The L'Anse sentinel., 1908-01-18
Ho.D S,Oindlers Dodge Ike LdsO
United States District Attorney, Chicago Formerly Solicitor Of the De
paztmsnt Of Commerce and Labor, Washmgtn.

conditions and annoyances. The
scheme In its present form 10 q clever
advance over all those previously
used. A swindler to-day 10 connected
in some way with q corporation Of
some kind, and. whatever part he may
take. his profits are derived ultimately
from people who purchase the securi-
ties Of these corporations. In order
to avoid danger. the corporation will
have something. II It IL q mining
corporation. It Will actually have some
place that It calls mine and II will
be making some show Of operating
It; II It is an oil company or any
other kind of fake corporation, there
will be some show Of activity. Under
this scheme. the victim has his share
Of stock. and the mine, or the oil well.
or the plantation. or whatever It is.
IL there; and. according to tho swind-
Ter, all the stockholder has to do is
to wait until the property is "devel-
oped." This tends to keep the victim
from prosecuting. for. Of course. q
prosecution would destroy the value
of the business, and 1t affords q de-
fcnse In court.
Another scheme allied to this was
one in which q number Of clever
swindlers cleaned up large amount
OF money. A man would advertise
that he had ample capital to invest
In the securities of corporations pro-
vided q competent examiner, after
thorough investigation, makes a fav-
orable report upon the proposition.
The victim Is led to choose as the ex-
aminer confederate Of the man with
capital. The examiner will receive
$500 to $500 for making the exam
ination, according to the size of the
business whose securities are to be
marketed: then. after getting the
money, he will make the examination
and return an unfavorable re.
port, which releases the first swind-
Ter Of his obligation to take the bonds
under the contract. Then, Of course.
the two divide the fee for the exam
ination between them. This scheme
and one or two others very closely al
lied in principle were flourishing until
they fell into the hands Of the federal
authorities here in Chicago.
This latter scheme. It will be OBJ
served. is more dangerous than the
selling Of worthless stocks and bonds
to the public. for the reason that 1t
can be proved that the swindler was
not In the position to purchase these
bonds even II q favorable report had
been made. In the case of these cor
porations which exist in large num-
bers and who are robbing the people
of the country of millions every year,
1t is very difficult to secure conviction
of their promoters In q majority OF
cases. When they are arrested and
brought into court, they are ready to
show that they were really carrying
on some kind of business, and that
they have been simply unfortunate
that expectations had not been realiz.
ed, and that business failure Is not
a crime. The great difficulty Is to
prove criminal intent. ~
In the past both our state and fed
eral courts have 30 interpreted the
law against schemes to defraud that
they have been able to suppress OF
curb these schemes, whatever form
they took. Just what is to be the at
titude of the courts towards the
swindler who poses as q promoter
and whether they are to 80 Interpret
the law that 1t can deal adequately
with this form of fraud, is at the
present time uncertain, a. the courts
differ widely upon the subject Some
of our courts are now holding that
even II q promoter does issue false
prospectus. and thereby induces peo
pie to invest In the securities Of q
corporation, that this does not consti
tute q scheme to defraud. and that II
must appear beyond all reasonable
doubt that the defendant intended to
put the money thus obtained into his
pocket, and not into the business.
/ The difficulty Of making this proof
has already been Indicated. In Eng
land, this dificulty was met by q stat
ute Gath and 26th Wet. s6, q. 94)
which IL as follows:
whoever, being director. man
agcr. or public oficer Of any body
corporate or public company. shall
make. circulate or publish. or concur
In making. circulating. or publishing
any written statement or account
which he shall know to be false IN
any material particular, with intent
to deceive or defraud any member
shareholder or creditor OF such body
corporate or public company. or with
intent to induce any person to become
Z shW eholder or partner therein, OF
TO ehtrust or advance any property to
suca body corporate or public com
paIy, or TO enter Into any security
for the benefit thereof. shall be guilty
Of . misdemeanor, and being CON.
victed thereof. shall be liable at the
discretion o1 the court 70 any Of the
punishments which the court may
award, - hersinbefore last mem
tioned-s
Under this 6tstuts. the dinhculty II
met by making n crime 70 issue q
false prospectus. eome Of our courts
hsvo held hat the issuing q false
,prDepoc(uo n = scheme % defrAud
U1thln eecf1Qa c1oo - ~ United
ulntoo roviood otetotoe. Other courto
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