The Sentinel=record., 1911-09-24
Sl,0OO,00O
 FRAUD CLAIM
HIGHLY CONNECTED BUSINESS MEN AND FORMER TREAS
 URER OF UNITED STATES
Daniel tI. Morgan and Others Ar rested On Get Rich Quick" Scheme Said to Have Net
 ted a Million.

! -NeW 1OIh' otpt. @O.-lH idiu ol the offices of Jared Flagg, on West Fortieth street today, FIngg and IseYen other men were arrested on a charge of fraudulently using the mails in species of endless chain scheme to defraud investors.
 Among the prisoners were former United States Treasurer Daniel N. Morgan, of Bridgeport, Conn :; Jas K. Schock, said to have been a min ister of the Dutch Reformed church IF Tennyson Nicely, formerly pub fisher on FNfth avenue. this city; Joshua Brown and Harold Jackson, brokers; Alvin M Higgins, lawyer, and Edward l.. Schiller.
 The prisoners pleaded not guilty Bail twas fixed for Flagg at S25,O00 Assistant District Attorney Smrn asking for nigh bail because. he said, he understood that Flagg had | S1 GOO. .000. Nicely, Morgan and Hig- gins were required to furnish bail to the amount of $1O,OOO each, while Ischlller's bail was fixed at 5000 and that of Brown schock and Jack son at $2,50O They will be given a hearing next Wednesday.
 Postoffice Inspector Elmer l.. Kincaid, made the complaint in the case Kincaid stated today thous- ands of customers of the Flagg en- terprise had iDyeste3 about sl,500,- GOO in tie scheme Flagg. it is charged, had claimed he would in vest their money in gilt edged SC. curities which would pay them thigh dividends. Early investors, it is all leged, were paid their dividends from the money which came to the con- Icern from new customers.
 According to Chief Postoffice In |spector Warren w Dickson, his a. tention was drawn to Flagg's busi- mess by a conversation with young woman ealing herself Lillian Gibbs Reyes, who referred to F1agg as a financial wizard Inspectors who made secret investigation reported .that Flagg was conducting business .after the fashion of the Miller Syn .dicate" They also reported that former United States Treasurer Nor gan was interested in the enterprise Ito the extent of S2oOOOo The scheme, according to the authorities, has been in operation for more than .ts months
 When arrested. Flagg was defiant and asserted he had violated no pos tai law Al a late hour no bail had been secured for any of the prison ers and they were locked in the tombs.
 'Flagg at first refused al request for statement. When asked, how ever, if he had guaranteed to pay |52 per cent a year on investments he responded quickly:
 T guaranteed no percentage O. yo- turns oh Investments handled by me- he said, diving into a drawer land placing a pile of blank contracts lon the table. There's the contract my customers signed with me. Il lis open and above board and refutee the charge that guaranteed fabu- lous interest
 T can pay every dollar [ owe Flagg continued fI have handled Si,l00,0o0 during the three years or more that I have been in this bust ness and I can account for every cent of 1t, every transaction. I have nothing to fear, This is all vi e conspiracy cooked up by big brok- CTS and Wall street interests that are jealous of me
 Mir. Morgan, who is white hair ed man, well along in years and of aignifed bearing, was greatly ner. trbed by his arrest which he term ed an outrage.