The West Virginian. [volume] (Fairmont, W. Va.) 1914-1974, 1915-03-25
Unfavorable Publicity Given
Fraud Company By the
State Auditor.
FIRM DRIVEN FROM v. VA.
LATER THE MEMBERS ARE AR.
RESTED IN ALABAMA AND
CONVICTED.

CHARLESTON, w. Va, March 25.-
Dispatches from Birmingham. Ala
bama, tell of the conviction in the
federal district court OF F. E. White
head and L. A. Whitehead, president
and vice president of the Standard
Home company, and their sentence to
terms of four years in the Federal
penitentiary by District Judge w. L..
Grub. The Standard Home company,
now bankrupt, was fined $1,000.
The convictions were secured by
the federal authorities on the charge
of having used the United States mails
to defraud in connection with the op-
eTations of the Standard Home COM
pany. and the investigation into the
affairs OF that organization dates back
to 1911 when the company came into
West Virginia and was first brought
to the notice OF the Insurance depart
ment OF the state.
Through the diligent efforts of
Auditor j. S. Darst and Secretary OF
State Stuart F. Reed thousands of dol
lars were saved West Virginia citizens
and by reason of the unfavorable pub
licity given the company 1t was forced
to withdraw from the state.
The Standard Home company sold
"home purchasing" contracts. The
purchaser paid $500 per month and
after six monthly installments had
been paid he was eligible for loan
of $1,000. Even if the contracts had
been carried out the chances of a
purchaser getting loan at the end
of six months were about one in a
thousand, but in most cases the con-
tract was sold on the claim of q loan
within a short period and the result
was wholesale disappointment for the
purchasers. Payments were then dis
continued and practically all that had
been paid in forfeited under the con-
tract
The state auditor claimed super
vision of the company under an act
passed by the legislature of 1911 and
demanded that the company submit to
an examination. This they agreed to
do and the examination was begun at
Birmingham, but as soon as the ex-
which would have justified the auditor
in driving them from the state the
company refused to permit the exami
nation to continue.
A publicity campaign was then in
/ augurated against the company and
their representative in West Virginia
was indicted. Then followed strenu-
Gus controversy with the auditor sup
ported by the secretary of state, In
which Jne Officials Oh tue CUupdly JusI
recently convicted Tesorted to the de-
vices of the dishonest, claiming black
mail, threatening prosecution, etc. 1t
ended In the Supreme Court of APP
peals which held that the auditor had
no jurisdiction over the company.
BY this time. however, the expose of
the practices OF the company was COM
plete and they were unable to do but
little business after that. Although
they had mulcted citizens of the state
for several thousand dollars the losses
would have been much greater but for
the Intervention of the state auditor.
At that time tho auditor without sue
cess to obtain action from the federal
authorities, but the recent convictions
of the two. Whiteheads come as a vim
dication of the efforts made by. the
state authorities four years ago to pro-
tect the public from fake promoters.