New-York tribune., 1918-07-30
u. S. Arrests Promoter Ac.
cused of Getting $5,00O,.
600 by Fraud
$4,000 "Customers"
Are Called Victim.
Countrywide Complaints
End in Federal Raid on
Lavish Offices

United States Marshal Mccarthy.
with Postoffice Inspectors McQuillan
and Homberry, made a spectacular
raid on the 4offces of George Graham
Rice, at 27 William Street, last even
ing and arrested the man whose oper-
ations have kept him in the lmelight
for the last twenty years and put him
in prison twice. He is charged with
using the mails in a gigantic scheme
to defraud.
According to the Federal authori-
ties, Rice, who has made and lost sew
eral fortunes in the last five years,
has defrauded $4,000 customers out Of
more than s5,OOo,OOO. Scores of com
plants are now in the hands of the
postal officials from all parts of the
country.
When Marshal Mccarthy and the in
spectors broke into the we'll furnished
Offices Rice jumped up from a table
where he was in conference with sew
eral of his associates.
What do you mean by breaking in
here in this manner" he demanded.
1--WE came here to arrest you on
warrant; you're coming along" an
swered the marshal "You are charged
with using the mails to defraud"
Offers Stock for Bail
Rice Immediately asked if bail could
he arraOped and whether I,e u-o,,lI \.
permitted to continue his conference.
He said he had 100000 worth of
stocks in the safe and would furnish
any reasonable amount
"You come with us and come now"
said Mccarthy. "If the stocks you are
ta}king about are any of your own
they are not worth as much as waste
paper"
Bail Fixed and $4,000
Rice was taken to the Federal Build
ing and arraigned before United States
Commissioner Samuel Hitchcock.
United States Attorney Ben A. Mathews
asked that bail be fixed at $4,000.
Judge Josephs, who represented the
defendant, made a protest. but after
Mr.. Mathews explained hat several
other complaints We're 70 be made
against Rice, the bail was fixed at the
amount asked. 1t was furnished by
representative of a surety company and
Rice was released for a hearing Au-
gust s.
In the complaint which was sworn
to by Inspector McQuillan, Rice is
identified as Jacob Simon Herzig. This
is his name. although he assumed the
alias of George Graham Rice some
H..
specific charge against him is that he
defrauded r. w. Hartman, of Mans
: field, Ohio. out of sT21.25. which the
latter had sent him through the mails
/ for the purchase OF ten shares of COM
mon stock of the American Car and
Foundry Company, at S72 a share. This
( stock, according y the complaint, was
never bought and Rice used the money
fer his own purposes.
Published Own Paper
The Rice firm occupies two floors
at the William Street address and en-
/ ploys 125 persons. The house organ,
known as THE Industrial and Mining
Age is sent out weekly 10 the $4,000
customers. This paper, according to
the Federal authorities. was used to
hold the customers and convey the
impression that some of the alleged
worthless mines flce was Interested IN
gave promise If development into val
liable properties.
Accepted Liberty Bonds
According to the Federal authorities,
/ when money was delivered to Rice to
purchase a good stock the investor
was Immediately informed that the
number of shares as directed had been
bought, but against the best judgment
of the Rice firm. He then was urged
to exchange for shares in some mine
or oil concern Rice was interested in,
with a promise of big profits.
1t is charged that he took thousands
of dollars worth of Liberty bonds in
payment for securities in his mining
and oil enterprises.