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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.
Rhoades,
a Republican, was elected state treasurer on November 8, 1864. Under the provisions of the
new state constitution, he won a two-year term.
Formerly the treasurer of Esmeralda
County, Rhoades named his
brother, Henry, as his deputy. The two brothers came to the Nevada Territory
from Massachusetts
in 1860, quickly rising to prominence as mine speculators, hardware retailers
and local political activists.
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
$106,432.88
(derived from land sales, revenue stamps, and the estate of at least one dead
man) had been taken from state revenues.
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.
Legislative
maneuvers and a series of court trials attempted to recover the embezzled funds
from Rhoades' bondsmen, who had put up their own credit against any loss of
state funds, in accordance with state law. A powerful collection of notable
Nevadans, the bondsmen were ultimately relieved of all liability by special
legislation enacted in 1873.
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.
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Suggested Reading:
Patty Cafferata and Dale Erquiaga, "Special Interests Run Amuck" Nevada Historical Society Quarterly (Winter, 2005). Patty Cafferata
Dale Erquiaga Last Updated: 2007-09-10 10:55:12
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