St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1891-07-01
Is the Way Commissioner
Dearth Speaks Of the Com
pany's Operations.
Action to Be Taken to at Once
EXtepminate the Organ
ization.

lu6 lllSuIdlCc COMMISSIONER Wis Cdlltu
upon to look into the matter. Accord
ingly, Deputy Commissioner Elmer II.
Dearth was dispatched to investigate.
His report, just submitted, shows that
the stories about the Equitable have not
been exaggerated in the least. and In
surance Commissioner Smith stated yes
terday that he would at once proceed to
wind up the affairs Of the company.
Attorney General Clapp will commence
operations to that end to-day. The re-
port submitted by Mr.. Dearth says:
Owing to varied and numerous COM
plants filed with this department. and
in pursuance to the provisions of the
laws of this state, /, Elmer II. Dearth,
deputy insurance commissioner of the
state of Minnesota, have made an eX-
animation Of the affairs and condition
of the Equitable of Minnesota, cover
ing a period from date of commence
ment of business to June q. 1891:
Total amount collected on occount
OF life department as shown by
its record ................ 81, 900 80
Paid out on account of matured
eertlhcates. .-.----.:---- -.... D. - .:
Paid out on account Of expenses. }, l56 SO
Balance to credit Of mOrtuary fund. 976 50
Balance to>credit Of expense fund. 143 to
ASSETS.
Cash in Second National Bank Wi
mona OBSERVATION-DISCLOSURES. i,l2J 10
LIABILITIES.
Due for matureG certificates (No. 81. 5000 90
Besides the above, twelve proofs of
death have been received, covering
$4,000 insurance. This makes seven
teen certificates, covering in the aggTe-
gate SIT 600, now to be settled for; but
under the terms of the
Contract Contained
in the certificates, or rather bonds, the
liability of the society is whatever may
be realized from one assessment upon
all certificates in good standing, the
proceeds to be divided pro rata as per
conditions contained in the contract. As
there are only 4S4 certificates in force,
it Will readily be seen that the amount
the society will be able to pay on each
claim is very small. While the books of
the society show the above transactions
to be legitimate and regular, still, by
thorough investigation of all the papers
and records of the said Equitable of
Minnesota. find plenty of convincing
evidence that the business being carried
on by said society is dishonest and ir-
regular. 1t appears that the Equitable
of Minnesota was organized and re-
ceived its license to transact business IN
January, 1920. with its home Office at
MankatO, MINI. That in September,
1890, its base of operations was trans
fcrred to WInona, Mimi. From its rec
Ords / observe that there was
No Business TRANSACTED.
or certif Gates issued. until October,
1890. During said Month the bonds of
the sO-called National Bond Install
ment and Disbursement company. of
Ithaca. Mich, which was operated in
that state under the management of
William A. Leet and TheO 5. Barnes.
president and secretary, respectively, of
the Equitable of Minnesota, were trans
ferTed without any reservation into said
Equitable society. l find that the So
called bond company, as above named,
never had legal or corporate exist
ence, the same existing in name only;
therefore. every one of the bonds issued
was an unlawful transaction, and every
dollar collected from members of the
Equitable to pay for these matured
bonds was nothing more nor less than
pure and unadulterated robbery. The
bonds issued are practically life insur-
ance certificates, and are issued pTinci-
pally upon lives Of old people, being
under the disguise of company that
Never Existed,
for the purpose of evading the insur-
ance laws of Michigan. These bonds
are still being issued upon the lives of
Michigan citizens. each one as issued
being transferred into the Equitable,
and, as fast as they mature, an assess
ment is made, not only upon the holders
of these bonds, but also upon all men,
- 10 IL, OE
pay the same.
Of the total number OF claims assessed
for up to June "A, 1891, only one was on
account of a certificate issued by the
Equitable; consequently, with this one
exception, all the money collected of
the members of the Equitable of Min
neSOta and paid over to the benefciaries
of said bonds has been illegally OBJ
tanned and disposed of, which fact
alone
Makes 1t the Duty
of the insurance department to see that
proper steps are taken Tor closing up
the business and affairs of said society,
thereby protecting the people against
such fraudulent transactions. Under
the provisions as contained in its arh-
cles of Incorporation, the said society in
January last commenced to issue endOw-
ment certificates. The plan and method
OF conducting this branch of the bust
ness was as follows, viz: The certifi-
Gates are issued for $500 each, upon
which monthly assessment of s. is re-
Quired to be paid, from which amount
20 per cent is retained for expenses, and
10 per cent goes toward the formation
of a security fund, leaving 20 per cent
to be placed in the endowment fund.
Whenever the amount in the endow-
ment fund shall reach $500, then the
lowest numbered certificate in good
standing shall mature and be paid,i
and in like manner the next lowest
shall mature and be PAID, and so on.
1t is needless for me to state that this is
an impractical plan upon its face. and
not at all in keeping with sound insur-
ance principles. But the irregular. dis
honest and unlawful proceedings by
which the society has paid off certifi-
Gates numbered one, two and three
makes it imperative upon the insurance
commissioner to protect the public
against
This NefarfOuS Business,
which is being transacted by said So
ciety. Upon examining the books and
records find that the total amount col
lected to date on account of the endOw-
ment certificates, and the dispensation
of same under the terms of the contract
contained in the certificates, is as fol-
lows:
Total amomunt Of assess
ments collected. ........... S1.S14 90
Twenty per cent reserved
for expenses. ...............S 262 50
| Ten per cent reserved for
security fund. ............. 131 40
| Total amount Of endowment--
fund go per cent? 500 50
l find at, regardless of the fact that
| only S9l9.S0 was legitimately available
! in the endowment fund, the society has
I receipts showing that three certificates
have been paid in full. amounting to
$500, and still has cash in the bank to
the amount of S226.20. Investigation
Reveals the Fact
that special contracts were made with
| the persons taking certificates num-
bered one, two and three. As a sample