LOTTERY ALLEGED

Taranaki Daily News, 14 October 1933, Page 3 (Supplement)

LOTTERY ALLEGED

SYSTEM OF MULTIPLES PROSECUTION IN COURT. MANAGER AS DEFENDANT. Appearing on summons, George Kennedy Elliot McLean was charged before Mr. Wyvern Wilson, S.M., in the Police Court at Auckland last week, with managing a lottery known as the Multiplication Bureau, on or about June 1. Mr. Meredith and Mr. McCarthy appeared for the prosecution, and defendant, who pleaded not guilty, was represented by Mr. Johnstone and Mr. Beckerleg. Mr. Meredith said the information was laid under section 41 of the Gaming Act. The scheme referred to was known as the Multiplication Bureau, and the case would refer to certain portions of a pamphlet known as “The Magic of Multiplication.” There would be no conflict on the facts, and the whole question for the Court was whether the scheme operated by defendant constituted a lottery. It was set out in the pamphlet that a member paid £1 to be enrolled and then had the right to enrol four other members at £1 each, said Mr. Meredith. The fourth ticket paid a cash commission of 15s to the original member, who was automatically started out on his first “tree.” The four members obtained began to earn a further four members each, and the original man received an indirect commission of 12s 6d on the first ihree of each, and so the thing went on. “STARTLING FIGURES.” “The figures are startling,” commented Mr. Meredith. “Evidence will indicate that the amount involved when a ticket gets on the 12th cycle is £22,369,621. One ticket in its ninth cycle will have practically used up all the adult males in New Zealand. There are no assets whatever behind this money, or materials. All a person gets for £1 is a piece of paper and the hope of commissions by enrolment. The legal question is whether this constitutes a lottery.” Detective Murch produced a booklet, entitled “The Magic of Multiplication,” which, he said, was issued by Multiple Systems, Limited. The company was managed by defendant, and the scheme was known as the Multiplication Bureau. A member paying £1 automatically became a life member. He was given a registered number, and a number of membership and enrolment forms containing his registered number, the first duty being to enrol four new members at a subscription of £1 a head. While a commission of 15s was payable on the fourth member, none was payable to the original member on the others. The four members had each to enrol a further four members, and, in respect of the first three of such, the original member received a commission of 12s 6d on, each. The fourth member started his own “tree.” When the scheme reached its eighth stage, there would be 87,380 members enrolled, provided the enrolment of fours was maintained. There was a provision that the commission which could go to a man could be only £l5OO in any one year. A PROFESSOR’S EVIDENCE. Answering Mr. Johnstone, witness said he did not know at the time of interviewing defendant that funds were to be devoted to. the establishment of a newspaper dealing with currency reform. He thought a portion of t’ e funds was to be used. > There was nothing about the proposal in the first edition of the pamphlet. Witness admitted that each member was entitled to commission according to a plan set out in the booklet and it was quite clear what he was entitled to in the long run. He would receive those amounts, no more and no was given by Professor H. W. Segar, of the Auckland University College, who said he had examined the first edition of “The Magic of Multiplication. Witness prepared a report, which included a table calculated on what could be called the normal development of a group from any single member. The table showed how quickly the operations of the scheme would reach impracticably huge dimensions if successfully operating, the report stated. It was time, as claimed in the pamphlet, that it was possible for a member to receive back a considerable sum for his H membership fee, but only if the tree developed a number of stages. What happened beyond the first stage was practically beyond his control, and was dependent on the inclinations and exertions of others, thus making any amount received a matter of chance as regards the individual. EXTENT OF MEMBERSHIP. Only the early members, in witness’ opinion, stood any appreciable chance of high rewards, as a single group, by ttae it reached the 12th- stage, would contain more than 22,000,000 members. Even at the 10th stage, it would require nearly every man, woman and chil m New Zealand to fill it. Conditions of uniformity were assumed. Cross-examined, witness said his ngures were on the assumption that the growth of the “tree” was uninterrupted. It was not necessary to sell all tickets to earn the maximum, and a member received whatever came to him in the way of commission, arising from his original £1 There was an element of chance m obtaining sales, but there was no chance about the distribution. The Magistrate: The distribution is quite definite. . , Answering Mr. Meredith, witness said the return of the money was certain, but the amount to be returned was quite uncertain. Mr. Meredith quoted a Scottish case in support of his argument. He said the results were a matter of chance, and that a lure was held out in the suggestion that other people would work to make money for a member. There was a certain amount of skill in obtaining the first four members, but the main, character of the scheme depended entirely on chance. CONTENTIONS OF SCHEME. “I am in no wise concerned to defend the scheme as it is put forward as a scheme,” said Mr. Johnstone. lam solely concerned as to whether the prosecution has proved that defendant h 3 *? managed a lottery.” Mr. Johnstone said that in a lottery, not only must the distribution be by lot or chance, it must be by pure chance. The Scottish case quote ed by Mr. Meredith could not hold, counsel submitted, because it was something in which the prize was determined by lot or chance. Under the scheme, people were promised just such sums as might be earned by their £l. Whatever came was by a definite and fixed system, although there might be an element of chance in the earning. . Continuing, counsel said it was definite that, whenever sums of money to which a person was entitled came into existence, they belonged to that person. What was promised was paid to a member without resort to lot or chance. The Magistrate: The prospectus, if I may call it such, offers a reward on the happening of each contingency. Counsel replied that no money was offered until it was actually in hand. “I suppose you will want to cany this further,” commented the magistrate, in announcing that he would give a written decision.