The first man to hold the office of Nevada state treasurer may have been the most notorious. Accused of embezzling over $100,000 from the permanent school fund and other state accounts, Ebenezer "Eben" Rhoades died a mysterious death and set off a political firestorm that preoccupied state officials for almost four years after his death. No other state officials were ever charged with wrongdoing, and the bondsmen who had vouched for Rhoades' character were relieved of any liability.
According to state audits and legislative hearings conducted after his death, Rhoades began embezzling from the treasury during his first term. Reelected in 1866, he began taking state funds in earnest. At the time of his death a reported
Rhoades often traveled to San Francisco on state business, such as selling state bonds, and he died there on September 9, 1869. Early newspaper accounts attributed his sudden death to heart failure, but subsequent reports revealed that Rhoades was a drug user who had committed suicide.
Rhoades' brother Henry testified several times during the three-and-a-half-year-long investigation that followed his brother's death but was never charged in the scandal. Henry admitted he and Eben had hidden the embezzlement by borrowing money from Wells Fargo Bank to have sufficient funds on hand for cash counts. Eben also lent state money to elected officials for their personal use, including Governor Henry Blasdel and Controller William Parkinson.
As a result of the Rhoades' defalcation (a term used by the United States Bankruptcy Code to delineate debt that cannot be discharged in bankruptcy), Territorial debt was not retired until the 1920s, and the state's Permanent School Fund was severely deficient. Estimated interest from the embezzled money could have amounted to more than $300 million over the next 100 years of statehood.
Suggested Reading:
Patty Cafferata and Dale Erquiaga. Special Interests Run Amuck. Nevada Historical Society Quarterly, Winter, 2005.
