Los Angeles herald., 1891-08-11
ROTTEN TO THE CORE
An Enormous Swindling Con-
Germ Exposed.
The Familiar Building and
Loan Association Fake.
A Corporation with High-Sounding
Name in Bad Repute.
Two of Its officers under Arrest, but the
Arch-Swindler Escaped Thou
sands of Dollars Fraudu-
lently Obtained.
Associated Press Dispatches.

4. Associated Press Dispatches.
CHICAGO, August 10.-Alfred Downing,
president, and N. S. Tollman, vice-pres-
ident OF the National Capital Savings,
Building and Loan association of North
America, were arrested today by Post
Office Inspector Stewart, charged with
using the mails for fraudulent purposes.
1t is charged that the men who have
been conducting the association have
swindled thousands of people from
every state in the union, and have taken
in 0,0O0 tc' $500, 900 giving nothing in
return. Their victims were found
among all classes Of people. From facts
already in possession OF the authorities,
it appears that the scheme will parallel
that OF the great "Fund W. swindle
which was broken up about five years
ago. There are still two men at liberty,
having disappeared several weeks ago,
and it is believed they got away with
most OF the funds.
For more than six months letters have
been received from all parts of the coun-
try by postoffice and city authorities
protesting that the company was not
what it was represented to be; that it
was collecting money and making no
loans. Inspector Stuart has been work
ing on the case four months. He found
that the concern had agents III every
state in the union who were selling the
$4,000 900 of stock the company had for
sale. These agents were being sent cir
culars and documents showing the asso-
citation to be glt-edged.
When Inspector Stuart took charge Of
the case, Lewis f. Mortimer, general
manager and secretary of the concern,
was apparently the responsible man and
handled the cash received in large
amounts every day. Stuart visited the
company's Office frequently, disguised as
q letter carrier, in order to secure evil
denee. Several weeks ago Mortimer dis
appeared, and, today, having waited in
vain for his return, Stuart decided to
secure the other visible members OF the
combination.
George o. Ferguson, OF Lincoln, Neb.,
representing about sixty victims in his
city, was summoned here With his
assistance the necessary evidence was
completed and the arrests made. Three
lduf ClCIh6 WClC iito Cuc-
tody as witnesses.
Mr.. Ferguson, in an interview, said:
'The association was represented in
Lincoln by local firm, acting in good
faith. Nebraska people are very much
in favor of building and loan associa-
tions. and the offers of the concern were
snapped up quickly. 1t sold shares
for SO cents each, with monthly
nj No fu. " hc
of $l1.O5, at the end OF which time a
$1,000 loan would be paid for; then
there was membership fee of $50; an
appraisement fee OF 500; $45 for three
months payment in advance, thus
making $95. The concern made one
$500 loan that was genuine, and this
was just enough bait to induce others to
invest, and hundreds sent money to
Chicago expecting on the strength of
the loans to make contract for the
building of home. The money never
came, and we wrote to Chicago
to learn what was the trouble.
Finally Professor Ellwood, OF the
Wesleyan university, who was heavy
invester, came to Chicago to investigate.
Manager Mortimer seemed to be such a
fine business man, and gave such assur-
ances that the loans would be forthcom-
ing, that Ellwood went back satisfied,
but the money never came, and finally
l laid the case before the postoffice
authorities"
Inspector Stuart and District Attorney
Milchrist went over the concerns books
and found that seventeen legitimate
loans had been made in as many differ
ent states. These, it would seem, were
made to allure other investors.
No records of any other loans could be
found, although the books chow that
money has been received from hundreds
of people in places where single loan
was placed. A rough estimate of the
amount received is $175,000 in the year
and half the association has been in
existence.
The books show that the association
had agents in all the states. but the
most active were in Omaha, Denver,
Olympia, San Francisco and Minneap-
oils. These agents transmitted hun
dreds of dollars daily in checks, money
orders and registered letters. Until
within few months, it is said, the con-
Germ did heavy business in Philadel-
phia, but it appears that the authorities
there made inquiries which resulted in
the manager leaving.
When the association organized Feb
ruary 81, 1890, the officers were: Alfred
Downing, president; N. B. Tollman,
vice-president; Lewis F. Mortimer, gen.
eral manager and secretary. Mortimer
seemed to be the leading spirit in the
enterprise, and at once incorporated the
concern with capital OF 500 1000.
He was a good manager, and soon had
money flowing in at rapid rate. Every
thing went smoothly until the
closing of the Philadelphia branch,
when Mortimer came back here and be-
gan wrangling with his business associ-
ates. Finally he ousted Downing and
elected one F. A. Wentworth president.
Downing threatened trouble and Mortl-
mer, saying his son was very i'll in Phil
adelphia, left suddenly and has not been
seen since. 1t is said he took about
500, 900 that the association had in bank
here, leaving about $4,000 which Down
ing had tied up by an injunction. Morti-
mer was last heard of July 10th in New
York city.
Downing and Tollman both admitted
that enormous sums had been taken in,
but asserted that they were not in it.