New-York tribune., 1911-01-15
ITS ASSETS WERE FRAUDULENT.

There was a company in the State OF
Washington that claimed a capital of 500
coo and 100000 of surplus 1t was licensed
to do business in twenty-three states. IL
failed to pay its losses. and a receiver was
appointed. He found that the assets were
nearly all mortgages made by real estate
concern and given TO the company in eX-
change for its stock. But the mortgages
were made out in the names Of two officers
Of the real estate company, who also took
the insurance company's stock in their
own names, and so the mortgages were
fraudulent and void
This hallucinaton l spoke about that
all you need is to get company going ana
it will pay easy money, made mighty
curious tangle down in Washington-Wash-
ington City-not long ago. There was a
man, a millionaire, who owned big hotel
and was vice-president OF bank. The
other character in the story was an in
surance company which needed some prop
erty to start on. SO this banker gave a
note for 100000 to his bank and got a
certificate Of deposit for the same amount
that is. the amount was such that he got
500 900 after the proper discount was made.
HE turned the certificate Of deposit over
10 the insurance company and took the
company's stock in exchange. Then the
company took the certificate of deposit and
deposited it in the mans bank, where it
started from, and the bank credited the
company with deposit of 100000. II
sounds a little complicated. but you can
figure it out If you think it over Anyhow,
everything was all right SO far Then the
insurance company called in the Insurance
Department of the District Of Columbia,
made affidavit that 1t had 10000 on de-
posit with the bank, showed the books, got
clean bill of health and went ahead and
did business.
Then one morning this man walked
into his bank, opened the vault, took out
the certificate and the note he had given
for it in the first place, took 'em to his
hotel, held em to a gas Jet and burned
em. Now, it isn't a nice thing for busi-
ness man to burn up note he has given
to anybody, let alone a note for a small
fortune let alone a note to his own bank.
"Well, Of course, it wasn't long before
the insurance company had some big
losses that wiped out its receipts sew
eral times over. Then the Insurance De-
partment came in again and wanted to
know where the 100000 was. OF course
the bank had given credit for that amount.
They put it up TO the banker He broke
down, confessed the whole story and
made good every cent of the losses That
just shows you the state Of mind some
people get into This man perpetrated a
plain fraud. lie stole-he just sneaked a
note out of his bank. Yet apparently he
figured that the crime would never be
found out and that his insurance company
would make money without any capital.
"Then, of course, there are the straight
out-and-out crooks. Sometimes they work
with legalzed but unsteady companies;
sometimes they just steal. whole crowd
of 'em got in Jail. here and in Chicago a
few years ago, and It did 'em good. But
some Of them are out now, so much the
wiser for the experience. Now, look here
Mr.. Best pointed to paragraph in his
insurance journal which told of Il police
raid upon tho Office of a fire insurance
"agent" I'm Brooklyn. THAT fellow has
been selling bogus insurance for twenty