The herald., 1893-12-03
The Hard Lines of the Guaran-
tee Investment Company.
Over Four Hundred of the Bonds
Taken in Los Angeles.
It's President Sent to Jail for Year by
Judgs arosscup in Chicago-What
the Local Agents say-Bust-
moss Suspended.


George M. Mcdonald, president OF the
Guarantee Investment company. to IL
months in the county Jail and $1,000
fine. and the secretary and treasurer
1900 each for using the United States
NAILS for lottery purposes.
The company has an agency in Los
Angeles, conducted by Messrs. Thomp-
son. Mitchell & Co., to whom the con-
yiction and sentence of the president
has come like thunder clap in clear
sky.
They have had their Office open for
several months and have succeeded in
placing about 400 of the bonds OF the
investment company.
The decision of the federal courts Tor
bids the use of the United Statea mails
to the company, and when it was made
November 22d Mr.. Mitchell ordered in
his large number of agents and discon-
tinued all attempts to procure new busi-
ness.
In conversation with a HERALD rep
resentative yesterday he said that he
was awaiting advice from the company
as TO the future policy. They had inti-
mated that they would be able to make
some notifications of their plan 30 as
to continue business. But II the ludg-
ment OF the court held he would go out
of business, as he had no disposition 2
disobey the law. He and his partner had
entered into the agency in good faith,
had removed their families to Los Ange-
les, and the decision had been thun-
derbolt. They had not come to Los
Angeles to run a lottery and expected
to remain here.
he said tnat ii the judgment STOOD ii
would result in loss to the purchasers
of bonds of the amounts they had put
in, no doubt, except that they would
get a share of the 100000 deposited
with the state treasurer of Missouri.
He was in the same position as any
other bondholder, for he was carrying
more than any one in the city.
The offices OF the agency in the Bry-
son block were not cheerful yesterday
afternoon. The people who were in
them wore faces as long as the moral
law, and it could readily be seen that
the agents and all concerned felt very
blue about the prospects of the Gusrsn-
tee Investment company.
The trial in Chicago of the officers of
the company, which has been alluded
to, was q sensational one, and the result
seems to strike them with consterna-
tion.
There is no doubt that the plan of the
company is q very plausible and in
genious one, and the agents have made
q brilliant success in doing business.
The company sells $1,000 bonds to any
one who will pay $40 down and $1.25
monthly. The bonds are supposed to
mature within five years and the pur-
chaser to receive many times the money
he pays in.
The very fact that the Los Angeles
agency has pluced over 400 of the bonds
in few months shows how popular the
idea has become.
Judge Grosscup delivered an elaborate
charge to the jury in the case, and it
was concluded in language that caused
the officers of the company to writhe.
After discussing the law OF lottery, he
said about the company's plan.
There is no doubt, gentlemen, upon
the face of it that it constitutes cheat.
The testimony shows that this COM
pany has been in existence now for two
years and has had 30 023 applications.
According to the constitution OF it's
organization it has therefore received
more than $500,000 from the $40 pre-
liminary fee. The testimony shows that
they have paid out $206.00 from the
so-called trust iund, If they had paid
out all they received, as the constitu-
ton OF the company required them to
do, then they have received as main
tenance from the dues more than
$4,000.
Therefore, after an experience of two
years the officers and the stock holders
have received more than $4,000, and
its so-called benefcisries have received
but s2O6. 900. This is public plumber"
Alter dissscting the plan of the COM
pany in detail, in comparison with lot
terry schemes, and saying that the
Louisiana lottery is fair and honest az
the day by contrast, the court said:
"The whole scheme disclosed by the
proof is cunning trick to attract the
cupidity and ignorance OF men," and
said that the mails of the United States,
being intended for legitimate business,
are defiled by the dissemination and
promotion of such scheme as the evil
dence admittedly disclosed. The sue
cess of the enterprise depended upon its
insolvency, its gross and well-known in
solvency-so insolvent that in the very
method of it's organization no hope of its
carrying out its promises could be en-
tertained.
Di scussing the probability of the pur-
chaser of 8 bond receiving his money,
Judge Grosscup said:
''It is said, and is one of the boasts of
the company, that everybody who has
been paid back has been paid $1,000 on
m Investment not to exceed $50,
THAT again shows the entire impossi-
bility, according to the constitution Of
the scheme, of but limited few-one in
q hundred--ever receiving any return
or prize except for the lapses. Because
money lying idle in the treasury, ehorn
in the first place of 20 per cent of the
amount, will never grow to pay 1000 to
or 1000 to 30 80 long as the present
economic law OF the universe prevails.
These defendants have foreseen this,
and foreseen that the company must
therefore come to an immediate end
and have instituted what is called the
multiple system Thereby a chance is
held out to men even after the company
has grown to be $4,000 to receive an
early payment of his bonds. But upon
what is that chance dependent? What
determines that return or that prize
ANY law OF nature, or OF industrial
growth, such as applies to insurance
companies or real estate investments2 ?
Not at all. 1t is solely dependent upon
the order in which his bond may go
through the registration process. If he
draws multiple and the company con-