Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-07-30


buying something else.
Another type of telephone worker
found occasionally in Washington
| operates in conjunction with conted-
crates in other cities. They decide on
a certain security ana begin talking
it up" and buying. starting as re-
suit n buying movement which makes
| it rise on the stock market. When 1t
reaches n high enough level, those
| who have been responsible for its
rise sell. and often they leave town
for a considerable time thereafter
! This practice, Of course. is not con
! fined to Washington.
! Eut the type of man who deliber
! atelY sets about selling fictitious and
| bogus securities is well known. lie il
not nearly SO dangerous, nor does he
take us much out of Washington rs
those who mSrcprcscnt some security
and who sell it for far more than II is
| worth.
Instance of Fact
The following is an instance founded
on fact: \ prominent banker in
Washington says that it has happened
in the past and is going on today.
/ The evil is that the men who are per
petrating such palpahle frauds are
able to so unpublished and the law
does not reach them.
~ WASHINGTON woman, dependent
upon small salary and her savings
for living now and comfort in her
old age. was approached by Il sales
man, who offered her some stock in
N.Y. Lenders Service. The name is
fictitious. hut the company exists and
its stock is worth something After
two or three hours the salesman was
able to convince this woman that this
stock. with n par value OF $40 Il share,
would pay for itself through dividends
within the course of a few years. And
the woman. convinced that it would
he an excellent thing to hold 100
shares, del@urred on the strength of
the fact that she did not have 81 900
in cash with which to buy it. SO the
salesman suggested that she give him
her note for 1000. Then he wrote
out an agreement. STIMULATING in effect
that he would sell the stock for s. 900
lat a future date" or else return the
stock to her-an agreement which
sounded very fair, but which. of
course, means nothing. He signed his
name to the agreement and told the
woman. orally. that she could pay off
the $1,000 by discounting it 500 at a
time whenever she found it con
venjent. but gave her to understand
that the dividends from the stock
would liquidate the note within n short
time and she could then sell the stock
for s. goo. In other words, what he
said and what she believed was that
by giving the salesman a note for
$1,000 she would get some miraculous
stock that would pay off the note and
give her $4,000 clear profit. SO she
gave him the note.
He took it Immediately to n mote
Ii.
The mote shaver telephoned the
woman and asked her if the note was
good. and she told him it certainly was
good. This made the mote shaver"
theoretically Il party to the transac-
ton.
Busy Plucking Lilies"
Several months have since passed.
The lady has her stock. But there
have been no dividends, nor is the
stock worth par. She is Iaboriously
meeting ker payments, with interest,
on the note, and the stock salesman is
busily at work in Washington pluck.
ing other lilies"
She might refuse to pay the note
and be sued. Then she would stand
a chance at least of showing there
was fraud. But she is lady who
breads publicity, and there are many
like her. She has no witnesses.
There is no written agreement that
means anything.
And now comes an interesting thing
about this particular type of fraud.
The banks accept the mote shaver's"
notes and pay him their face value.
They have an idea of how he has come
into possession of the note, and they
know that his methods are not only
unethical but very shady. Yet they
lend him a hand by allowing him to
cash in on them. They know they
will get their money back The posi-
ton of the banks in this matter is
that they cannot go behind their de-
positor'S motives. To do this they
might bar bootleggers, who obtain
their money illegally. But they would
at once set themselves up as judges
of morals. And thisait is commended. q
is outside the province Of banking,
Stock is being sold in Washington
today-and has for several years past
in mine that not only has failed
TO pay dividends but is yet to start
operations. 1t is always on the verge
or starting to operate tomorrow.
the mine exists and it was success
fully operated some years ago. 1t has
rather romantic history. But no
one knows, outside the members of the
company, how much stock has been
sold in the mine or whether 1t is worth
operating again. And those who buy
stock therein do not take the trouble
to ask some very pertinent questions
which would indicate that it is not
sound.
Fugitive from Justice.
Every one in Washington is familiar
more or less with the oil boom Of a
few years ago in nearby MARYLAND.
There are many Washingtonians who
also hold stock in n proposition to
bring natural gas here from West
Virginia. But the oil is yet to flow,
and so is the gas.
Stock is being sold here in an oil
company today that claims to have q
lease on tract near producing Gov
eminent oil land. Two Of the pro-
motors are out on bail. for violation
OF a nearby State law regarding oil
promotion schemes, and another one
IS a fugitive from justice, who skipped
out OF Washington and has not been
heard from since his recognition.
There ls nothing to prevent the sale Of
this stock in Washington and nothing
winch can be done to stop it here.
although 1T has been stopped in a
nearby State.
Every day the doorbelS ring at
washington homes and "cat-and.dog"
salesman are able to persuade persons
or small means to pay 800 for stock
that has par value of $40, but which
Is now selling for 81.
BY telephoning the Better Business
Bureau they could find something Of
the nature of these securities Put