Building and Loan

This photograph of the Centerburg Building & Loan Association did not identify the people. It is very possible, judging by the period clothing, that all three of the men involved in the 1931 banking scandal are in this picture.

CENTERBURG -- Friday, July 10, 1931, didn't seem much different from any other end of the week at the Centerburg Savings Bank. There was always plenty of work to do.

So bank president Guy C. Bishop and his head cashier, Homer C. Smith, had stayed late to finish up after the other workers had gone home. This was standard procedure.

Both of the men were known as hard workers each holding down multiple jobs. Bishop was also secretary of the Centerburg Building and Loan Association, right next door to the bank, and where, conversely Smith was president. Smith had also for many years run a chicken farm with his family.

Indeed, Bishop thought Smith had been unusually successful with those chickens, as Smith had bought a brand-new car two years in a row recently, no small feat during the height of the Great Depression that was plaguing the U.S. economy. But Bishop wasn't worried. They'd worked side by side for nearly 15 years, and, after all, Smith had been superintendent of the Sunday school at the Methodist Church in Centerburg for over 30 years.

There was no one more trustworthy.

The men finally wrapped up business, locked up, and stepped out into the mild evening. They walked down South Hartford Avenue, not talking about much. At the Church Street intersection, the men paused, to head off in different directions.

“Well, I'll see you tomorrow,” Smith said, then headed on down South Hartford toward his home.

Bishop turned onto Church Street to walk the two blocks over to his residence on Preston Street. He had no way of knowing that those were the last words he'd ever hear Homer Smith speak.

Sometime before dawn Saturday morning, July 11, Smith rose from his bed without waking his wife, Fern. When she awoke, Fern was concerned that she could not find her husband. It was not at all like him to leave without announcing where he was going — but the family automobile was gone, too.

Sensing something was very wrong, Fern telephoned Guy Bishop, who was equally shocked and unsettled.

When no one could account for Smith's whereabouts, search parties were organized to criss-cross Centerburg. Not finding any sign of him in town, the searchers started circling further and further out of the village. Finally, three miles north of town, near Rich Hill, a searcher found Smith's automobile parked along the road running beside the Hall farm.

No trace of Smith was found along the roads or in Rich Hill. The searchers were gathered and reorganized to start a sweep of the growing cornfields, for the corn was already tall enough to conceal someone.

At about 8 p.m. that evening, searchers found Homer C. Smith in one of the cornfields near his car. He was dead, with a bullet hole in his head, a gun in his hand, and two notes in his pockets. One was for his wife. The other was for his boss and friend, Guy Bishop.

What those notes said has never been revealed.

It was a stunning end for the 52-year old businessman and pillar of the Centerburg community. It threw the town into an uproar and unleashed chaos at the bank.

When Bishop was asked to produce audits to demonstrate the soundness of the bank's finances, he fumbled and haltingly explained that he had gradually stopped doing audits over the years because he trusted Homer C. Smith implicitly. What he left out was that he had a few curious transactions himself that might not look so good on an audit sheet.

To Bishop's shock, the bank's board of directors voted Monday morning to shut the bank down until further notice -- until a proper reckoning could be made. Rumors (never explicitly addressed in the press) swirled that up to $70,000 was missing.

The public didn't even want to believe that Homer Smith could have been so villainous, so the rumor mill quickly focused on Bishop and assistant cashier Ralph Ramey. The auditors found some very questionable figures on the bank's books and in the books of the institution next door, as well.

Within a month, the Centerburg Building and Loan Association went into receivership.

Whatever money disappeared through Smith's hands, it wasn't the only funny business going on. Cashier Ralph Ramey was charged with writing a check for $2,695 to an “L. J. Lemley,” a person that no one seemed able to actually produce in the flesh. That check, it turns out, had been stamped with Homer Smith's rubber stamp on a day when witnesses could prove Smith wasn't even at the bank.

Bishop himself was indicted on four charges, including the amazing charge that he had attempted to write a check to himself from the bank just before the inspectors started examining the books. Bishop attempted to explain it away as a transfer of funds from the bank to the building and loan, pending a credit payment coming from Cincinnati.

But the Knox County grand jury didn't buy it and indicted Bishop for embezzlement.

With his two places of employment closed and large legal fees to pay, Bishop quickly found himself in desperate financial shape. Forced to sell his home, Bishop and his family moved in with his wife's mother, Vesta McLaughlin.

McLaughlin herself had lost $2,000 in the bank debacle, so she refused to speak even one word to her son-in-law. According to the 2003 Centerburg history book available at the Centerburg Public Library, she held that grudge, too. Although McLaughlin lived another 26 years, she maintained her icy silence to Bishop the entire time.

Ralph Ramey came up for trial first, in October of 1931, and admitted cooking the books to cover up some strange transactions. He claimed that he had been instructed to write the mystery check to the fictional L. J. Lemley by Smith himself. Whatever the case, Bishop also signed off on that check, leaving all three individuals — who had all worked together at these institutions since 1917 — looking less than sparkling clean.

On Dec. 5, Ralph Ramey was found guilty of forgery. Knox County Prosecutor Robert L. Carr wanted Ramey to go to prison, but Judge Philip Wilkins opted to instead put Ramey on two years of probation, with the requirement that he pay back the bank the $5,100 they could prove Ramey was involved with siphoning off.

He did so, and later moved away from the area.

The courts then focused on Guy C. Bishop. By this point, more charges had been added, bringing his total up to seven charges of embezzlement and falsification of records. Bishop's attorney pleaded for a change a venue from Knox County, but was denied. The former banker went on trial for the initial charge of embezzlement and was found guilty.

On Wednesday, Dec. 30, he was sentenced to serve one to 10 years in the Ohio Penitentiary in Columbus. Bishop's attorney appealed the ruling and sentence to the Ohio Supreme Court, but lost. Bishop went to prison.

One charge that had not been nolled against Bishop was writing a check with insufficient funds. In 1933, Bishop demanded, and received, a trial on this charge, with a change of venue granted from Knox County to Ashland County.

In this trial, he again explained that he had written this check in expectation of a payment coming to the Centerburg Savings Bank from an institution in Cincinnati, and that he had only rushed the check because the inspectors were about to shut down operations. He wanted to make sure that the savings and loan had cash to pay dividends to its customers.

By this point, with Bishop's severe sentence of hard time in the Ohio State Penitentiary, public sentiment had swayed back in his favor, and he was seen as a patsy for crimes that Smith and Ramey had committed.

The Ashland jury found him not guilty on the check-writing charge, and Bishop promptly used it to plead that the Ohio Supreme Court overturn his previous conviction.

They declined to, and the state parole board denied him release that year and next. Finally, on Friday, Dec. 21, 1934, Ohio Governor George White issued a “Christmas pardon” to Bishop and another banker who had been jailed for a bank collapse in Cincinnati.

In the end, no one can say for certain just who was guilty of how much misuse of funds at the two financial institutions. The cozy arrangements they worked under for many years do nothing to clear all three men of suspicion. But the worst part is that many innocent people lost money in the scandal, and one man ended his previously acclaimed life, leaving two children and a wife behind, unsupported.



The Centerburg Savings Bank, where an embezzlement scandal began to unfurl in 1931. (Submitted photo courtesy of the Centerburg Public Library.)

Centerburg Main Street:

Another view of the Centerburg Savings Bank in an early vintage postcard scene of the town.

(Submitted photo courtesy of the Knox Time Collection.)

Bank 2018:

After its closure in 1931, the bank was reorganized and has operated ever since. Today it is known as the First Federal Savings & Loan Association of Centerburg. (Photo by Mark Jordan.)

Former building and loan 2018:

While the building retains its original grandeur, the former building and loan structure has been

converted into more mundane uses. (Photo by Mark Jordan.)

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