The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1899-11-16
ARRESTS ARR MADE
SENSATIONAL DEVELOPMENTS IN
THE FAILURE OF MLAIN BROS.
& COMPANY
CUSTOMERS LOST THOUSANDS

Many of Them Located I'm Minnesota
and the thwest-POstOffIce In
spectOr Tells How the Firm
Worked Its Scheme-Evidence In
the Shape of Correspondence in
Hands of the Authorities.
CHICAGO, Nov 15.-The federal au-
thorities today took cognizance of the
reports which had been made concerning
the alleged fraudulent business of the
board of trade firm of McLain Bros. &
Co., and arrested Charles r. and Albert
o. McLain, members of the firm. The
charge was using the United States mails
to carry on a scheme to defraud The
prisoners were taken before United
States Commissioner Humphreys, where
they waived examination on the charge,
and were held to the federal grand Jury
in bonds of $1,000. The bail was what
is known as joint and several bond,
the whole of which will be forfeited if
either or both Of the defendants fail to
appear in court when called upon
The two board of trade men are said
to have begun their operations with Gus
toners in various parts of the country
two years ago, and it is claimed they
realized over $500,000 through their buck
et-shop' scheme. They will not appear
in court again until next spring, and
not then unless the federal grand jury
finds true bills on the charge.
The firm of McLain Bros. & Co. has
stopped all operations on the market,
having transferred its trades.
The case which will be presented be-
fore the next grand jury, is said to show
the most fragrant violations of board of
trade laws, as well as violations of the
postal law. The operations consisted
principally of deals for country custom
ers. The members of the firm are said to
have matched buying or selling orders
from customer with the reverse trade
on its own account, and the work is said
to have been carried on so quietly that
many customers lost money on the f1cti-
tious sales.
EVIDENCE SECURED.
The evidence in the case is in the Gus
tody of the posto1f1ce Inspector, and it
is made UP of bundle of letters written
be defendants to their customers Some
of these customers were: F. o. Hyke,
Luverne, Mimi; J. ]. Stevens, Dalton,
Kan; Hunter Milling company, yelling
tom Kan; A. c. Mains, Philadelphia,
Ill.
The warrant for the arrest of the Nc
Lain Bros. was based upon the alleged
swindle of F. O. Hyke, of L.uverne,
Mimi, who claims to have lost about
$4,000 on his deals with the board of
trade firm.
The board of trade rules provide that
when sales or purchases are made for a
customer the firm must furnish the for
mer with memoranda giving the name
of the firm from which the purchase was
made, or to whom the commodity was
sold, as well as the prices at which trades
were made. The evidence In possession
Of the postal officials consists of letters
which contain memoranda of transac-
tions made for customers, and show that
While an effort was made to keep within
the letter of the board rules, con-
spiracy existed among certain local firms
to violate them. 1t is said these deals,
which were made by the McLain Bros
for customers in the-West, were bucket
shopped," and never reached the grain
pit. Postoffice Inspector Mayor said to-
night:
we hope to prove that the defend
ants carried on an extensive business
through fictitious sales, and that they
protited in nearly every case where they
made trades for their correspondents
They engaged in business as commission
men, or agents, and in making> trades
for customers they usually traded" only
with themselves, thus acting as prin-
cipals, instead of agents, and in doing
this kind of a business they were in
position to name their own prices, be-
cause the deals were never reported in
the pitt