The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1901-03-27
says THEY IRE LOTTERIES
OHIO SUPREME COURT SHUTS DOWN
ON DEBENTURE COMPANIES
IN THAT STATE
INVESTORS WILL LOSE MONEY
Aggregate Liabilities of Nine Com
panies Involved Considerably
More Thnn Twice the
Amount of Assets.

COLUMBUS O., March a6.-The Su-
preme court today dealt a death blow
to the so-called debenture business in
Ohio. In the quo warranto proceedings,
brought by the attorney general against
the Interstate Investment Company of
Cincinnati, the court entered Judgment
of custer. The decision is based upon
the finding of the court that the methods
employed by the debenture COMPANIES
are those of a lottery; that they are
fraudulent, contrary to public policy and
unlawful. Five of the six judges concur
in the judgment, and the sixth, Judge
Shauck, does not dissent Assistant At
torney General Todd, who has had
charge of the case for the state, said
today that in his belief the miro de
benture companies of Ohio will attempt
to do no further business Application for
receivers for most of them have already
been made.
The companies aggregate deposit in
the state treasury now amounts to about
$4,000. According to their own reports.
the aggregate liabilities to debenIur i.
holders amount to approximately go, GOO, :
ee0 The aggregate assets claimed by the
corporations, other than the deposits
Win the state treasurer, amount to
about $S00Ge0. The syllabus of the SUI
preme court IN the case is as follows:
SYLLABUS OF DECISION.
contracts of investment security. do
49eItures or certificates which, by the
oeVlce OF 'nulneral apart may be call
81 81 III ana redeemed at any period before
they would regularly accumulate a credit
~ the reserve fund equal to the stiDll.at-
Su endowment value and otherwise Civ
ihg unequal advantages to the Certificate
holders, contain the elements OF Chance
unlawful. civ az
tsCtOOtraotc
Ventures or certificates which cannot
reasonably be eXpe cted to accumuJata a
SIIIucle!ll reserve fund to equal the stiD-
staIed endowment vaiuee within the
tpproprlat1on from premiums on new
business, are fraudulent, contrarv 10
pubhc poilcy and Unlawful
A comprehensive review Of the courts
It aSons Tor reaching it's conclusion that
the business of the debenture GONNA mics
IS fraudulent is presented in the opinion
prepared by Judge Davis. The court saws
in part:
COURTS OPINION.
The Inc question is not whether the pro
IioterS or the defendant company have in
tehtlonally devised a scheme to misIead
CT it: '''' : '-ie eiiec'
OF accumu1ative endowment certificateS3
ISSUED by the defendant discIoses that in
none Of them does certificate Absolutely
sE9 certainly mature within any fixed
anu qeHnlte period, yet the certificates
are all SO drawn as to create the exnec.
IaJIon and to make it appear that thew
VIII mature in period of 10 months. If
five or eighty per cent of the nrenoii1r3-
received consumed in expenses and
monthly redemptions the reserve credits
could not equal the endowment value in
several times the periods STIPULATED In
other words, twenty or twentv-fiVe nar
cent of the premiums, with interest earn
lngs, alone and unaided by lapses or the
appropriation of money from premiums
received for new business will not suffi-
GENTLY accumulate to equal to represent
ed endowment value in the stipuIafed
perlods. A scheme which can succeed onIy