep the funds of his wards so invested that they will draw interest. and to use due care in making investments, avers a decision in State VS. Sanders, 62, Ind. 562. In the same case is the citation. "use by a guardian of the funds of the ward in his own business is a conversion of funds." No Bonds Were Needed Up to the passage of an act in 1931 governing specifically war veterans' estates under jurisdiction of a guardian it was not necessary for banks. when acting as trustees, to give bonds. Not only guardianship now in litigation in the Grant circuit court for war veterans was bonded by the depository acting as parent for the ward. Mr. Breedlove says attempts to pass the act in legislatures prior to 1931 met with opposition from bankers of Indiana. "They had lobbyists in the legislatures who watched judiciary committees for bills of that type and were quick to oppose the act," explains Mr. Breedlove. "But we got it through both houses in 1931," he chuckled. "How Did You Do It?" "After it was passed a certain banker came to me and said, Well. you put it over. How did you do it? No bill like that was reported out of the judiciary committee'." "I told him." added Mr. Breedlove, "that it was reported out by the World war memorial committee. "But what has a World war memorial committee to do with the guardianships of insane veterans?" replied the chagrined banker. The new veterans' act prevents overcharge of guardianship fees by trustees by setting a maximum of 5 per cent of the estate's income as a fee unless amended by a special court hearing. It provides that bonds must be made by banks as well as individuals "in an amount not less than the sum then due and estimated to become payable during the ensuing year." Bonds in Full Required Mr. Breedlove now requires the present Marion banks. First National in Marion and Marion National of Marion. to give bonds in full for the funds on hand and due in the estates of World war veterans. The act precludes the investment of a veterans' funds in enterprises in which the guardian may have interest with "Every guardian shall invest the funds of the estate in securities in which the guardian has no interest One of the main points of law proving a bone of contention between attorneys for the First National bank of Marion (now in receivership) and Mr. Breedlove is the extent of the liability of the First National (the old bank) in taking over the veterans' guardianships from the defunct Grant Trust and Savings Company Attorneys for the old First National declare that in accepting the trusts the bank took them as guardian and executor. but only for "safekeeping and accounting Court Records Scanned Mr. Breedlove and attorneys for the new First National. however charge that the liability of the old bank is on a par with that of the Grant Trust and that the old First National had knowledge of the shattered securities in the veterans estate in that Marshall Williams, trust officer in the Grant. became trust officers of the old First Nation. Mr. Williams has sworn to a great number of the court reports on conditions of the estates throughout the past ten years, Grant circuit court records show. Some directors and officers from the old Citizens Trust and Savings Company are followed into the merger with the Grant Trust and thence into the First National of Marion and now into the present institution. First National in Marion. is found in a perusal by The Times of directories and bank statements of officers. It also is revealed that some of these officers and directors were incorporators of companies or officials in firms whose securities were placed in veterans' estates or were purported to have been purchased for their estates by the guardian bank. In other instances some of the bank officials were interested financially in those companies flor ing bond issues. Listed as Secretary-Treasurer Beginning with the original officers of the Citizens Trust and Saving bank it is shown that Willard El kins, president of that bank at one time, later became acting vice president. of the Grant Trust.

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VETERANS' BANK LOSS RESTORED Marion Receivers Agree to $209,874 Claims, Probe Begun by Times. By United Press MARION, Ind., Nov. 10.-Allowance of claims totaling $209,874 against the receivers of the Grant Trust and Savings Company and the First National Bank, both of Marion, today virtually assured restoration of investments to a large humber of incompetent war veterans. The investments were attacked in seventy suits filed in Grant circuit court on behalf of the veterans and were the subject of a congressional investigation, which was inspired by a series of articles in The Indianapolis Times. Most of the veterans are patients in the federal hospital here. The claims against the receivers were agreed upon at a conference here at which the two receivers, the present guardian, the veterans' administration and the comptroller of currency were represented.