Law & Order ~ Itasca County Treasurer Embezzled Funds part 1

Resort Note: Due to circumstances beyond my control (and yes technology has played havoc with my historical data) the other two resort articles will be postponed until spring 2022. Also, I still can write a few more if you have a suggestion.  The criteria are that they were started before 1935 and have operated from the time they opened until the present.  Names, of course, may have changed! reminiscewithchris@gmail.com ~ 218-244-2127 ~ blog chrismarcottewrites.com

10.10.2021

In October 1909, citizens of Itasca County were shocked to learn that Arthur Kremer, the man they had elected as treasurer several times since 1894, had been arrested for taking money from the county coffers.

Brief Family History

In the early 1890s three Kremer brothers moved from their homes in Saginaw, Michigan, to the prosperous village of Grand Rapids, Minnesota.  Edward (preferred to be called by his initials, E.A.), the oldest, came in 1891.  A registrar of deeds in Saginaw, E.A. and his long-time friend Fred A. King formed a business partnership, Kremer & King Abstract Company located in the Itasca County Courthouse. Twenty-five-year-old Arthur followed in July 1892.  George is the one most of us know because of the Geo. F. Kremer store which occupied a city block in Grand Rapids from 1893 until it closed its doors in1991.  He came in 1894 to build a house for E.A. and returned the following spring with his family. One of their sisters, Minnie Marie and her husband Werner Groening, also lived in Grand Rapids by 1910.

Arthur August Kremer

Arthur was one of nine children born to William and Sophia. They had both immigrated from Germany in 1852, then married and settled in Saginaw. Kremer had been employed as a clerk in a real estate office, a bank, and then as a bookkeeper in the City Treasurer’s office in Saginaw.  In Grand Rapids, he was first employed as assistant cashier at the Lumberman’s State Bank.  When he was offered a more lucrative position with Tuller Brothers, Arthur felt he could now marry.  He returned to Saginaw and married Mary Elizabeth “Birdie” Thompson on October 6, 1892.  The couple lived on Kindred Ave. in Grand Rapids.

Arthur was elected County Treasurer in 1894 and re-elected in 1896.  In 1898 he lost to C.C. Miller. The 1900 U.S. Census shows Arthur, Birdie and son Russell living in a home on 7^th St. Grand Rapids that they owned.  Arthur was employed as a bookkeeper for a lumber company. Kremer ran unsuccessfully against Miller in 1904 but was elected in 1906 and re-elected in 1908.

Investigation

During the first week of October 1909, it was brought to the attention of “Attorney General Simpson of shortages in the treasury of Itasca County, and last Saturday [Oct 9] he took up the matter with Anton Schafer, public examiner, who sent Mr. Kain to Grand Rapids to make an examination.” [Bemidji Daily Pioneer 10-13-1909]

Michael Kain immediately began going through the books of the County Treasurer’s Office and by noon on Monday had enough evidence to take control of the office. In a telegram to his superiors, he stated that Kremer had confessed to the embezzlement of county funds.  It is believed he took about $8,000, and that he has about $6,000 in his personal bank accounts towards restitution.

The telegram, along with a formal recommendation that Kremer be suspended, was brought to the Governor, Adolph Ebenhart, who that afternoon ordered the suspension. By law no official can be removed by the governor without a hearing, but the county auditor was also sent a copy of the order.  Kremer resigned and, on Tuesday, the County Board elected Glen Strader to serve as County Treasurer.

By the time Kremer was arrested, the financial discrepancies continued to climb, and were near $20,000.  He was released on $10,000 bail provided by his brothers.

Two questions that were on the minds of the county citizens were how he embezzled the money and why.  It was alleged that he wrote incorrect totals on the duplicate tax receipts.  For instance, when several items on a tax receipt totaled $324, he would mark that total as $224 on the duplicate he gave the county auditor and keep the remainder.  It is believed that at first, he started with $100 at a time, then $500 and possibly even more substantial amounts.  Based on dates, this had been going on some months when the discrepancies were discovered.

The question of why will not be resolved until perhaps the trial, but there was still speculation.

County Gives Ample Bonds ~ Duluth Evening News 10-14-1909

Grand Rapids, Minn., Oct 14. – (Special to the Herald.)—The National Surety company furnished ex-County Treasurer Kremer’s bonds in the sum of $75,000, so the county is believed to be amply protected against loss resulting from the deposed official’s misconduct.

Deputy Public Examiner Kain continues his probe of the books of the county and is quoted as saying that the shortage will not exceed $40,000 if it reaches such a large figure.

Kremer has securities including mortgages and other property, amounting to $34,000, all of which will be turned over to the county.  Mr. Kremer has on deposit in various banks, $6,240.43 which he has turned over.  The public examiner found $1,545.77 in the treasurer’s vaults.

Kremer’s hearing may develop more sensations.  The public appears to be at a loss to explain where all of the money went, large family expenses being one of the explanations offered.

Although Kremer is said to have made a confession of his shortage to the public examiner, it is reported he has retained counsel and will fight prosecution, but this is not verified.”

Friends of Kremer Attribute His Trouble to Mental Defect ~ Duluth Evening News 10-18-1909

“A friend who has known him for twenty years stated that twelve years ago Kremer had an attack of brain fever and that during this spell of sickness morphine was given to him to relieve him.

Recently Kremer spent some time at a sanitorium, telling his friends here, that he was compelled to take treatment for his nerves.  Since his return from this hospital, he has apparently been somewhat improved in health.

The news of his defalcation, while an absolute surprise to most of the residents of this county, was not unexpected by many who have been close observers of events here.

When Kremer was elected treasurer about five years ago, he is said to have been a poor man.  Almost at once he bought land and built a handsome home, which was elegantly fitted up.  He took pleasure trips with his family to the Pacific coast, Niagara Falls and other places, sent his children away to school and lived in an expensive manner.

He also began to lend money, and a list of notes and mortgages totaling many thousands of dollars is now in the hands of Assistant Public Examiner M.F. Kain.  Most of these were registered here under his own name and the apparent lack of ordinary prudence in covering his tracks is pointed to by his many friends as one strong evidence of his mental incapacity.

The entire list of securities belonging to Kremer and now in the hands of Mr. Kain totals more than $37,000, all of which is believed to be good.  It includes deeds to various lots, mortgages, bank stock, building and loan and mining stock. 

If, as now appears probable, the shortage in his accounts proves to be in the neighborhood of $50,000, these securities will come within a few thousand dollars of covering it.  It will be at least a month, however, before an accurate statement of the deficiency can be made.”

As the sum of misappropriated funds continued to climb, the county residents were impatient for the court process to continue in a timely manner.

Kremer Shortage May be $60,000 ~ Duluth News Tribune 10-24-1909

“Grand Rapids. Oct 23. —The board of audit is still at work on the books of the ex-county treasurer Kremer, and up to tonight had found discrepancies, indicating an apparent shortage of about $60,000.  Quite a good many securities have been uncovered in the vault and others are not in the vault but have been accounted for.  The ex-treasurer’s investments were so good that it is regarded as probable that sufficient funds may be realized upon them to cover the shortage within a few thousand dollars.  It is the aim of the board of audit to complete the investigation by Oct. 29 when Kremer’s hearing will be held.  The hearings will be held before Justice Walker of Grand Rapids.”

Indictment

Kremer Indicted on Five Counts ~ Duluth Evening News 11-5-1909

“The grand jury has completed its labors and reported to the court. The court thanked the jury and dismissed it.

Arthur A. Kremer, ex-county treasurer was indicted on five counts. In three of these cases, Kremer is alleged to have taken certain portions of tax payments of the Great Western Mining Company.  In one of the cases, it is charged that the company made a payment of $16,342.54 and that the sum taken out by Kremer and appropriated to his own use was $2500.  In another case, the company paid $28,045.17 and the sum of $2000 was held out.  In another instance, an entire payment of $3583.10 was entirely held out.  In the other two instances, personal property taxes were never entered on the county books, the amounts being $265.45 and $370.34, respectively.” 

Kremer was arraigned on the five counts but entered no plea.  Judge Stanton fixed his bond at $25,000, which was furnished.”

At first it was thought that the trial would not happen during the present term of court, but County Attorney Price was adamant that the case would be scheduled for early December.

Look for the trial and decision on Sunday October 24, 2021, in Part 2 of County Treasurer Embezzled Funds.