Evening star., 1951-11-15
Extradition Pact Hits
Promoters Of Fake
Ontario Stocks
By Donald B. HodIey

~~'~sS ssSSsSy
Ontario stock promoters WHIT
have made fortunes selling Securi.
ties fraudulently to United State!
investors without serious inter.
ference for the last decade face 6
bleak future.
Announcement yesterday of tn,
conclusion of an agreement be.
tween the United States and Can.
ada, adding fraud and false pre-.
lenses to the list of extraditable
|offenses between the two nations
was hailed enthusiastically by
Securities and Exchange Commits.
sion officials, who have been work.
ing on the problem for years.
The agreement is subject to rati.
fication by the United States Sem
ate, but no obstacle is anticipated
by the SEC.
81 Million a Month.
The amount the Canadian stock
fraud promoters have taken from
United States investors has been
estimated as high as $50 million a
year. or 81 million a month. How
much they have taken from the
Washington area is uncertain, but
an SEC spokesman reported q
steady stream of calls from peo-
pie who had received the pro-
moters' literature here.
Both the SEC and Post Office
Department have played a hide
and-seek game with the Ontario
stock pushers, without any power
to prosecute so long as the pro-
moters stayed on their side of the
border. Sales were made by mail
and telephone in almost every
State. Attempts to block mail ad-
dressed to known fraudulent oper-
ators and other devices were side
stepped by frequent changes in
addresses. names and corpora
tions.
Offered as Protocol.
In Ottawa, Prime Minister Louis
st. Laurent presented a copy OF
the agreement to Parliament. II
need not be ratified by Parlia-
ment, but the Government in
tends to permit debate on the
measure.
The Canadian promoters op-
erations generally follow the same
pattern. For example: A colored
:harwoman in a downtown Office
here received a letter
from a Toronto securities dealer,
Of whom she had never heard. He
enclosed an elaborate yellow
bordered certificate emitting" her
bo buy 1000 shares of a mining
company at 40 cents a share-a
total cost Of $400.
The letter and enclosed litera-
ture gave a rosy picture for the
company and for anyone who pur-
its stock. AS neither the
stock nor the dealer was registered
under the SEC Act, the woman
was advisd to ignore the letter.
The letter often is just the
beginning. II the prospect shows
any interest-and even If not-a
special telephone call from Can
ada almost always is impressive,
and the glowing promises become
still brighter.
Still Another Trick.
According to postal authorities,
many Of these dealers have still
another trick after the sucker
buys for the first time. Another
telephone call from Canada in
forms the new stockholder that a
certain group is trying to sup
plant the management and that
the stockholder may be ap-
preached in few days with an
offer to buy his stock at higher
price than was paid for it.
The dealer warns confidentially
that the stock will double in value
N the next few months and urges
The holder not to sell. The holder
and in a few days. he
receives a call from another
stranger, who wants to buy his
shares. Forewarned. the holder
hangs on to his shares. and the
lealer calls again.
He thanks the stockholder for
standing firm and advises him
hat the company has a little
stock left in the treasury, which
t will sell only to stockholders at
/ small advance in price. The un-
-. - T..