The sun. [volume] (New York [N.Y.]) 1833-1916, 1912-07-18
e PER CENT. FLAGG
IS INDICTED AGAIN
Seven Agents With Him: His
Booklet Defence Used
Against Jared.
WANTED GUNSAULUS'S AID
Government Says the Fraud
Was Bic. but Victims
Wouldn't Believe 1t.


laret Flagg and eight men associated
with him in his enterprise of Offering to
maze pcr cent. n week for persons who
would rntrusl their money to him for
SPECULATION in Wall Street.
nne of the seven counts of the indict-
nenl against Flagg is based on letter
in which the name of the Rev. Dr. Frank
Gunsilll,s Of Chicago. president Of
Armour Institute. is mentioned. In this
letter FlagGs Chicago agent said he in
tended to Try to interest Dr. Gunsaulus
through tho Chicago attorney for the
standard oil Company.
Tho new indictments are far more
sweeping than the previous ones. They
are based partly on the testimony of
Flag. himself. Flagc issued "A booklet
after his Office was raided on September
a3. ialI IN which he said he was being
| bounded hy the Federal authorities and
that if he could present his case before
, the Grand Jury and was indicted in the
face Of his tcsiinonyhe would plead guilty.
H. booklet had n wide circulation and
created SO much comment that the Flagg
case was rcopened and he was invited
~ become voluntary witness. He was
before the jurors for two days.
Wron Flags Office at los West Fortieih
s.rcat was raidpd hy the Post Office au-
'horilies on the ground that he was using
tho mails To defraud the men arrested
with HIM w"r" Daniel y. Morgan Of
Bridgeport. Conn, eXTreasurer of the
United States: +. Tennyson Nicely, the
publisher: the Rev. james 7. Schock
pastor of Dutch Reformed Church at
pialniield. y. j.: Alvin NJ. Higgins. "a
lawyer; r. 4. Schiller. Joshua Brown and
Henry A. jackson. All were indicted
four days later and were Released on bai
Nee y. Schiller and Brown are not
named in the indictments handed up
Yesterday to Judge Hand. but three
others were added. They are James
Alien and Edward &. De Wolf. Flagg's
Chicago agents. and Rufus p. Hankey,
the gent at Detroit.
just after the raid De Wolf came her e
and characterized the arrest of Flagg
and his associates as IA great mistake.
4 He said he had been customer of Flagg' s
in Chicago for nearly two years. and in
that time had cleared 81 600 on an invest
ment of $1,000 He said that the only
wav customer of Flaggs could lose was
for all the stocks sold short to go up and
all sold long to go down at the same
time, and this had never happened in
the history of the stock market. De Wolf
WIS invited before the Grand Jury and
hi. Indictment followed.
Bench warrants We're issued for all the
defendants yesterday and it is expected
that the majority of them will surrender
to-day.
Id, h Of yesterday : indictments charges
the conspiracy 70 defraud The first 81,
counts describe how Flagg formed his
customers into units of $4,000 each anC
had two classes of these units For one
,.,- he represented that he was buying
short and selling long, and for the othel
SLING short and buying long.
The Indictment charges that Flagp
n represented that there would be a on'
point profit for each customer on a trans
action and that no matter what the marke
did he class" couldn't lose. II is alleget
thai part Of Flagg's fraudulent scheme
wa- 10 get profits for himself by inducin
n" brokers with whom he dealt to give
min a secret rebate on the commiss iol
charged to him. while he charged up tn
f.ll amount TO his customers. IL il
against the rules of the Stock Exchang'
toI a broker to give secret rebates on com
missions.
It Is also alleged that Flagg kept al
elaborate. fraudulent and deceptive Sc
Of hooks" and that a part of his scheme
n was 10 show by these books that his Gus
TONERS were all winning. BY manipulat
ing these books it is charged that Flag
showed that he was dealing in all tn
thrty-six leading stocks. He could per
sIade the investor by the books that h
wa~ carrying SIS. .OOO. 600 worth OF stocks
or 800. 600 shares, for his customers. ia
which he was able to charge nearly 81 600
II oQo interest.
II was said yesterday that the Federa
Investigation showed that Flagg was dea
lrg IN not more than 900 shares OF stool
and that his enormous interest charge
were fraudulent.
he indictment also says that Flag
som letters concerning his scheme to +. i
ldru grocer at New Brighton. Pa;
Campbell of 14O Nassau street, and tn
koy j. c, France of Bridgeport. Conn.
n If said that the Government had some diff
Guilty m linding witnesses because of the
complete confidence in Flagg and the
t"lei that they were not being swindlet
II i, alleged that to effect the object {
ur. 'ou,piracy Allen. the Chicago agcn
wro', l'rter TO Fagg telling how h
showed he Rev, ID. Il. Eddy letter frol
~ "lI telling Of your splendid success
Y .-ud the Rev. Dr. Eddy was SO much il
'..'-.nd that he borrowed Flagg's letts
>" how to his wife and son. and the
n'i it to a number Of his friend
'""''- httcr continued:
r.pr,t 10 yet in touch with tho attorns
' ~" N'audlld ON Company. as he IL
'.-.p "' Mr.. Iddy's. and he in turn "
influence with tnIn-ailus. AS IN,
..' .upI lInnds and have travelled
H' u~ companion, ON several ~
lol sec the heel works within
H...
dn,,i' 'r., i ,,-, fgu,i,g ii. ,i.r .on-, -,,ii a,
1870 N.. Wrrt"n 10y the Rev. Mr., Scho,
a. ...''rli Ia the Rev J. -, Ncrplan,
u egg office. The letter said
I Ign with We are mer, handising. n
g. ug We are actually buying al