New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-09-24


The inspector found that Nicely had
gone back to Flagg and informed the
broker that the postoffice inspectors and
the Department Of Justice had been
fixed"
Inspector Elmer L. Kinkaid on Sep
TENDER i complained to Dickson that
on September Jared Flag and others
sent fraudulent letters through the mails
10 Mrs. Bertha L. Bentley, Of No. 133
South street, Cory. Penn. The letter
represented that Flagg would invest
money for Mrs. Bently in New York
stocks which would pay astounding re-
turns.
The inspectors learned that Flagg has
been doing a brokerage business with
Eeavitt & Grant, of No. - Broadway;
blair Brothers, of No. 20 Broad street,
and with Mcdonald & Co, of Broad
street. on August l President Jarvis
Of the Consolidated Exchange issued an
order 10 brokers forbidding them TO take
business from Flagg. Flag secured an
injunction and continued desultory
business with the Consolidated EX-
change.
The game Of finance as played by
Fiagg was pretty fair duplication of the
old Miller Syndicate and storey cotton
operations which wrecked thousands OF
investors. IT consisted of a blind pool,
IN which no money was invested in
stocks. As fast as Flagg raked in the
Tr. 11 h q &
sociates proceeded to set aside enough
tC pay dividends on the old stocL. As
long as he could keep the money Of new
subscribers flowing into his treasury he
could pay out / per cent a week to Gus
toners on his books and still have' a
splendid reserve on hand.
The inspectors say that Flagg has
taken in more than S1.JO0,OOO in the last
two years His books showed that he
had customers in every large city Of the
country. many Of whom were prominent
men. and some of these clergymen. No
trouble seemed 10 arise over the inabil-
fly OF customers to withdraw their
money. because everybody seemed to be
so thoroughly captiyated by the l per
cent Saturday dividends that they pre-
ferred 10 increase their accounts with
Flagg rather than to decrease them.
Daniel N. Morgan an Asset.
one Of Flagg's best assets was the
name Of Daniel y Morgan, Of Bridge
pert Conn, former Mayor state Sena-
tor and United States Treasurer during
nd a <
President of the United states. Nor
gan consented 10 become treasurer of
Flagg's concern, and the inspectors say
that he had 100000 invested. In addi-
ton To this, the inspectors believe that
Morgan received handsome sum for his
connection with the house.
Naturally some of the suckers how
ering around Flagg's contract evinced
timidity. These were taken aside and a
crisp greenback bearing the photograph
and signature Of Daniel y. Morgan, the
former Treasurer Of the United States
was flashed before them. Then they
were merely asked 10 write 10 Mr.. Nor
san. in Bridgeport for a confirmation
Of the big dividend" story Mr.. Nor
gan's answer, the inspectors say, eX-
blamed that Mr. Morgan was an investor
in Flags enterprises and that Flagg
had never failed 10 make good every
promise.
Flagg's counsel tried hard to have
Commissioner Gilchrist lower Flagg' s
bail, declaring that neither the warrant
nor the affidavit showed any evidence
that Flagg had committed fraud.
If you were at all acquainted with
fraud you wouldn't talk like that, said
Mr.. Smith, Federal Attorney. Why, this
operation mounts up into millions"
Exactly! So have the operations Of
every broker in Philadelphia or New
York" cried Flagg's lawyer.
i say that the defendant has sailed
away enough to warrant the fixing of
his bond at $4,000" said Mr.. Smith.
To Commissioner Gilchrist, Flagg ad-
united that he had been arrested about
twelve years ago for misdemednor for
which about twenty-five complaints, al
leging that he maintained a common
nuisance. had been brought against him.
He said that he was convicted on one
complaint and was sent to the city
prison for thirty days and paid fine
Of 500
Fl3gg's career in New York has been a
checkered one. He is the son Of Con-
necticut clergyman, and first came to
notice as the originator OF the instalment
plan I'm selling furniture. That was in
1887 His advertisements Offering TO fur
nish fats, no cash down" drew and his
profits for the first few weeks were enor-
nous. in three years time he was act
ing with six large furniture firms in New
York City Early i'm 1890, he writes in
HIS book. "Flagg's Flats the first broad
side was fred against him by compeu-
tors and, metaphorically speaking, he
was blown so high that instalment fur
niture men Of New York were never able
TO recover a fragment OF him. That he
wrote. was the beginning Of Flagg's
Flats
The rest Of mis- book deals with the al
legged persecution which he suffered at
the hands Of Tammany Hall and the
New York Police Department growing
out q his aathOuse business. The jury
acquitted Flagg Of the charge Of keep
ing discrderly houses and Of Willingly
renting his hats for immoral purposes.
# violating the excise law and Of all
charges brought against him ex-
ccpt the one which charged him with
maintaining public nuisance in having
tenants I'm his West 18Th street fats
, no madc 81 noise and disturbed neigh
Dors b. singing Oh the roof at midnight