The times. [volume] (Washington [D.C.]) 1897-1901, 1900-08-28
SAVORS OF ILLEGALITY
Postal Officials Suspect ths Mails
Are Being Illegally Used.
Alleged Investment Concerns That
"est-Pinn on which They Arc
worked - Large Profits for Lit
tie Outiay-Fraud Orders Likely.

A scheme with vast promises OF big
profit is occupying the attention of the
postal officials. Little investment com
panies have been formed all over the
.'ountry in the past few weeks which
tavor strongly of violating the lottery
laws
Chicago and the middle West is literal
ly honeycombed with the concerns. They
have been issuing flashily prepared litera-
ture In which they set forth that the
iapses on the part OF members enable
those who remain to make big profits.
The schemes have been coming to tho
attention Of the postal officials for several
weeks. About forty different companies
have been located. and their methods have
been discovered. The office OF the Assist
ant Attorney General for the Postal De-
partment is expected to give a decision in
few days which will set forth whether
the companies are really lotteries under
another name II II be held by the Assist
ant Attorney General that they are such.
fraud order will be issued against each OF
them, which will prohibit their using the
mails
Most of the companies are Incorporated
under the laws OF Missouri or Illinois for
various amounts of capital running up to
D.
however, shows how much OF the capital
has been paid up. It is believed that the
incorporation in most cases is nothing
more than farce
Some name in which "tontine" or Gin
vestment" has a prominent part Is usually
adopted. N their Literature the promoters
have followed as closely as possible the
style OF the life insurance companies do
ing an endowment business. The con-
1lv hoy -
who travel over the country among people
drawing salaries Of from $40 to s25 a week
From them most Of the business comes for
1t requires only 81 a week to stay in the
game, while the chances of winning a big
prize are giisterIngly high
The plan is based on the sale of a
bond" valued usually at 500. Four dol
lars Is charged as an initiation fee. and
the rest is paid in weekly instaliments ex-
tending over twenty-four months.
Each bond is numbered and that fact
forms the key to the element of chance
IN the system. At the discretion OF the
directors in the company drawing is held
whenever enough money has been taken in
from the sale of bonds" The money thus
received is divided into -ss--..oossss sinls and
numbers are drawn by chance from among
the numbers on the bonds" already is
sued. The lucky holders receive the sums
tnuS uiflueu mat cancels the CONTRACTS,
and they have no right to participate in
future drawings.
Should "bondholder" have one of his
contracts "matured' by this process in
week or so after taking it out he would
OF course make an enormous profit. On
the other hand. should he have to remain
in the concern for two or three years be-
fore ge iting his return, the value of the
investm ent would be almost nothing. The
elemen Of chance therefore determines the
profits which each winner receives. On
that account the postal officials believe
that they can find sufficient authority In
the lottery laws to prevent the Of the
mails by the concerns.
Unlike legitimate insurance companies
which have their chief income in the in
terest received from premiums paid, thsse
new get-rich-quick concerns do not even
pretend to put any of their receipts at
interest Their only source of profit is in
the lapses OF contracts when members get
tired of the game and quit paying the dol
lar a week.
1t would be impossible for the companies
to last shoIld their customers stay with
them. They depend constantly on taking
money from the fresh arrivals in order to
pay those who have been longer in
Postal officials are satisfied that in many
cases the drawings are purely fraIsulent.
and that the money divided By that means
goes to the promoters of the scheme and
their immediate friends.