New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1922-09-09

DIR. Leonard k. Hirshberg
Arraigned i'm Connection
With Alleged 'sPonzi''
Mail Fraud Scheme
Winthrop Smith Sought
Members of Firm Disap-
pear After Promise TO Pay
Huge Dividends, Charged

What the postal authorities declare
is second Ponzi scheme was brought
to light yesterday through the arraign-
ment Of DR.. Leonard X. Hirshberg, as
ISOLATED with the firm of Winthrop
Smith & Co., which is charged with
using the mails with intent to defraud.
1t is understood that warrant is out
for the arrest Of Winthrop Smith.
The complaint against DR.. Hirsh-
'berg and Smith Is sworn to by E. Hon
very, postal inspector, and alleges
that the firm has been engaged in what
Is known as participating syndicate
to create pool for buying and selling
securities Of the New York Stock Ex-
change; that the defendants obtained
mailing lists and sent circulars prom
Using returns of from "a to 100 per
cent year on the amount Invested,
and that the mails were used with in
tent to defraud and with the inten-
ton Of using the money collected for
serted that the firm is accountable for
about 100000
DR.. Hirshberg Well Known
The complaint was prosecuted by
Assistant United States District At
torney Mccoy, who asked for $4,000
bail. However, United States Commits
sioner Hitchcock said that in view OF
the fact that the defendant WAS q mar
ried man with two children he would
demand bail Of only $4,000. This was
furnished and the case put over for g
hearing next Friday The defendant
was represented by Terence J. Nc.
Manus, of the Arm of Olcott, Bonynge
McManus & Ernst, ITO Broadway.
DR.. Hirshberg, who is graduate OF
Johns Hopkins University, is widely
known through his writings on health
For twelve years he has been writing
daily health articles for the newspapers
which ard syndicated all over the
United States. He is also the author
of several books, and at present is sale
| to have an active practice both in New
York City and in Baltimore.
He declared yesterday that he hac
not been active in the business Of
| Winthrop Smith & Co., but thai
his connection with it was the result
of having invested some money in the
| firm. The firm was organized in April
| 1921.
According to officials Of the Better
| Business Bureau, the matter was
brought to the attention of the posta
| auCnorlrleS aTCer an lnveSClgaClon o!
several weeks by Edward A. Schwab
formerly postal Inspector and nov
chief fraud Investigator for the ma
tional vigilance committee Of the AS
sociated Advertising Clubs of thu
World and the Better Business Burea,
| of New York.
Firm Members Disappear
Better Business Bureau officials sait
! the firm sent out circulars Offering
big profits to investors and promisin,
to invest their capital for them in
blind pool They reserved the right t,
invest the money as they saw fit ant
none of those who contributed to tn,
scheme knew exactly what was beinf
! done with their money, although, as il
the case of Ponzi, regular dividend:
have been paid monthly.
DR.. Hirshberg declared that he went
to the Office of the firm only about
| twice week, but that few days ago
| he found several members Of the firm
| had vanished. However, he said he be-
| lieved Winthrop Smith was still in the
| city.
According to the Better Bushes.
| Bureau, Winthrop, Smith g. Co. hac
offices in New York, Baltimore, Cleve
land, Harrisburg, Washington, Elmirs
and Martinsburg. 1t was said yester
| day that the offices in Cleveland and
Harrisburg had been closed together
with the New York Office.