Exhibit - "Scandinavian American Bank": Shoot It to the Other Banks

Records Fight

The fight over the Scandinavian American Bank (SAB) did not stop once O. E. Lofthus (State Examiner) returned from Florida and assumed control of the bank as its receiver, following the temporary ruling of the North Dakota Supreme Court.

After Lofthus took control of the SAB, he served a notice to William Langer (Attorney General), Thomas Hall (Secretary of State), Albert E. Sheets, Jr. (Assistant Attorney General), and P. E. Halldorson (Deputy State Examiner). Lofthus warned that he would hold them accountable for any missing records or property during the time that they held and took "unlawful possession" of the bank.

Langer petitioned the North Dakota Supreme Court to modify its order so he could retain certain evidence for the prosecution of Halvor J. Hagen (President of the SAB) and P. R. Sherman (SAB cashier). The Supreme Court denied Langer's request and ordered him to surrender everything to Lofthus.

Letters Released

Before completely complying with the Supreme Court's order to turn over all records to Lofthus, the Attorney General's office released letters to the public.

On October 8, 1919, Langer released the "shoot it to the other banks" letter to the public. In the letter from June 1918, Roy M. Halliday (then Chief Clerk in the State Examiner's Office, under James R. Waters) gave John J. Hastings (then Vice President of the SAB) advice on how to deviously outwit state examiners.

Halliday passed along some advice to help avoid giving the NPL's opposition any leverage over the bank. State examiners, including P. E. Halldorson, were inspecting the bank at the time; and Halliday said if examiners object to any of the "paper" at the bank (presumably bank notes or postdated checks), Hastings should tell them that "it will be removed at once" to get a clean report, but instead, it should be moved to other NPL banks and then transferred back later.

Halliday sent a follow-up letter the next day telling Hastings not to send anything to the banks in Buxton or Grand Forks, but the Hatton, Hillsboro, or Lisbon banks were good options.

The letter appeared on the front page of newspapers across the state, and it served as fuel to the growing fire against the NPL. In his statement accompanying the letter, Langer said:

"The courts, the governor, the state bank examiner, and some other state officials can line up with crooks and use their official positions to protect them if they wish. As for myself, I shall keep on trying unfalteringly and faithfully to serve the people..."

On October 11, 1919, Assistant Attorney General Sheets released two more letters to the public. The letters were allegedly discovered during the SAB investigation. The letters were carbon copies and bore no signatures, but they appear to originate from Halvor J. Hagen (SAB President) and P. R. Sherman (SAB Cashier). Both were sent to A. C. Townley (leader of the NPL). The letters suggest that the SAB was concerned about its financial situation back in May 1919 and feared "embarrassment and disgrace." The senders looked to Townley for financial assistance and inquired about alleged promises he made to get the bank through this "dangerous period."

These letters became infamous. The NPL's opposition used them as a rallying cry and accused the NPL of political favoritism and poor banking practices.

Legal Battle Continues

After failing in a District Court appeal before Judge Albert T. Cole, the Attorney General's office continued its fight to regain control of the SAB, on behalf of the State Banking Board. Assistant Attorney General Sheets, arguing the case before the North Dakota Supreme Court, justified the board's actions and insisted that the State Examiner is a subordinate of the board, so the power to appoint a temporary receiver is the board's. Sheets also argued against using postdated checks as collateral.

William Lemke, representing the SAB, rejected Sheets' arguments and pressed the Supreme Court for a quick resolution because the bank lost business and prestige each day it remained closed.