Show tf yi SAY SA Y A jow swindlers lers dodge the law schemes of fleeming fleecing Flee cing the public have evolved from the shell came to gigantic frauds wearing the cloak of legitimate business enterprises 1 k by EDWIN W SIMS united stales district attorney chicago formerly solicitor of the department part ment of commerce and labor washington EDWIN W SIMS for many years chicago has been the headquarters tor the swindlers lers and confidence men of the country chicago being the great railroad and distributing center of the west strangers are drawn here in great numbers and for many years they have supported a large class of men who live by their wits because of the ease with which money Is obtain ed by various kinds of swindles the swindler has flourished in chicago despite the utmost vigilance and activity of the officers of the law both state and federal in devising schemes swindlers lers always have in view two objects first obtaining money tor nothing second evading the law the ingenuity displayed by these men is often remarkable As the attorney for one of them remarked after his client had been convicted if that man had used the same in and persistence in legitimate business that he has in inventing swindles he would now be a million alre the evolution of the swindling game during the last 25 years Is very interesting twenty five years ago the swindler eked out a precarious existence hia operations were con fined to the shell game shortchange short change take bet green goods gold brick and similar schemes usually these schemes were worked upon country people aad only small sums could be obtained they also lacked another imi octant feature of the modem swindle la that there was no provision for a defense in court swindlers lers who worked these schemes depended upon avoiding detection but they could make no defense to the scheme itself this was a dangerous and cumbersome method of procedure and during the last decade has been by the confidence game or scheme to defraud in its modern form in the these schemes began to exhibit some 0 the elements of their modern perfection the method adopted was to conduct the swindle by an elaborate imitation of business methods an example will show the great advance that was made over the old method the man would open an office and insert advertisements la the papers stating that a business firm with a large capital wished men to represent it in various states at substantial salaries this would at tract scores of men who would come to the office each victim would be told that he had all the qualifications necessary to conduct the business and would be offered a salary of two or three thousand dollars a year and commissions and would have some state assigned to him he would then be told it was necessary for him to make a deposit of two three or five hundred dollars as the case might be and a contract shrewdly drawn would be presented to him to sign lie would pay his way to cleveland or milwaukee as ohio and wisconsin were the states they usually gave where his employer would pay no more attention to him when he would return and demand bis deposit ha would be shown the contract varl ous provisions of which he had not kept and the money would not bo returned to him another scheme was to advertise for sale a partnership in an old and established business A set of take books showing profits would be produced tor the inspection 0 the alo urn and ho would pay or 1 for a new partnership some pretense to conduct the business would be made but soon the business would fall and the victim would be out of his money schemes of this kind were conducted in great numbers in achl bigo during the latter and up into the first few years of the present century and millions of dollars thus obtained from the credulous there was a weak point however in schemes of this nature nhsn the swindler was baled haled into court be could show no effort to conduct a real business the defense was always that this wag not a crime but only a allure to carry out a contract but the courts held that a contract otherwise legal it used in connection with a scheme to defraud could not avail as a defense then the next step in the evolution of modern was taken to meet this difficulty the swindler would actually make a pretense of carrying on a real business and then simply wear out hla victim by various conditions and annoyances the scheme in its present form Is a clever advance over all those previously used A swindler today to day Is connected in some way with a corporation of some kind and whatever part be may take his profits are derived ultimately from people who purchase the securities of these corporations in order to avoid danger the corporation will have something if it Is a mining corporation it will actually have some place that it calls a mine and it will be making some show of operating it it it Is an oil company or any other kind of a take corporation there will be some show of activity under this scheme the victim has bis share of stock and the mine or the oil well or the plantation or whatever it Is Is there and according to the swindler all the stockholder has to do Is to wait until the property Is devel aped this tends to keep the victim from prosecuting tor of course a prosecution would destroy the value of the business and it affords a defense in court another scheme allied to this was one in which a number of clever swindlers lers cleaned up a large amount of money A man would advertise that be had ample capital to invest in the securities of corporations provided a competent examiner after thorough investigation makes a favorable report upon the proposition the victim Is led to choose as the examiner a confederate of the man with capital the examiner will receive to 2500 for making the examination according to the elze of the business whose securities are to be marketed then after getting the money be will make the examination and return an unfavorable report which releases the first swand ler of his obligation to take the bonds under the contract then of course the two divide the tee for the exam between them this scheme and one or two others very closely al lied in principle were flourishing until they tell into the hands of the federal authorities here in chicago this latter scheme it will be ob served Is more dangerous than the selling of worthless stocks and bonds to the public for th reason that it can be proved that the swindler was not in the position to purchase these bonds even it a favorable report had been made in the case of these corporations po rations which exist in large num bera and who are robbing the people of the country 0 millions every year it Is very difficult to secure conviction of their promoters in a majority of cases when they are arrested and brought into court they are ready to show that they were really carrying on some kind of a business and that they have been simply unfortunate that expectations had not been really ed and that a business failure Is not a crime the great difficulty Is to prove criminal intent in the past both our state and fed eral courts have so interpreted the law against schemes to defraud that they have been able to suppress or curb these schemes whatever form they took just what Is to be the at of the courts towards the swindler who poses as a promoter and whether they are to so interpret the law that it can deal adequately with this form of fraud is at the present time uncertain as the courts differ widely upon the subject some of our courts are now holding that even if a promoter does issue a false prospectus and thereby induces people to invest in the securities of a corporation that this does not consal tute a scheme to defraud and that it must appear beyond all reasonable doubt that the defendant intended to put tto money thus obtained into his pocket and not into the business the difficulty of making this proof has already been indicated in eng land this difficulty was met by a stat uto and vict c 6 s 90 which Is as follows whoever being a director man ager or public officer of any body corporate or public company shall make circulate or publish or concur in making circulating or publishing any written statement or account which he shall know to bo false in any material particular with intent to deceive or defraud any member shareholder or creditor of such body corporate or public company or with intent to induce any person to become a shareholder or partner therein or to entrust or advance any property to such body corporate or public corn pany or to enter into any security for the benefit thereof shall be guilty of a misdemeanor and being con thereof shall ba liable at the discretion of the court to any of the punishments ahlich the court may award as hereinbefore last men under this statute the difficulty Is met by maung it a crime to issue a false prospectus some of our courts have held that the issuing of a false prospectus s a scheme to defraud within section of the united states revised statutes other coarts however hold to the ont bat whether by judicial interpretation 01 by legislation it la absolutely been oal aaa the issuing of a false proa pecans be made a crime before it la possible to deal effectively with the largest class of swindlers lers that now prey upon the public while the united states govern ment cannot directly schemes to defraud et it the malla are used in the furtherance of tho scheme the government can act aa most of these schemes contemplate the use of malls it Is possible for tho government to proceed against them under sections and of the united states revised statutes section provides that whoever devises a scheme to defraud and promotes it by opening correspondence through the mails shall be guilty ot a misdemeanor section provides that it two or more conspire to coin alt the offense denounced in section they shall receive a still greater punishment acting under the authority given by these two sections the post office department part ment and the united states district attorneys office for the northern district of illinois have for years waged a vigorous and relentless war against all swindlers lers who make use of the mall service the task presented the authorities Is a difficult one in the first place where the malla have been used tho victims are widely scattered and it Is difficult to know who haft been swindled and the government must choose its witnesses from those who happen to make complaint these witnesses are scattered from maine to california it Is necessary to bring them hero tor the preliminary hearing then for the grand jury session and once more for tho trial of the case much labor and expense are necessary then too it la necessary tor the attorney who draws the indictment to go through correspondence and the various conversations with the greatest care in order that be may analyze the scheme and determine exactly in what the fraud consists so that tho indictment may be accurately drawn then at the trial of the case the government is perhaps confronted with the fact that the scheme has been ao cleverly devised that direct intent to defraud is impossible of proof and resort must be had to circumstantial evidence the records show however that the government has very seldom lost a case of this kind and that and confidence men stand in the greatest fear ot the federal authorities because of the vigor of prosecution in the past it the law could be amend ed as above suggested undoubtedly the government would be able to reach and suppress a large majority of the schemes to defraud that are now operated from this city one of the surprising things in connection with this subject is the credulity of the average person who has saved a little money and hopes for large and immediate returns from it it seems that there Is nothing so extravagant so improbable that the people will not believe it it the stock of any company had any chance of earning the dividends which these promoters represent that it will of course it would be subscribed and oversubscribed over subscribed tor at once by the big moneyed men and would not have to be peddled around at absurd prices often as low as ten cents a share when this Is suggested to the promoter he always states that the big moneyed men are trying fo get bold of the stock but that it Is not desired that they should have it because they would then come into control of the property and the victim swallows the explanation the swindler usually has a confederate to whom be refers the victim who wishes to learn about his standing and integrity and it seems the victim rushes right to this confederate instead of going to banks or business men and making inquiries from people upon whom he could rely every prospective purchaser should stop and ask himself the question why Is this stock being peddled around in this manner Is it possible that a good sate Ineat ment would be so bandied when so much money Is lying idle ready tor good investments in the hands of men who are competent to pass upon the safety of an investment who are the men back of this scheme and what are their an at what banks or at what established business houses are they known as honest conservative men of business of course the swindler has his plausible answer to all these alons and the victim takes his esplan atlon without making a thorough additional dit ional investigation copi right by joseph E dowlea |