ATTACK OH RACKETEERS

Evening Star, Issue 22974, 3 June 1938, Page 9

ATTACK OH RACKETEERS

MR DEWEY DN THE WARPATH “ MIRACLE OF HIGH FINANCE " EXPOSED 4*ress Association —By Telegraph—Copyright NEyTyORK, June 1. Mr T. E. Dewey, special prosecutor for the Racket and Vice Investigation, announced another spectacular attack on racketeering, involving the indictment of six men, some of whom are lawyers of good standing. They aro accused of taking 10,000,000 dollars from seven investment trusts. The manner in which the “ ring ” is said to have operated is almost unbelievable —a miracle of high finance. They started with a five-dollar outlay, acquiring one share from the trusts. They then negotiated with other shareholders to obtain control of the latter’s holdings, and they thereupon withdrew millions of dollars of securities from the portfolios of trusts by loan arrangements, The securities were then sold, part of the proceeds being used to pay off the shareholders. The remainder was pocketed by the alleged conspirators, who thereafter returned to tho portfolios face-value amounts of perfectly worthless securities. Several of tho lesser known brokerage houses are involved in the scheme, which, the authorities declare, shows the vulnerability of many existing investment trusts which have billions of assets.