Los Angeles herald., 1910-10-03
OFFICIAL TRACES
HERZ|G OFFENSES
Postoffice Inspector 0'ConnelL
Who Caused Arrest for
Frauds, Is in City
CLOUDY RACING OPERATIONS
Final Activities of Man Accused
by Government Affected Nat
Goodwin Mines
CLOUDY RACING OPERATIONS

Simon Herzig, alias George Graham
Rice arrested in New York, charged
with using the United States mails to
defraud in connection with the b. r.
Scheftels company, of which firm he Is
supposed to be the head, is a clever
criminal, according to Postoft1ce IN
snector James O'Connen of San Fran
cisco. who furnished the New York
federal authorities with most OF the IN
formation and evidence which LED 10
Herzig's capture.
Mr.. O'Connell is in Los Angeles IN
connection with his regular duties Win
the postoffice department. According
to his story, Herzig, or Rice, as ne is
better known, is bright, capaple, Wen
educated man-one who can easily
make his fortune by honest business
methods. Mr.. O'Connell stated last
evening that the beginning of the deal
which has resulted in the mans ar
rest was probably the first legitimate
business operation he engaged In IN ms
life. and that even in this, when he
thought that he could make fortune
he could not resist the temptation to
be dishonest.
FRAUD ORDER IN SOUTH
Herzig's first conflict with the federal
authorities occurred in New orleans,
where he was operating horse-tlp-
ping bureau known as the Mexln-Gay
company. A fraud order was issued
against him there by the postoffice de-
partment and his company was driven
out of business.
He next appeared in San Francisco,
running a turf-tipping bureau, ana II
was there that he first came under the
surveillance of Mr.. O'ConneI. He went
by the name of Jack Hornaday. A
cleanup was made by him in the bay
cities, and also in Los Angeles, where
he at the same time conducted similar
bureau under the alias of Bud Ham
nell. Fraud orders issued against him
in both places at the instigation of Mr..
O'Connell resulted in his being driven
out of the two cities.
Following his expulsion from Los An
geles Herzig went to Reno, and then
10 Goldfeld. He began a brokerage
business and later bought out the Larry
G. Sullivan company making small
fortune by selling mining stocks.
OPERATIONS IN CHICAGO
After his Nevada experience, accord
ing to Mr.. O'Connell who during all
this time had been keeping track of the
operator, Herzig went to Chicago,
where the B. F. ScheftelS company was
formed. He was it's head, under the
name of George Graham Rice. The
new company soon moved to New York
and was doing a small business, but
Herzig, not satisfied, sent one of his
chief lieutenants out to Ely to investi-
gate conditions there. This lieutenant
discovered the Ely Central property, a
valuable piece of land owned in San
Francisco. 1t lies adjacent to the Ne
vada Consolidated holdings. The in
vestigator reported back to Herzig, who
went to look at the property himself,
and being satisfied negotiated for it
with the owners, who sold out to him.
DIsTURBs CURB BROKERS
'I believe that Herzig saw in this
property a chance to become rich legit-
imately," said Mr.. O'Connen last even
ing at the Lankershim. ''At least it
was the first time to my positive
knowledge that he ever engaged in an
honest business proposition" Herzig
bought the stock in the Ely Central,
took it to New York and put in on the
curb. He advertised extensively in the
New York papers. He kept the price
of the stock up and incurred the en-
nifty of the other curb brokers, who
began fighting him. He came under
the ban of the postoffice authorities by
securing mailing lists from the Nat C.
Goodwin company and the L. NJ. Sulli-
van Trust company and sending his
publication through the mails.
From the record looked up by Mr..
O'Connell, Herzig is alleged to have
served a term in the Elmira, N. Y,
reformatory when a boy. Later he
served a sentence in Sing Sing for for
gerry.
Whether he can be convicted on tho
evidence secured, Mr.. O'Connell refused
to state last evening. He did state,
however, that in all probability he
<OConnelD would go to New York to
testify against him.