The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1902-05-07
LATEST CRAFT.
Endless Chain Fake Insurance
Scheme in Kansas.
An Alluring Circular to En-
trap the UnWary.
HAS NO AUTHORITY.
Company Has No License and
Affairs a Secret.
Mr. Church Turns Matter Over
to Government.
HAS NO AUTHORITY.

What appears on the surface to be a
first class combination Of an endless
chain insurance graft was today brought
to the attention of W. V. Church. SUI
perintendent of insurance. and Mr..
Church is taking steps to investigate it.
It is known as the American Assurance
association, and its circular states that
its head Offices are at Newton, Kan.
The same mail this morning brought
two inquiries from different parts of the
state. and each inquirer enclosed a cir
cular setting forth the plan of the con-
Germ, The parties making the inquiries
wanted TO know If the company is re-
act business by the insurance depart
nant.
The circulars contain no names OF in
diVidua1s whatever A hasty glance at
the circular reveals only that the name
of the company is the American As
surance association of Newton, and that
it proposes to do big things for it's mem
bers. Each member is required to pay
in a membership fee of two dollars and
two dollars a month thereafter for six
months. At the end of this time his
contract or policy natures A hasty
reading of the circular leads one to be-
lieYe that when the policy natures the
member receives fifty dollars, but on
closer reading he finds that the company
agrees to pay back his twelve dollars
and his proportion Of what has accum-
ulated from lapses, but in no case shall
he receive more than fifty dollars.
The circular lays great stress on
lapses. It presents a table to prove that
81 per cent of all persons who take out
policies in old-line insurance companies
allow their policies to lapse and it repre-
sents that this is where the insurance
companies make their money. It states
that the same ratio of lapses can be
expected in this company, but the mem
bers who keep up their payments will
he hpnnflf Of lorcsac "a
dollars membership fee pays the
company for doing the business.
OF course, every man who gets into
it believes that he can easily pay two
dollars q month for six months, and he
will not be the one who will lapse.
But it is in the endless chain feature
that the principal graft lies, and this is
not brought out prominently in the cir
cular. careful reading shows that
when a member Joins he is sent q GER
tifieate of membership and three blank
applica tons for new members, and is
authorized and agrees to get three
new members who will carry out the
requirements of members-in other
words. they will pay in their fourteen
members and each of them will get
three new mem bers to do the same
thing The circular does not say so,
but the indications are that If one of
the three fails to perform his contract
1t lapses the man who got him to be-
come a member.
though this would allow the Company
to pay each man at least $36, provided
all of the three members procured by
him carried out their contracts, and if
any one of them failed to do so the COM
pany would not be obliged to pay the
policy. This would protect the concern
from becoming heavily involved when
the membership begins to fall off and
it is apparently sure of its two dollars
membership fee from each member.
Superintendent Church says he E.aver
heard of the concern until this morn
ing, and that it has no authority from
his department to transact business.
He also asceftained from the Office of
the secretary of state that it is not
incorporated in Kansas and has no au-
thority as a foreign corporation to do
business in the state. He thinks 1t has
violated the postal regulations. and he
therefore forwarded one of the circulars
sent him to the postoff1ce authorities for
an investigation. In the meantime he
will Investigate the company in Kan
sas and try to ascertain who is run
ming it.
The circulars received by Superin-
tendent Church bear the imprint of the
Newton Kansau, and 1t is therefore
supposed that Newton parties are al
the head of it.