New-York tribune., 1906-07-25
STATE LOSES S25O,OOO? /?
BIG SPINDLE CHARGED.
FiUe Arrests Washed Stock I'ar
Stamps Sold, 1t Is Sad.

With the arrest of five men late yesterday
afternoon Secret Service detectives believe they
have broken up q gang which has quietly robbed
the state of at least s250OOO through the lille
gal use OF stock transfer tax stamps in the Wall
Street district The detectives say that hum
dreds of Office boys were indirectly involved in
this alleged huge swindle. They are looking
for young woman, who they say played an i'm
pOrtant part in the transactions.
Under The state law which went into effect
about a year ago tax of two cents is imposed
on each share of stock sold. Stamps from two
cents to $50 have been issued by the state for
the use of stock brokers in carrying out the pro-
visions of the law Wall Street banking in
stitution was designated as the distributing
agency for these stamps. Soon after the en-
forcement of the law numerous stamp brokers
started in business in the financial district
These brokers advertised to sell these stamps at
reduced prices, and they also advertised to buy
these stock transfer stamps
Believing for some time that a swindling game
was in operation, Secret Service detectives have
been making quiet Investigations of the methods
employed by certain of these stamp brokers
They found, it is declared, that these men were
engaged in washing cancelled stamps and re-
selling them Obtaining warrants from Magis-
trate Mayo the detectives arrested yesterday
afternoon William O'Reilly. of No. 317 Degraw
street, Brooklyn; Patrick King. of No. 372 Pa
cifc street. Brooklyn; c. NJ. Lawrence of No 16
North. Henry street, BroOklyn; Frederick
Thompson, of No. SO Pacific street. Brooklyn.
and Luke D1cSherry. a retired fireman, living in
Hoe street. The Bronx. McSherry is not only
charged by the Secret Service men with being a
stamp washer, Fl't they say that he was engaged
as dealer in s4amps. selling them at reduced
rates. The prisoners will be arraigned this
morning in the TOTnbs police court
One OF the detectives explained in detail the
alleged methods of operation employed by the
prisoners. He said that at least five hundred
young men and boys employed by stock broker
age houses had been connected indirectly with
the swindle. These boys, he said. had charge of
the purchasing of the stamps for the houses with
which they were connected. After forming an
acquaintance with these clerks, the next step
adopted by the swindlers. he said. was to induce
them to buy stamps from them. This was not
hard to do, as the men allowed the boys per
cent discount, and the boys pocketed the differ
ence. He explained that the prisoners were able
to allow this discount because they sold washed
stamps
After this initial profitmaking introduction
the Secret Service man said. new scheme with
even more money in it was taught the boys
They We're instructed to exchange good stamps
for the worthless ones given them by the sharps
was
worth about 40 cents to the boys when given to
one of these stamp brokers. There was a big
profit to all concerned.
The final step in the "get-rich-quick'' game
the purchase from boys of cancelled stamps
to be washed later and turned out as the legiti-
mate article According to the detective it was
comparatively easy for the stamp brokers to
wash the stamps a poor grade of ink is used
on them The young woman is brought into the
case at this point. The detective alleges that she
is the inventor of q method of replacing the
mucilage on the backs of the washed stamps
Until she came to their rescue, the detective
says that the men used only common mucilage
but by her method the washed stamps were
gummed almost as we'll United States postage
stamps. He said that they were now looking
for her, but had not decided whether to bring
charges against her
In order to obtain evidence against the men
several Secret Service men went into the stamp
brokerage business. They became acquainted
with the men arrested yesterday through their
dealings in stamps The detectives said that If
the members of the Stock Exchange would as
sist them they believed that they could CONF
pletely wipe out the business They added that
they had information which implicated a big
Stock Exchange house in this swindle and when
they obtained additional evidence would bring
charges against it, with the view of having il
expelled from the Stock Exchange. The Secret
Service men hope soon to make additional ar
rests.
Detective Sergeant Schocnig paid visit to
the room of Patrick King. Among the articles
he found in the young mans room were FIVE
hotters bottle OF mucilage, bottle OF javelIe
water bottle of glue. four bottles of ink eradi-
Gator a package OF some unknown powder and
forty stock transfer slips. with cancelled stamps
of denominations ranging from 81 and 81 to $50
Vuznf hrfla Tog -snr fV
Edward Glinnen. of No. 81 Herbert street,
Brooklyn.