EASY MONEY IS THE BAIT OFFERED BY SWINDLERS

Auckland Star, Volume LXXII, Issue 181, 2 August 1941, Page 13

EASY MONEY IS THE BAIT OFFERED BY SWINDLERS

MAJESTIC figure of a man stalked into my office not long ago, frowning as he came. A bodyguard of five lawyers surrounded him, demanding to know by what right we had summoned him. It was really simple routine, but the man acted as if the State of New York were committing lese majeste. Nobody in the room—except the guilty man himself—guessed that we were on the trail of a series of swindles amounting to more than 500,000 dollars. In examining the books of a shady stockbroking firm, we found the name of William F. Peterson and invited him tc come in and answer some questions. That was all. When his lawyers stopped thundering about the outrageousness of questioning a man of his standing, they con Pen ted to have him sworn as a witness, to bo examined in a few days. But the man himself had no such intention. He skipped town. Two days later his wife, fearing he had been kidnapped, asked the police to look for him. The newspapers printed the story, and that brought his swindled customers in swarms to our office, many of them too ashamed to testify. To Suit the Client Peterson's office was a gorgeous suite on the fifty-seventh floor of a Pine Street skyscraper. He and his wife lived at the Sherry-Netherland and spent thousands entertaining friends who invested with him—and who introduced other He was careful to adapt his talk of pro fits to fit his clients, offering ten per cent to smart businessmen, as high as 1860 per cent to trusting women. The police finally caught Peterson in Milwaukee and brought him back to New York. He put up 15,000 dollars cash bail—and ran away again. Fate did not overtake him until last June, when he crashed his car into another in Kansas and was killed. When all was reckoned up it turned out that he had stolen 516,745 dollars in New York. His victims got nothing. With billions of dollars of national ' defence money now in circulation, thousands of swindlers like Peterson will be swinging into action in the United States, but there are lessons to be learned about smart swindlers that all the world should know. I hope that, by telling how they operate—and I have caught thousands oi. them during ten years as Attor-ney-General of New York State—l may be able to give the public a few pointers for that fight. i~

I \ The Attorney-General of the State of New York, who has sent 500 5 swindlers to prison, here offers five simple rules that will keep s yon from being "a sueker." 1

By John ]. Bennett J

First, beware of the "scientific" sharper. Science has made such ; wondrous progress that a crook who i can mix a little science jargon in ' his sales talk rakes in money as fast as he can spend it. Arthur Lingel- j bach posed as an engineer. He was small, suave, dignified and grey, and < he told tales of his Super Utilities < Company and his perpetual-motion ] machine that charmed thousands of ' dollars out of the pockets of simple < folks. The machine was to be en- ( closed in a refrigerator. You wound • up his marvellous secret spring and this kept the box cold without the use of gas or electricity. There would be millions in it! When Lingelbach testified at our i investigation he claimed every scientific achievement imaginable. He : swore that he had perfected Edison's phonograph, helped Burbank and ;

, Michelson develop synthetic rubber, shown Ford how to design his • Model T car. ; A pudgy seeress who held spiritus alistic seances in a Broadway hotel > had steered suckers to him. "Trust [ him."she would intone in an awe-. - some N voice. "and you will Rather > wealth." They did trust him—but • they did not Rather sreat wealth. t In the midst of our. investigation ' I received a petition, signed by scores of Super Utilities stockholders, urging me to "stop persecuting this great and good man." They flatly refused to testify against him. All we could do was to get an injunction forbidding him to sell stock. hut he later was sent away to federal prison. How this old fellow could charm people into buying stock in anything as overworked as a per-petual-motion machine is a mystery. Yet his victims were not all fools by any means. The first complaint was made by an intelligent business woman who had invested 1070 dollar?. Lt isn't only the phony inventions that trap the suckers. Crooks exploit every new invention. When the newspapers began to proclaim the wonders of television they were unconsciously spreading bait for suckers. A proup of promoters organised the Television Corporation of America. "Capital 6.000.000 dollars," shares at one dollar each. 11 seemed honest. They had patents which they said television couldn't set along without. They nearly sold 300.000 shares: then there came a lull. The list of stockholders' names and addresses v.-ere used bv William H. Milne, a Schenectady broker, and Kred Knanp jind Ivewis Duel], his salesmen, a? a means of sellins more Mock to these people. They yild thi.s slock at three dollars, five dollar- and ten dollar--a share to a cod men and women who had already invented in Television Corporation r>," America. High Pressure Sales Witnesses, some- i:i their late 70'.« and 80's. testified that Knapp and Duell called at their homes, casually mentioned the local preacher, and then waxed eloquent about big profits in television, lettir.c drop that they were going to sue Radio Corporation of America for 12.000.000 dollars because "they stole our patents." One man went with Knapp to Albany, drew 200 dollars from the bank, and bought 40 shares at five dollars each. Soon Knapp came back and sold him GO shares more: then

he came a third time ("last ohanr. to buy at five dollars a share") and sold 40 more. "I have never seen Mr. Knapp since," was the end of his story. An 81-year-old widow eavo Duc-11 her cheque for 250 dollars for r>o shares but, growing suspicious. stopped payment on it. Ducll again called, declared that if the cheque didn't clear right away* she'd have io pay 10 dollars for the stork—and she let the cheque fro through. Convicted of grand larceny. Milne and Knapp were sentenced to Sine Sing for from five to 10 year=. Ducll turned State evidence and got threemonths in prison. Pmrtial to Rich Widows are a special target of the swindlers —and many are shorn of their wealth, liobert K. 1-,ancapicr wasgettinp ready to offer them some astonishing bargains in securilie.when we began an inquiry that stopped his career. We stumbled on him by accident—found that hi was connected with a suspicion investment firm—and «:hpopnaed him as a witness. When he fled, we examined books and issued a warrant for his arrest, charging him with helling 500.000 dollars' worth of fraudulent securities. He had been nin king money fast, living in a penthotist , and entertaining in a big way. He

was picked up'-in Florida and !-en" to Federal prison on mail charges that resulted from ou: investigation. When thii icrm : finished he will lace : cnv :kc- ,-. New York Stale Courts. The most interesting ih,ni_- v found in his office was « 1::-1 <■( 1" widows whose fortunes run fi 100.000 dollars to 3.000.000 d 0:..--with their addresses, the n:im< their children and other detail '. • ful to a swindler. 1 wrote a li-t" to each of them, telling of 1. • ter's list and warning them ■ - • ware of all strangers who jn'igj.i • to coax them to put their i r. into a marvellous investment. ! hope they all took warning, h , knowing how cunning the hi.sh-p! i sure salesmen are. 1, fear :-•■■■.,<" <•' them may have been swindl'-i ;• this time. These are only two or ti.i-r-r----thousands of similar ca=c~ v.t i .. handled during my year- in o:!.i. We have sent 500 i-w n.•'/.'v- i■• prison. We have obtained inv.itions against 5500 ;>ther.- fiirb»l«i ■ • them to sell securiiies in uv- *»'.• And we have recovered l'in» ■■• ><■ dollars of the stolen nv>r.'-y -•..•■. fraction, of mtiM , , <■' ihelr haul. Yet there are Mill tho",;-;iS'l- < swindlers and hundred.-- of !hn':-;i:i<! of suckers. Ann there wi ' !•' nv • of both when the <ief'-:.'-<- 1>:1'!oti get into wider rirrula'. :«>n. Five Simple Rales Most people are si d.izz'.e i \r. ■' prospect of pettinc ><■:. f-iln; _• •■ noth:r.p tliat they furpc ''• 'ske ■ commoncFi pre ■■<■.::: v.i■.- }: ■ cman and woman «ho re«<i- ■. lines can escapt- :lie .-v. r.n'.■; '.- • by remembering fi\ <■ n-]'.v ]>o:r--1. Big prof:'.- ;i'way< n.dii i risks. 2. Stranger.- off'-: ;np to • r..h'y.> 1 money for you" arc. rir."-.>■: ■<:• times out of a hundred r'-al'y ;r. : to rob you. .'5. Before u,\ f< o- c>: lawj'er's or yom- hanke-r's .i<:. especially if the offer ■■• ' . :• :•- the class. 4. When a stranger o;!e:.- >omarvellous speculation, be <.\'.rc- . have him tell his Fto;y t.r'.. : .. ■ : nesses. Honc-Ft r: < ■:<' d.-.n't witnesses: crooks fiphi -; v .: ;. 5. In buying sc-cur.":c-- - -ke i least as mui-h <;-rc- a-" >o.j ■•■.-&„ i • buying a car. • And hereV the best invc--'-■■--• ! of all: Put your monev jmo V> r • Bonds or other euailar snvesinc: ; They are safe—and they a l patriotic.