The initial accusation against Bates was that he had illegally deposited $88,000 with Palmer, Cook & Co. for the purpose of paying the interest on state bonds in New York City in July 1856, without requiring security for this deposit; and that the interest was not paid. A report to that effect was presented in the Senate in January, 1857. Soon afterward the assembly drew up articles of impeachment against him, for the Palmer, Cook & Co. matter, for purchasing state warrants with state funds and pocketing the difference in value; for other dubious transactions; and for a "corrupt combination" with the president of the Pacific Express Company for loaning state money. Bates was convicted, but resigned from office before he could be sentenced. The investigation and removal of Bates from office was the result of an article in the Sacramento Bee, at the time of publication still less than one week old.