• U.S.

INDIANA: To Pay Paul

4 minute read

Young Clyde Rectenwall didn’t know much about banking. But then, neither did anyone else in Spencerville, Ind. (pop. 300), and Clyde was as steady a young fellow as there was in town. The farmers who had scraped together $25,000 so that Spencerville could have a farm bank of its own didn’t think twice. They named Rectenwall cashier, brought in a specialist to show him theropes and help him get started. That was back in 1914.

Clyde and a bookkeeper were the bank’s only employees. The bank prospered, in a quiet way, and so did Clyde. His salary was modest ($2,880), but he and his wife, whom everybody called “Princess,” never seemed to stop working. Before & after banking hours, they raised hogs and chickens on their 2O-acre farm. Clyde bought a 240-acre farm outside of town, leased it out to tenant farmers. The Rectenwalls sent their son to Purdue University, later saw him set up as a grain-elevator operator.They lived quietly. Sometimes Clyde and Bert Fisher, the bank’s president, would go to baseball games together.

Gradually, Clyde became just about the most respected man in town. He was elected Worshipful Master of the local Masonic lodge, served as its permanent secretary. He was president of the Lions Club. Twice he was elected township trustee, would have been elected again if the law had allowed.

The Start. Last week a busy horde of federal and state investigators told Spencerville some things it had never known about its respected citizen. It all began about eight years ago, when a young schoolteacher named Dale Wicoff came to town. Everybody liked Wicoff, and when he asked Clyde for a mortgage to buy a house Clyde told him to forget it. Just pay for the house with a check, he told Wicoff. He would give him the money and hold the check until Wicoff could pay it off.

That seemed to have been the start. If Wicoff needed money, he wrote another check and Clyde paid him what he wanted from the bank’s funds. Soon, Clyde was doing the same thing for other friends. He stowed away the worthless checks in a private safe. He balanced the bank’s books by whittling the money off other accounts. Almost nobody asked for monthly statements anyway.

Faint Trail. The overdrafts piled up; the figures got bigger & bigger. Last month, state bank inspectors picked up a faint trail and followed it to the little one-room brick bank. Clyde suddenly left town. The examiners called the FBI.

What they found stunned Spencerville. In those eight years, respected old Clyde Rectenwall apparently had paid out some $350,000 to his friends—more than half the bank’s total deposits. Dale Wicoff had gotten $6,000; Ray Hoover, a grocer, $15,000; Andy Miller, a poultry farmer, $35,000. Lessil O. Bardsley had taken away $70,000, Leroy Chaney Jr., son of one of the bank’s directors, more than $145,000. Many another depositor had been “helped” by Clyde. So far as anyone knew, Clyde had not taken a penny for himself.

The bank closed. Clyde had cost the stockholders their whole investment but the FDIC assured depositors that they would get their money. A grand jury indicted 65-year-old Clyde Rectenwall for mishandling funds, the five overdrawn depositors for “aiding & abetting” him.

Silent Clyde. After the first shock, the town felt more embarrassed than angry. Clyde Rectenwall, free on a $20,000 bond, returned home; neighbors saw him carrying swill to the hogs or working in his truck garden. The old man refused to talk to anyone, and nobody felt like talking to him. Bert Fisher, the bank president, who lives next door, saw Clyde only once, and turned his head away quickly, as if he hadn’t seen him. Teacher Wicoff was still teaching, Grocer Hoover still working in his store. Said a townsman: “They weren’t used to dealing with banks much and, I guess, didn’t think what they were doing was wrong.”

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