The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1913-04-10


Investigations at the hands of the
bank commissioners office have re-
Vealed frequent cases where men and
women have been the victims of a sys-
tematic fraud practiced in every sec
ton of the state. The method of SELL
ing these equities showed the clever
handiwork of some mighty competent
lawyers, who devised a scheme which
has for several years skinned by the
provisions of the Kansas statutes and
allowed the operators to continue their
business without fear or trembling.
Now the practice will stop, or the re-
cent amendments to the blue sky law
will result in the wholesale arrest of
men who have stood behind the
scheme.
How They Did 1t.
Under the system practiced in Kan
sas, real estate dealers and other
persons were permitted to buy certi-
ficates conveying equities in stocks Of
merchandise. For these certificates,
the price ranged from fifty cents to
ten dollars. Invariably the certifi-
Gates were drawn for sums of $1,000
each. On their face the certificates
looked perfectly harmless. In fact
silver tongued land agent made them
look like a draft on the sub-treasury.
That the certificate might have eV-
cry appearance of genuineness, there
was usually endorsed on the back of
the certificate a payment for $3.50:
This left a $3.50 equity in the stock of
more or less mythical merchandise.
Gates, the interruptions one went
forth to trade. And he usually sue
ceeded. For what farmer has not
dreamed of some day owning dry
goods, hardware or grocery store?
Usually the person with small
piece of property to trade or sell was
the victim of the mercantile graft.
Probably the victim owned plot of
<-N11
for cash. The man with the stock
certificates agreed on a price. But he
explained that he didn't have that
amount of ready cash. Would the vic
tim accept say half cash and gilt
edged investment in a big stock of
groceries? Possibly. So the certi-
ficates were produced. There
were say four of them. Each showed
a $1,000 stock with a $3.50 payment
on each.
AS the little farmer thinks it over,
the gent with the certificates explains
how his friend Jones bought this
stock, paid three-fourths the value
and in the face of financial reverses,
was compelled to sacrifice his great
bargain. 1t looked good. Usually the
farmer bit and instead of receiving a
cash balance on his farm, found that
he had decided the farm and assumed
additional liabilities.
Even Gave Invoices.
skeptical, the accommodating trader
promptly produced invoices of the
stock. And there was another evil
dence of cleverness. The trader point
ed out to the farmer the fact that he
had bought whole crates of canned
corn, canned peaches and apples, soap
and pruneS at real wholesale prices
which was the real truth. But the
farmers eyes were kept glued to those
prices of prunes and apples. His at
tention was never called to a lot Of
other things on the invoice, such as
knives and forks and other articles
that go to complete the stock of a
transferred does the farmer with an
ambition to engage in mercantile bust
ness find that while he has bought
some things at real wholesale prices,
that he has bought a great deal more
at a price far in advance of whole
sale lists.
For years this practice has been
worked in >ansas. Perhaps that ex-
plains why many new faces have ap-
peared in the mercantile business in
this state. After the farmer once ac-
cumulates one of these lists of mer-
chandise, there is nothing to do but to
slip it to some friend or other victim
or to open shop and dispose of the
wares to the general public at the best
possible prices.
1t was this practice that attracted
the attention of Bank Commissioner
Sawyer even before he entered on the
duties of his present office. So with
the legislature working to make new
laws, Sawyer suggested a number of
changes to the blue sky act And one
of these amendments will legislate out
of business the men who have follow |
ed the trafficking of fictitious equities
among Kansas property owners.