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covered that his stenographer had used the wrong check, he went out into the main office and said: “ Please transfer from my account in the main office to my account in this particular branch of this same bank, mind you—“ of a sufficient sum to cover." So there was no actual overdraft in the account itself. The committee was satisfied that it was inadvertent, that he had used the wrong check by reason of what I have mentioned, and that in the bank itself there was no overdraft.

We were equally satisfied that

Mr. PECORA (interposing). There was an overdraft as a result of using your own check in the particular account against which the check was drawn, was there not?

Mr. Mills. Well, it was not an overdraft at all in the bank. There were ample funds in the account of Donald N. Sweeny in the First National or Peoples Wayne County Bank, whichever it was at the time, to make that check good.

Mr. PECORA. Yes; but the overdraft was on the account specially kept at the Delray branch?

Mr. Mills. It was in that branch; yes.

Mr. PECORA. Considering that account by itself, there was an overdraft which you say, according to Mr. Sweeny's explanation, was due to the fact that the wrong check inadvertently was used?

Mr. Mills. Due to Mr. Sweeny's and to his stenographer's-we also talked to her—but the account in the bank was not overdrawn.

Senator COUZENS. Were they both trustee accounts ?

Mr. Mills. No. One was Donald N. Sweeny, trustee, and the other was Donald N. Sweeny, trustee, and he was trustee for the same person in each case.

The statement was made in this report that just prior to the national bank examiner coming in this account in the Delray branch was covered. We were perfectly satisfied that that happened to be a coincidence; that he did not know that the national bank examiners were coming in. I didn't know when they were coming in. There could have been no reason that I can see for covering an account down in that branch just a minute before someone happened to come in and at the same day. I think, and the committee all thought, he did the right thing in having the funds transferred from the main office to that branch.

Mr. PECORA. The fact then reported by Mr. Verhelle you found to be the fact, but you ascribed an innocent motive to what was done! Isn't that it ?

Mr. Mills. Well, you cannot read the whole report without getting very improper—at least I could not read, I will put it that way, the report without getting very improper-motives as respects Mr. Sweeny.

Now, there was this type thing that went on: This question of mortgages, which is most bothersome. In Michigan-well, you can have three kinds of-I hate to get into a legal lecture, but I probably will have to do so. There is quite a difference between mortgaging your property. That would be example number one. You may become liable for that debt, but if you sell that property to me you then become in the position of a surety under the law of Michigan. And a bank who has a mortgage on that property in the first instance looks to me, and there is nothing that you, Mr. Pecora, as the original mortgagor, can do about that in the meantime except to buy the mortgage from the bank. If you pay it, why you are probably just out of luck. You cannot control the property. You cannot control the income from the property.

Then there is a type of mortgage in which John Jones makes a mortgage, and it is purchased by, we will say, myself, subject to the mortgage. Now that does not mean, and the law of Michigan does not imply, any convenant on my part to pay that mortgage.

The CHAIRMAN. Unless it is expressed in the deed ?

Mr. Mills. Unless it is expressly set forth in the deed. And that is the third type, where the deed itself expresses that provision.

Mr. PECORA. Where the grantee assumes?

Mr. Mills. Not only assumes but agrees to pay it. You have to have both the assumption and the agreement to pay.

Now, I will be the last to say that the Verhelle report did not in the end accomplish some good in the institution. As I said in my prepared statement, it was not the one bank alone, but these banks had come together and it was a very difficult situation. You had in there at least four men who had been presidents of their own banks. Each had their own systems that they thought were the best systems. And we had to put those systems in, and I will say that the Verhelle report was helpful to that extent in some cases. But it did, with the publicity that has been given to it, in my judgment, irreparable damage to some of these men.

The CHAIRMAN. He held the position of comptroller of the bank? Mr. Mills. No; he was comptroller of the Detroit Bankers Co. The CHAIRMAN. Was he continued in that position afterward?

Mr. Mills. I am glad you asked that question, Senator. At the time of the Verhelle report and the hearings of the examination were held, Mr. Ballantyne had resigned from the Detroit Bankers Co. He was president. Mr. Mark Wilson, who was vice president, had resigned. Mr. Dwight Douglas, who was vice president, had resigned. Those resignations in general were caused by the fact that it had been then determined that the Detroit Bankers Co. thereafter would be practically a nominal holding company without any extraneous activities.

And when that policy was determined by the board, these gentlemen resigned. Mr. Verhelle was the only officer remaining in the Bankers Co. of any consequence that had any knowledge of what had gone on of the various activities of the Bankers Co.

Now, Mr. Browning was a vice president of the Bankers Co., but he was one of these nonactive vice presidents. So far as I know, Mr. Browning was not active. He was more or less of an honarary vice president of the Detorit Bankers Co.

The committee—this first report, this first exonerationMr. PECORA (interposing). You mean the one marked “Exhibit No. 126", dated May 25, 1932?

Mr. MILLS. The short one; yes—was presented to a governing committee and read. The governing committee asked various questions about it, and it was then ordered filed, and the governing committee approved that report, and immediately someone said, “Why, we believe that Mr. Verhelle's services should be dispensed with."

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Mr. Pekka. He aimaid in his report: “ On February 13, 1931. the auriitors reported as follows"_and by - the auditors" I assume bæ means the auditors that were emplover by the Detroit Bankers Co.

Mr. Miua. That would be under Mr. Cooper's supervision.
Mr. PRA. Yes. Those are the auditors referred to, are they not?
Mr. MILLA. I presume so, without question.

Mr. Praka. Then Mr. Verhelle in his confidential report quotes thom auditors under date of February 13, 1931, as follows:

The scorinty of the Wire Chrome Products bare shown chronie oredrafts sims the latter part of last December. The amounts range from about $2.000

$7,99 daily. The manager reports that the overdrafts are authorized by loaning officials at the main office. He was unable to say whether or not intrext would be collected on them. All overdrafts were covered on February 14 during this examination.

Did you find that that was a misstatement of the fact by Mr. Verhelle?

Mr. MILLs. We found as to the overdrafts that Mr. Sweeny had on some occasions permitted overdrafts of the Wise Chrome Products Co, where he was satisfied that the overdraft would be lifted and taken care of within a few hours or the next day.

Now, besides that, we found this condition, that eventually they were trying to put through a number of overdrafts, and we got in the manager of a branch, a fellow named Clayton Porter, who was manager of a branch. Mr. Sweeny had testified that he, Mr. Sweeny, had told Porter that under no condition was Porter to let any more overdrafts go through with the Wise Chrome Products Co.

Mr. Pecora. When?

Mr. Mills. Toward the end of the overdraft period of the Wise Chrome.

Mr. Pecora. Well, the end of the overdraft period with the Wise Chrome appears to have been some time after March or April 1932, and it appears to have commenced in December 1930.

Mr. Mills. All right. That is just what I am saying.

Mr. PECORA. So, for a period of about a year and a quarter, these overdrafts were of very frequent occurrence?

Mr. MILLS. There were a number of overdrafts. I won't say very. There were a number of overdrafts. But our investigation convinced us that the overdrafts had always been covered within a day or so. And later we found that Mr. Sweeny himself had given instructions that—at that time he was executive vice president or vice president—had given instructions that there were to be no more overdrafts on that account, and a branch manager had

gone ahead and allowed some himself on his own responsibility against his direct instructions. I had to bawl him out for it.

Mr. PECORA. If you have a copy of Verhelle's confidential report before you, I should like to have you refer to it as I question you about it.

Mr. MILLS. Yes, sir.

Mr. PECORA. Doesn't it appear at pages 8 and 9 of that confidential report

Mr. Mills (interposing). My report is not paged, Mr. Pecora, and it may not be the same as yours.

Mr. PECORA. Have you a section of it captioned “Wise Chrome Products Company "?

Mr. Mills. Yes.

Mr. PECORA. On the first and second pages of that section doesn't it appear in substance that these overdrafts were found not by Verhelle but by the auditors of the Detroit Bankers Co. to have developed from December 1930 and to have continued up until some time in March 1932?

Mr. Mills. Well, it speaks for itself. I don't know who found it. It speaks for itself.

Mr. PECORA. Well, you see Verhelle citing, quoting, from the reports of the Bankers Co. auditors.

Mr. MILLS. Oh, there were overdrafts. There were overdrafts, no question about it, but they were covered.

Mr. PECORA. And the overdrafts were of a very frequent occurrence for a period of time commencing in December 1930 and extending up to and including March 1932?

Mr. Mills. They were all covered, and it is not unusual to have an overdraft in any institution where you are satisfied that it is due to an unusual occurrence.

Mr. PECORA. Was it a fact in your opinion as one of the members of this investigating committee that acted on Mr. Verhelle's report, that Mr. Verhelle in calling these overdrafts to your attention through his confidential memorandum called to your attention anything but the facts ?

Mr. Mills. Not all the facts. That was all.

Mr. PECORA. Well, what were the facts that your committee found that were additional to the facts reported by Mr. Verhelle with regard to these overdrafts?

Mr. Mills. I have not read this, but my recollection is—I will take time now, if you wish me to—my recollection is—I may be mistaken in this—that this report does not state that these overdrafts were all taken care of. It may. I don't know. I have not read it, as I stated to you. I have not recently read it at all.

Secondly, there is no showing in this report that Mr. Sweeny. toward the end of the time, expressly instructed the branch manager where this account was carried that he was not to permit any further overdrafts.

Mr. PECORA. Were those instructions to be found among the records of the bank or were they instructions that Mr. Sweeny had orally given and which could not be found among the records of the bank?

Mr. Mills. They were instructions that he had orally given that manager, admitted by him when we called him before the committee.

Mr. PECORA. Well, how would you expect that Mr. Verhelle would know what instructions had been orally given by Mr. Sweeny if, as I assume the circumstances were, this was a confidential investigation being made by Mr. Verhelle for the benefit, information, and guidance of the executive officers of the bank?

Mr. Mills. I would certainly have expected Mr. Verhelle before making such a report to have talked to the manager of the branch with which the account was carried and asked him the circumstances of it.

Mr. PECORA. Where Mr. Verhelle found among the records of the bank reports by the auditors of the Detroit Bankers Co., which owned the bank, calling attention frequently, first, under date of February 13, 1931, then under date of March 6, 1931; then under date of January 4, 1932; and under date of April 14, 1932, that these overdrafts were chronic, in the language of the auditors, and that they had been authorized by Mr. Sweeny (at least some of them had been) didn't you think that was sufficient basis for Mr. Verhelle to make mention of those overdrafts in the confidential report he made to the executive officers of the bank?

Mr. Mills. If the report had said that and nothing else, I would have had no complaint about it. But where I criticize his report is that there were so many additional things that just a little information, a little inquiry, would have brought to light that many of these charges would not have been made and the man's reputation would not have been so damaged. That is all.

Senator COUZENS. Is Mr. Sweeny a law partner of yours?

Mr. Mills. No, sir; no, he has another firm. I did not know Mr. Sweeny hardly when I went in the bank.

Senator COUZENS. The reason I asked that was because you find Judge Keidan called up Mr. Sweeny when he wanted to see you, and I understood him to say it was the same law firm.

Mr. Mills. No; the reason for that, Senator, was I was in the northern part of Michigan and I had left word with Mr. Sweeny and Mr. Gilchrist and 5 or 6 other people where they could reach me.

Senator COUZENS. You remember Mr. Verhelle's testimony as to why he was asked to resign, do you not?

År. Mills. I read it in the newspaper. I do not entirely agree with that.

Senator COUZENS. Did you regret to let him go?

Mr. MILLs. No; I did not; and that is not what I stated to Mr. Verhelle. I think his recollection is a little bit faulty. The question was asked, I think by you, Senator, as to why I, with my authority as only a director of the bank, came to suggest to Mr. Ver

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