9592. First State Bank (Ely, MN)

Bank Information

Episode Type
Suspension → Closure
Bank Type
state
Start Date
January 4, 1933
Location
Ely, Minnesota (47.903, -91.867)

Metadata

Model
gpt-5-mini
Short Digest
b96da9f8

Response Measures

None

Description

The First State Bank of Ely was closed/suspended by the state banking commissioner in early January 1933 after examiners uncovered a large shortage and frozen assets; a receiver was appointed and the bank remained in liquidation (no reopening). Receiver completed liquidation by 1938 (72% paid to depositors).

Events (3)

1. January 4, 1933 Suspension
Cause
Bank Specific Adverse Info
Cause Details
State examiners uncovered a shortage of $14,500; assets were 'frozen' and insufficiently liquid; cashier disappeared and later shot himself amid accusations and warrants for larceny/shortage.
Newspaper Excerpt
At a meeting of the directors of the First State Bank held Wednesday morning, a decision was made to suspend operations at the bank pending liquidation of the assets.
Source
newspapers
2. January 13, 1933 Receivership
Newspaper Excerpt
J. E. Draeger has been appointed as receiver of the closed institution by the state banking department and has arrived and assumed his station.
Source
newspapers
3. October 20, 1938 Other
Newspaper Excerpt
John E. Draeger ... has completed liquidating the affairs of the bank ... Under the efficient management of Mr. Draeger, 72 per cent have been paid to depositors.
Source
newspapers

Newspaper Articles (5)

Article from The Ely Miner, January 6, 1933

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Article Text

STATE BANK CLOSED DOORS Cashier Slabodnik Attempts Suicide When State Officials Find Shortage. At a meeting of the directors of the First State Bank held Wednesday morning, a decision was made to suspend operations at the bank pending liquidation of the assets. The last two years of depression has worked havoc with the assets of the bank and while it was thought that the assets were sufficient, in the shape of mortgages and securities, to cover liabilities, they are not in liquid form and are termed frozen lassets. Immediately following the closing of the bank, Jacob Riggs and J. F. Angells, representing the state banking department, began a thorough check of the books of the institution and during the day uncovered a shortage ,announced as $14,500, in the funds of the bank. In the meantime, Leonard Slabodnik, cashier, had disappeared and the sheriff was ordered to locate him for questioning. Deputy Sheriffs Jeff Cusson and Chick Murphy remained through the late afternoon in the vicinity of the home of Slabodnik, waiting for him to return, but it was not until after dark that their vigil was rewarded. They followed him into the house to find that he had gone at once to the basement. Before they reached him he had shot himself in the breast. He was immediately rushed to the hospital, where an officer was left to watch him. The wound, inflicted, according to hospital authorities, is not expected to prove fatal unless complications set in but at the present time he is in a very serious condition. Sam Owens, St. Louis County sheriff, and Frank Rosemier, assistant county attorney, were in the city yesterday and issued a warrant for the arrest of Slabodnik to give information concerning the affairs of the bank with which he had been connected since its formation in 1912, first as assistant cashier, and for thirteen years as cashier. He was promoted when George L. Brozich, one of the organizers of the institution, was retired from the position. Slabodnik had been associated with Brozich in the insurance business prior to the opening of the bank. The notice of the closing of the bank was posted on the door by the board of directors late Wednesday morning. The institution has a capital stock of $25,000 and a surplus of $20,000. The deposits were about $250,000, according to the last bank statement published in September. The bank will remain closed while the state banking department continues its probe of the affairs of the bank estimated to take about ten days. Although the doors are closed the affairs of the bank will be administered in such a manner as to pay depositors as rapidly as possible and every effort will be put forth to liquidate assets in such la manner as to preclude a loss for the depositors, according to the bank officials.


Article from The Ely Miner, January 13, 1933

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CLOSED BANK IN PUBLIC EYE First State Bank Affairs as Yet Not Clearly Defined by State Officials. Nothwithstanding rumors constantly in the air as to this, that and the other developments in the affairs of the closed First State Bank, nothing of a very definite character has been given out by the examiners, Messrs. Rigg and Angell, who have been investigating and checking the books and accounts. Leonard Slabodnik who is at the Shipman hospital recovering from selfinflicted revolver shot wounds is getting along as well as can be expected. He is still under arrest. John E. Johnson, assistant cashier, who was taken into custody on Tuesday evening appeared before the district court at Virginia Wednesday and plead not guilty. He was released on $5,000 bonds by Judge Freeman. The bonds were furnished by local people. Nothing definitely will be known until after the bank has been thoroughly checked. J. E. Draeger has been appointed as receiver of the closed institution by the state banking department and has arrived and assumed his station. Mr. Draeger comes recommended in the highest by the department. J. M. Anderson of Minneapolis, representing the Reconstruction Finance Corporation is also here and is checking 0.1 the loans made of this corporation and the securities pledged.


Article from The Ely Miner, February 24, 1933

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PROEEDINGS OF THE SCHOOL BOARD DISTRICT NO. 12. Ely, Minnesota, February 13th, 1933. Regular meeting of the Board of ducation of Independent School DisNo. 12 was called to order at sevenhirty o'clock P. M., by the Chairman, S. Richards. On roll call, the folowing members were found to be resent: Jones, Kotchevar, Richards, tarkman, Sundholm and Veranth. absent: None. Moved by Kotchevar, supported by ones, that the minutes of the regular neeting of January 9th and special neeting of January 14th, 1933, be aproved as read. Motion carried unanihously. Moved by Kotchevar, supported by tarkman, that the request of the National Educational Association meetat Minneapolis 25th, to March 2nd, granted, and that he, together with he high school principal and dean of he Junior College be authorized to atend this meeting at the expense of he district. Motion carried unanihously. Moved by Jones, supported by Sundthat Albert Bezek be retained as ymnasium assistant until March 25th, nclusive. Motion carried unanimously. Moved by Veranth, supported by Kotchevar, that the liability and property damage insurance on the Crskine Sedan be renewed through the Friedsburg Service Agency. Motion arried unanimously. The reports of The Hartford Steam Boiler Inspection and Insurance Comon various boilers and pressure essels were read and filed. Communication from the Ely Council Girls Scouts advising that the salary to the scout director by the school listrict had been reduced from $70 to 60.00 per month, beginning February 1933. Moved by Veranth, supported by Kotchevar, that the communication rom the Ely Council of Girl Scouts accepted and that the salary of Miss Elizabeth Raisky be reduced to $60.00 month, beginning February 1, 1933. Motion carried unanimously. Communication from the State of Minnesota Banking Division relative to unds of the district on deposit with he First State Bank of Ely was read. Joseph Veranth offered the following esolution and moved its adoption: WHEREAS, The First State Bank of St. Louis County, Minnesota, has designated a depository for funds Independent School District No. 12, Louis County, Minnesota; AND WHEREAS, The said First State Bank of Ely has furnished Independent School District No. 12, St. Louis County, Minnesota, 5½ % building bonds in the of five thousand dollars, due June 1934, as collateral in lieu of a depository bond, and has assigned said ecurities to Independent School DisNo. 12, St. Louis County, Minneand has deposited said securities with the First and American National Bank of Duluth, Minnesota, for safe keeping; AND WHEREAS, Certain Funds of Independent School District No. 12, Louis County, Minnesota, are now on leposit with the First State Bank of AND WHEREAS, The Commissioner Banks of the State of Minnesota has aken possession of the property and business of the First State Bank of St. Louis County, Minnesota, and liquidating its affairs pursuant to the of the State of Minnesota; NOW, THEREFORE, BE IT RESOLVED, That the treasurer of said Independent School District No. 12, St. Louis County, Minnesota, demand the release and surrender of five thousand dollars Independent School District No. St. Louis County, Minnesota School Building Bonds, dated June 1, 1923, due June 1, 1934, numbered 471, 472, 473, 474 and 475 together with interest coupons numbered 20, 21, and 22 attached thereto from the First and American National Bank of Duluth, Minnesota, to be applied as an offset on the amount now on deposit with the First State Bank of Ely. Motion supported by E. C. Jones and to a vote. All members voting in favor thereof, the resolution was unanimously adopted and so declared. Moved by Veranth, supported by Starkman, that the report of H. A. Berg with cash in the sum of $422.92, received from various sources be accepted


Article from The Ely Miner, October 13, 1933

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Leonard Slabodnik and John E. Johnson Indicted on Two Counts Each in First State Bank AffairJohn Paicher Indicted in City Investigation. Affairs of the City and of Tower Looked Into by the Jury Whose Recommendations Are Given BelowPalcher Case to Come Up Next Tuesday. ELY ACCOUNTING SYSTEM PRAISED. Odd Fellows to Tower. The Grand Jury closed its deliberations of the affairs of the City of Tower, City of Ely and the First State Former Congressman W. A. Pittenger will be the speaker at the fall meeting Bank of Ely on Thursday evening and of District No. 11 of the I. O. O. F. at reported to Judge Magney. The jury was discharged and left for their homes Tower tomorrow evening. Mr. Pittenger was recently elected deputy grand sire that evening and the following morning. Five indictments were returned. Two of the soverign grand lodge. District No. 11 comprises Virginia, Eveleth, Giltrue bills were found against Leonard bert, Biwabik, Aurora, Ely and Tower. Slabodnik, cashier, and John E. Johnson, assistant cashier, of the First State Sam B. Keller, district deputy and grand master from Gilbert will be in Bank of Ely which closed its doors in charge. The occasion will also serve as January and has been in the hands of a receiver since. Slabodnik was ina home-coming for the Tower lodge and a roll call of old time members will take dicted on two counts, one for the larceny of $1,743 and the other for the place. A large party from this city will attend the session. larceny of $1,582.50. Johnson was charged with the larceny of $1,000 and $500, respectively, and he was indicted on one first and one second degree WEDDING BELLS counts. The indictment against John Palcher charged him with "the appropriation THREE COUPLES for his own use of City of Ely warrant No. 63,939 in the amount of $94.08 for certain labor alleged to have been perCupid Does Thriving Business formed by said John Palcher during the Past Week in this City; the month of December 1932, which said alleged labor the said John Palcher Depression is Over. then and there knew had not been performed by him." MATCHINER-MORRIS Palcher was taken into custody at At the home of the bride's uncle and once. He plead not guilty before Judge aunt, Mr. and Mrs Carl E. Johnson at Magney upon being arraigned and was Winton on Tuesday afternoon, the marreleased after furnishing a bond in the riage of George Matchiner, son of Mrs. sum of $500 for his appearance in court J. Machiner, and Miss Florence Morris, for trial on Monday, October 16, when daughter of Mr. and Mrs. Dennis the evidence will be heard before a Morris, was solemnized. jury. Rev. J. T. Dixon of the Ely M. E. The report of the Grand Jury as prechurch read the ceremony which united sented to Judge Magney was signed the couple in the presence of only imby Rupert R. Asplund of Duluth, as mediate members of the interested foreman and W. A McCurdy of Virfamilies and a few invited guests. Miss ginia, as secretary. Besides these servEsther Morris. a sister of the bride, and ing on the jury were: Carl E. Johnson were the attendants. John V. Anderson of Iron; John L. A wedding dinner was served after Benz, W. C. Berkelman, John Carson, which the couple left for a visit with Chas. L. Cecil, F. B. Getchell, Albert relatives in Topeka, Kansas and other Olson, A. S. Ulvang and A. M. Solie of cities. They will be at home at BassDuluth; H. E. Billings of Virginia; M. wood lake after their return, Mr. MatCalvert of Saginaw; Gus Cronberg of chiner being employed with the WilderBuhl; Robert Ely of Eveleth; F. W. ness Outfitters. Rowbottom of Cook. Both the bride and the groom have The report of the jury made public many friends in this city and Winton after the placing of Palcher in custody. who join in wishing them all possible the others indicted already being in happiness. custody, was as follows: "The Grand Jury for the October RYAN-POPISH term, which met in the City of Ely, on James Ryan, son of Mr. and Mrs. the 3rd, 4th and 5th days of October, J. Ryan of Aitkin, and Miss Margaret A.D., 1933, hereby submits the following Popish, daughter of Mr. and Mrs. report to the Honorable Clarence Michael Popish of 609 East Chapman Magney, one of the Honorable Judges of the above named court: Street, were united in the holy bonds "Indictments have been returned and of matrimony at a high-mass ceremony at the Catholic church in this city have been heretofore submitted to the court. Tuesday morning at 8 o'clock. The impressiveness of the ceremony was fur"The Grand Jury, having gone into ther enhanced by the presence of the the report submitted by the Public ExRev. Father Joseph Ryan, brother of aminer's office of the State of Minnethe groom, who performed the ceresota concerning the audit of the fimony. Father Ryan is assistant paster ancial affairs of the City of Tower, at Hibbing. makes the following recommendations: Attending the couple were John Ryan "That the city officials of the City of of Aitkin, a brother of the groom, and Tower be admonished to adhere to the Miss Mary Popish, a sister of the bride. provisions of law requiring the verifiA wedding breakfast was served after cation of claims presented to the city the ceremony at the home of the bride's for payment, and it is further recomparents and a reception was held in mended that the City of Tower install the evening. Only relatives and imsuch books and records as are recommediate friends of the couple were mended by the Public Examiner's office present at the breakfast and reception. of the State of Minnesota. It is furThe couple left Wednesday for a visit ther recommended that the said city with relatives and friends at Aitkin council comply with the statutory reand other cities of the state. Upon quirements in the letting of contracts their return they will be at home at and purchases of materials over the sum of $500. 130 East Sheridan Street to their many friends. "That from the evidence presented to The bride was gowned in white satin, this Grand Jury, both by witnesses and white bridal veil and carried a bridal report of the Public Examiner, we are boquet of white flowers. The bridesunable to find any dishonesty in the maid wore pink with a blue hair band management of the financial affairs of the City of Tower. and belt and carried pink flowers. Michael Popish, Jr., brother of the "We commend the City of Ely on the bride from St. Paul Seminary, was here efficiency of its accounting system in to attend the marriage of his sister. general, but more care should be exThe bride has been a resident here ercised in the purchase of materials since birth. The groom has been a and in the letting of contracts SO as to resident here for the past two years. comply with the law. Changes should Both have many friends who join in be made in the handling of time rewishing them all that is good. ports so as to effect a double check on time worked by field men. KRALL-MEDEN "We, the Grand Jury, have carefully gone into the banking situation conFather Michael Hayes of St. Ancerning the First State Bank of Ely, thony's Catholic church on Wednesday Minnesota, as exposed by the banking morning united in marriage, John Krall, examiner's reports, as well as other son of Mr. and Mrs. J. Krall, and Miss witnesses called before us, and find, Ann Meden, daughter of Mr. and Mrs. while there is some negligence exposed Frank Meden, using the impressive high on the part of the directors, we do not mass services. find any evidence of any criminality as Mike Evonocheck attended the groom regards those directors against whom while Miss Mary Meden, sister of the no indictments were returned. bride, attended her sister. The bride "The pitiful situation disclosed was attired in a gray ensemble with through our study of the affairs of this hat and shoes to match. The bridesbank cannot be mitigated by this jury maid wore a tan ensemble. but we feel that it is our duty to A wedding breakfast was served at endeavor to see that the punishment the home of the bride's parents and a for culpable offenses more adequately reception was tendered them on Wedfits the crime. nesday evening at the Klun building "We further recommend that the attended by many friends of the happy state banking examiners include the couple. verification of the balances in deBoth are well known in this city positors accounts as a part of the where they have grown to manhood and regular audit of the banks under its womanhood. Both are graduates of the jurisdiction." Ely schools. The groom is the manager Dated this 5th day of October, A. D. of the Winton Resort. 1933. Many friends join in congratulating The jury in the District Court which the couple and wishing them continued (Continued prosperity and happiness.


Article from The Ely Miner, October 20, 1938

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FINISHED HIS DUTIES. John E. Draeger who has been a resident of this city since 1933 when he was named receiver for the First State Bank has completed liquidating the affairs of the bank and has left for Red Lake Falls where he and family will make their home. Under the efficient management of Mr. Draeger, 72 per cent have been paid to depositors. He also turned over to the state banking department collateral which, when liquidated will probably net the stockholders several per cent more. During the residence of the family here, they have made many friends