WAR ON CRIME

Otago Daily Times, Issue 23517, 3 June 1938, Page 13

WAR ON CRIME

FIGHTING RACKETEERS ALLEGED INVESTMENT TRUST SWINDLE INDICTMENT OF “RING 5 * (United Press Association) (By Electric Telegraph—Copyright) NEW YORK, June 1. (Received June 2, at 10.30 p.m.) Mr T. P. Dewey, special prosecutor for the Racket and Vice Investigation, announced another spectacular attack on racketeering, involving the indictment of six men, several of whom are lawyers of good standing. They are 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 fivedollar 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 the portfolios face-value amounts of perfectly worthless securities. Involved in Scheme Several of the 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. Mr Thomas Edmund Dewey, New York’s special prosecutor for the Racket and Vice Investigation, is the man responsible for the remarkable clean-up which has taken place in New York underworld since 1935. Mr Dewey was appointed Special Prosecutor in 1935, a New York County grand ]ury, appalled by the tales of racketeering terror and extortion which witnesses told them, had petitioned the Governor of New York (Mr Herbert Lehman) to take action. On accepting the appointment Mr Dewey made it absolutely clear that his investigation was not going to be just another round-up of underworld small fry. He was determined to get the leaders; particularly the leaders of those rackets which preyed on law-abiding business men. <