New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-09-24
D. N. Morgan Taken Into Custody
with Jared FIagg for Fraud
uIent Use of Mails.
WOMEN HELD, THEN FREED
Usual Saturday Luncheon to
Customers" Who Were Draw.
ing 80 Per Cent on Stock,
Is Interrupted-Prisoners
Are All Sent to Tombs.

| tectivcs closed the brokerage" Office ~
Jared Flagg, No. 1O5 West 10Th street,
yesterday afternoon, and arrested Flagg
and seven Of his associates on charges ot
conspiracy and using the mails 10 de-
fraud investors In stocks on which F'lagg
has been paying. or promising 10 pay. y
per cent a year. one Of the men ar
rested was Daniel y. Morgan. former
United States Treasurer under> President
Cleveland
Flagg has been in trouble with the
police Of New York since the early 9O's,
when he was indicted on charge oe
keeping and maintaining disorderly
houses in what We're known as "FIaggs
Flats" in West 33d and West 18th
streets. In the controversy Flagg main
tained that he had the support Of Theo-
dore Roosevelt. then Police Commls-
sioner and Of the Rev. Dr. Charles II.
Parkhurst.
The others arrested with Flagg yes-
terday We're F. Tennysou Neely. "A for
mer book publisher; Alvin NJ. Hig-
gins. a lawyer. Of No. 200 Broadway:
Edwin 5. Schiller Of College Point Long
Island; Joshua Brown, Of No. SO West
1lst street; the Rev. James T. Schock.
Dutch Reformed minister. Of Plainheld,
y. j. and Harry Jackson, Of No. 249
West 10Th street.
Seven women, all customers" OF
Flagg's enterprises, were IN his office
when the police entered. The women
were ready 70 go 10 luncheon. which was
10 be served, according 20 F1agg's weekly
custom, at the Beaux Arts restaurant
just across the way, In Sixth avenue.
The prisoners were arraigned before
United States Commissioner Gilchrist,
who had issued the warrants. Irwin r.
Ziegler. who said he had been counsel
for Flagg for nine years. appeared for
the prisoners. They pleaded not guilty
Abel f. Smith. Assistant United States
District Attorney, asked for adjourn
ment until next Wednesday and for bail
of $4,000 for Flagg, $4,000 for Nicely.
Morgan and Higgins 5000 for Brown
and SchocS and $500 for Jackson.
Flagg offered a cash bond, but 1t was
not accepted. They were sent to the
Tombs.
Flagg's suite OF seven rooms on the
eleventh floor of the Tiden Building was
assuming its usual Saturday afternoon
complexion when Marshal Henkel and
the detectives dropped in. All the pris-
oners were there except Neely, who was
at the Beaux Arts restaurant, No. 80
West 10th street, and Higgins, Flagg's
counsel, who was arrested at his offices,
No. POO Broadway.
FIagg never advertised his business in
the ordinary way. He used the mails to
attract customers all over the country,
and the statement from Warren sW.
Dickson, chief postoffice inspector, that
F'lagg had more than a thousand WELL
to-do persons on his books, with two
hundred OF this number here in New
York CITY, indicated that his method q
getting business was rather successful
Getting Per Cert Week.
Flagg's best advertisements were his
customers. For nearly two years they
have beer getting their weekly dividends
Of 1 per cent, paid every saturday. In
fact, this was the day that attracted
F'lagg's best men and women customers,
those who went out and brought I'm the
new business These were the ones who
broke bread with Flagg at the BeauX-
Arts and other places, and, Of course tho
women invariably We're present.
The meal was awaiting the diners ar
rival yesterday when Marshal Hcnkel
interrupted The women became hys-
tericaI and Flagg frantically hourished
new form of contract under the marshars
nose The contract which Inspector
Dickson he'd been investigating showed
that customers couldn't come In for less
than ten shares Of 500 each. It Indi-
Gated also that no dividend was guaran-
teed. but it nowhere promised that once a
customer had subscribed for st0cs hs
could sell out for cash.
The women dried their eyes and hIt-
tered around Marshal Henkel, assuring
him that they had perfect confidence in
the honesty Of Flagg and trusted i'm
pllcitly in his contract What more could
the marshal want? Every one had been
getting dividends Just as regular IS a
clock"
The inspectors hurried TO the safe.
however. just In time 10 prevent Flagg
from locking H. In groups OF twCs tho
detectives led the male principals away.
The women were finally taken 10 tne
federal building. and after private con-
terence in the rooms of the federal at
torney they were released.
Jared Flaggs brokerage business came
to the attention OF Inspector Dickson a
few months ago. when Lillian Gibbs
Keyes. daughter Of a resident of West
field y. Y. went TO him and assured,
him that Flagg was operating a most
successful and at the same time highly
legitimate business. She ACKNOWLEDGED
that she had invested. and liked il so
well that she had induced many Others
In do likewise She evidently thought
somebody had been complaining about
F'lagg
( Biaekmail, Says Mr.. Nicely.
little later Neely. the bankrupt pub
Usher. called on the inspector 20 leara
: T. there was anything shady about
Flagg. so that he might warn the Gus
toners he had taken TO Flagg Nicely
learned nothing alarming about Flags,
/ but he called again a few weeks later to
( say that Inspector Dickson and his men
were lot Of blackmailers. and he in
/ tended 10 go before Attorney General
wickersham and expose the whole Office.
/ Anyway. he would so u District Attor~