GET RICH QUICK.

Star (Christchurch), Issue 16582, 15 November 1921, Page 7

GET RICH QUICK.

A SCHEME FROM ADELAIDE, PROSECUTION UNDER GAMING ACT. “ Most companies are floated for the benefit of and to attract only those with money to play with. Hitherto there has been no concern ofI fering shares at 5s each in which the | man or woman with limited means j may invest to the extent of one share and be absolutely assured of dividends up to £SOOO. Get a share for 6s Ikl and participate in this chance of a life time.” These words appeared at the head of a company prospectus which formed tho basis of a charge under the Gaming Act, 1910, heard by Mr S. E. M’Car thy, S.M., at the Magistrate’s Court to-day. The defendants were Harold P. Dalwood and William Collins, and they were charged with publishing a circular inviting shares in a lottery or scheme known as the Cooperative Perpetual Investment Company, Dtd. Mr W. J. Hunter appeared for tlie defendants who pleaded not guilty. Chief-Detective Cameron conducted the prosecution. The circular which the defendants were charged with publishing set forth that the objects of the company were: (1) To raise money by the issue of shares, the investment thereof in Government securities, advances to shareholders and others on approved security ; (2) To carry on the business of investors, financiers, bankers, money lenders and any other business which may be authorised by the company’s memorandum of association; (3) To distribute the interest, income and profit to be derived from the company’s investments and business among the shareholders in such shares and at such times and in such manner and subject to such stipulations as tho directors think fit, but so that in the final result there shall he no discrimination between or preferential treatment of shareholders in the distribution of interest, income or profits, but the order of time in which shareholders participate shall be decided in the absolute discretion of the directors and not otherwise. It was also pointed out that if the capital ( £1.000,000) was fully subscribed the interest, calculated on the basis of its being invested at only 5 per cent, would produce £50,000 yearly. The shareholder who in any allotment received the first or maximum sum would he incapable of further participation in further allotments until each and every shareholder had received a sum or sums equal to such first or maximum sum. . . . Ever}' shareholder, therefore, would ultimately receive an amount equivalent to the maximum sum allotted, and when all shareholders had been equally treated the procedure would he repeated. It was also pointed out that assuming the net annual income to he £50,000, tho quarterly income of £12,500 could bo distributed every three months as follows:—First, the maximum sum of £5000; second, £2000; third, £1000; fourth, £BOO, and so on down to forty sums of £5 each. Chief-Detective Cameron said that the promoters of the scheme mostly resided in Adelaide, and there had been prosecutions in Australia. He contendI ed that the proppectus showed that the ! whole scheme was a pure lottery with a first prize of £SOOO. It was true that once a shareholder had received £SOOO he had to stand aside until every other shareholder had received £SOOO or dividends amounting to that sum. However, it would take a million' years for every shareholder to receive such a sum William do Renzv, managing director of D. N. Adams, Dtd., printers, said that his firm had printed the pros]>ectu9 in question for the defendants. They printed 10.000 prospectuses and also 5000 ‘application for share forms. The orders were booked to Collins. To Mr Hunter: When the orders were given he understood that- the work was being done for Dalwood. He had known Collins for manv years and had always locked upon him as a respectable man* Constable Thompson said that on July 1 last Dalwood called at the detective office and handed in about six prospectuses of the Co-operative Perpetual Investment Company. Dalwood asked witness if he would care to buy some shares, hut witness declined to do so. Dalwood then said he would leave the prospectuses at the detective office as probably some of the men might like to buv shares, j Detective-Sergeant Gibson said that j on July 7 last he had a conversation with Dalwood, who said he was only an agent for the cowmanv and that he received threepence for each share he Fold. Dalwood also said he did not know how the prizes were divided. Ori July 17 he called at the Express Company’s buildings and on a board at the foot of the lift there was a card with the •company’s name and DalI wood’s name. He went to the room indicated on the card. On the door | there was a notice to apply to the j defendant Collins. Witness interview. | ed Collins, who said that Dalwood had i leftj W. A. D. Banks gave evidence re- ■ garding an application which Dalwood had made for a sharebroker’s license, j Tho application, which was supported | by W. C. Collins, It. S. Badger and ! J . R. Cunningham, was referred to the ) Superintendent of Police for a report jin tho usual way. The Magistrate j subsequently refused to grant the apj plication. Mr Hunter contended that there was j no evidence which would justify a eon- | vietion against Collins, who was a j well- know n commercial broker of the , highest respectability. There was no i blame attachable to Collins. Tho I company, said Mr Hunter, had been \ floated in Adelaids, and the directors j there were reputable business men. Tts legal advisors were a well known firm of solicitors, and its hankers the English, Scottish and Australian Banks. The capital of the company was invested in proper and ordinary business dealings, and the profits were to bo. divided at the discretion of the directors. If the profits were divided on a pro rata basis the dividend might amount to 5 or 10 per cent., hut the directors could pool the profits and divide them into lump sums and so gjive to particular shareholders substantial dividends. Once a shareholder had received a substantial dividend he had to stand aside until all the other shareholders had received like dividends. Mr Hunter submitted that this was not an offence under the law of New Zealand, which aimed at preventing gaming on games of .chance. Mr Hunter quoted several authorities in support of this contention. and added that if tho defendants wore convicted it would mean that building societies and Starr Bowkett societies, which were performing useful work in every city in the Empire, would ho liable to conviction. In the case of building societies the share money was pooled periodically and lots were drawn to decide who should take the pool. Dalwood. said Mr Hunter, had no intention of flouting the law. He wan a respectable man, and since liis return from the

war ho had been endeavouring; to build up a business. Although he considered he had committed no offence, I>alwood was finished with the Co-op-erative Perpetual Investment Co., Ltd. He had lost considerably over the whole transaction. The Magistrate reserved his decision.