FABULOUS LOSSES IN BIG TURF FRAUDS.

"INVESTMENT" COMPANIES OF LAST FEW YEARS NETTED $10,162,000.

This is a sad, sad story, because it is an obituary, the death notice of one of the meanest and most abominable frauds that has ever taken the hoarded pennies of children and working girls, the "late lamented" "turf syndicate."

Several years ago the turf syndicate was in its glory. A poor girl, fresh from the old country, would scrub floors for a week or take in washing for a month in order to pour money into the pockets of these swindlers. Thanks to the efforts of Detective Clifton E. Wooldridge, of Chicago, and others, this particular fraud is now a thing of the past.

But the enormity of this tremendous crime against the poor may be appreciated from a study of the following figures.

Turf "investment" companies that have failed, absconded or have been driven to the wall by prosecutions during the last few years and the amount of money estimated to have been lost in the swindles give the following astonishing record:

E. J. Arnold & Co.$ 4,000,000

John J. Ryan & Co., St. Louis, Mo.1,500,000

Brolaski & Co., Chicago200,000

Benedict & Co., Chicago200,000

The Mid-Continent Investment Company, Chicago150,000

The Mason-Teller Company, Chicago50,000

The Douglas-Daly Company, R. S. Daly and N. C. Clark, Chicago125,000

The Armstrong-Baldwin Turf Commission, J. P. McCann and O. L. Wells, Chicago100,000

The Money-Maker, C. A. Pollock, manager, Chicago15,000

Gulf Pacific Trust Co., F. Lehman and R. G. Herndon, Chicago, New Orleans and San Francisco50,000

Investors' Profit-Sharing and Protective Association, Chicago12,000

J. J. Shea & Company, Chicago10,000

Standard Investment Bureau, Chicago and San Francisco25,000

The Security Savings Society, W. R. Bennett, Chicago1,500,000

The Investors' Protective Association, Frank E. Stone, Chicago200,000

D. W. Moodey & Co., Chicago50,000

Co-Operative Trust Co., L. M. Morrison, Chicago150,000

Edward L. Farley & Co., Chicago75,000

Inter-Ocean Commission Co., J. T. Mitchell, Chicago75,000

Hugo Morris & Co., Chicago50,000

Al Fetzer & Co., Co-Operative Turf Pools, Hammond, Ind.500,000

Co-Operative Investment Association, L. H. Myers, New York150,000

American Stock Co., W. M. Nichols, New York100,000

Mutual Security Co., C. Dudrey, New York100,000

Henshall, Bronner & Co., New York75,000

W. W. O'Hara & Co., Cincinnati50,000

Crawford & Co., New York35,000

Paul Pry's Investments70,000

The Belt Company, N. S. Goodsill, Hammond, Ind.150,000

Drake, Allison & Co., Hammond, Ind.175,000

McClellan & Co., John McClellan and John Murphy, proprietors, New Orleans, absconded50,000

New York Co-Operative Company, New York20,000

W. J. Keating Company, New York20,000

The Fidelity Trust, Wm. J. Young, San Francisco25,000

C. E. Cooper & Co., Cincinnati15,000

C. E. Cooper & Co., Covington, Ky.10,000

C. E. Collins & Co., George D. Jones and Charles Thompson, New York30,000

—————

Total$10,162,000

Gigantic Turf Swindle.

Among the first of the get-rich-quick schemes into which the public poured millions was the "turf investment" concern. The "literature" of probably no other class of swindle was so plausible as this. The promise was to pay 5 and in some cases 10 per cent on the investment each week. The method by which the promise was to be fulfilled was this: The money invested was to be placed in a pool and used as capital in playing the races. A standard bet of a certain amount was to be made. If this wager was lost, enough money out of the pool was to be bet on the horse picked by the managers of the concern in the next race, to recoup the loss on the first race, win the amount set out to win on the first race, together with a like amount on the second race. If this wager was lost, the process was to be repeated on the next race, and so on until a wager was won. Each time there was a winning, a large enough sum would have been bet to recoup all losses on previous races and win a fixed amount on each of the races played. Some concerns claimed to play the favorite horses in the betting, others the second choices to win and others to bet according to "inside information" derived from horse owners and jockeys.

Regardless of the variations of the scheme, the general plan was the same. The prospectuses, in a most plausible way, set forth the claim that "beating the races" was merely a matter of having a large enough capital at hand to continue the progressive betting plan.

By the claim that horse racing was as legitimate a calling as dealing on the Board of Trade or Stock Exchange and possessed the additional advantage of being open to persons of small means, a strong appeal was made to the poor.

Of course, none of the money that poured in ever was bet. Had 5 per cent a week on all the millions contributed by the public to this form of swindle been actually derived from the bookmakers, every penciler in the country would have been bankrupted in a month. The remarkable feature of the "turf" investment scheme is that this phase of the matter seemed never to occur to investors, and the other palpably impossible phases of the operators' claims were also overlooked in the effort to secure 260 per cent a year on the investment made.

Get-Rich-Quick Schemes.

As in the horse swindles, the older investors were paid their dividends from funds sent in by new ones. No attempt was made to win dividends in the market. As the gullibility of the "suckers" became a little dulled, innovations to increase the plausibility of the schemes were made and new forms of bait devised.

"Turf swindles" have flourished, while the victims, who number tens of thousands, dare not raise their voices in protest or complaint, well knowing that they would not only be the butt of ridicule in their community, but also that the world at large would rather rejoice at their losses, and courts and juries would probably waste little sympathy on them. Consequently the safest swindles operated today are those having race-track betting for their basis.

In the latter part of 1902 there were upwards of twenty-five of these schemes in operation in the United States. New York City was the headquarters for about ten, and the balance were located in St. Louis, Chicago, New Orleans, San Francisco, Cincinnati and Brooklyn.

Their prosperity was evidenced by the ability of managers to buy advertising space in the leading newspapers, to pay the printers for the most elaborate booklets, circulars, etc., and Uncle Sam for postage stamps, with which they were extremely liberal, usually sending a stamped envelope, for reply, to prospective investors.

Extracts which I give below from the literature of five of these concerns offer a fair criterion for the whole mass which I have before me, and demonstrate the turf swindlers' method of extracting money from the unsophisticated. Fully 25 per cent of their "investors" are women, while the whole number who contribute to their scheme is made up of persons who would not be seen betting at a race track or pool room, but who have consciences that will permit them to make money "honestly or otherwise."

WHO SAID I LOST TWENTY DOLLARS?

Here Are Plausible Arguments.

This is one argument of a firm of so-called "Expert Handicappers" of New York City, who bet on the races:

"There has never been a week since we started in business when we did not pay a dividend. The smallest dividend we have ever paid for any one week was $6.50 for every $100 invested. We average about $9.50 per week on each $100."

"An investment with us is safer and brings better returns than bookmaking or any other form of speculation."

Here is an argument of a firm of so-called "Turf Commissioners" of San Francisco, which claimed to be betting on the races, guaranteeing 4 per cent weekly:

"There is no kind of speculation that affords so great an opportunity for making money rapidly on a small capital as playing the races on a business-like and systematic basis. Our average weekly profits usually range from 4 to 8 per cent."

Another argument, that of a so-called "Bookmaker" of St. Louis, who guarantees 5 per cent weekly dividends to investors:

"We make books and allow the betting public to place the money. The man who bets has one horse running for him—the bookmaker has the rest. For this reason the odds are all in favor of the bookmaker and if he understands his business he is certain to make money."

Argument of a firm of so-called "Turf Commissioners" of Chicago, who claim to make books on the races:

"Our plan insures a steady income on a small capital, such as no other company offers, and far eclipses any mining, oil, or other stock investment."

Argument of so-called racing stable concern of St. Louis, guaranteeing 3 per cent per week to investors of $50 and upward:

"We have a large stable of race horses, which we run at all tracks, winter and summer; we make books wherever racing is conducted, and the proposition we manage pays so well because we know how to run it to that end."

One of the variants of the old turf scheme is the venerable "Two-Horse Special," a fraud that is so old that its whiskers drag about its knees. Here is a sample of the two-horse literature:

"MY TWO-HORSE SPECIAL PLAN." (Send this slip with remittance.)

No Account Received of Less Than $50.

George F. Stone, Turf Specialist. Brooklyn, N. Y.

I hand you ........ Dollars to be used by you in speculating for me, according to your TWO-HORSE WIRE plan of Turf Speculation. You are to play one-fifth of the amount of capital on each special, placing the money to win and also for place. You are to mail for me your selections each day, mailing the same NOT LATER than 1 P. M. You agree to operate the account, MAKING NO CHARGE until winnings equal capital invested. After that 20 per cent of all winnings you are to deduct, and send me the balance by money order, with statement, each week. I can close my account and withdraw any balance due me on demand. My liability is strictly limited to above amount.

The Police, Aroused by Turf Swindlers, Raid and Close Up Their Places.

Detective Wooldridge led the officers on February 23, 1900, when the following concerns were raided and closed up:

Co-Operative Trust Company, 80 and 84 Adam street.

Turf Investment Company, 84 Adams street.

Inter-Ocean Commission Company, 66 Wabash avenue.

Security Savings Company, Madison street and Fifth avenue.

Investors' Protective Association, 510 Realty Building.

D. W. Moody, 182 and 184 Dearborn street.

The papers, books and "big-dividend" circulars of these concerns filled several wagons. The police estimated that over $500,000 had been lost by the investors in these concerns, which, notwithstanding some of the high-sounding names adopted by them, were all turf swindlers. Raid after raid has resulted in practically ridding Chicago of these vampires, but they seem to thrive wherever they are permitted to exist.

FAKE TURFMEN INDICTED.

Gambling and Bookmaking Charged Against the "Get-Rich-Quick" Syndicates, Including Bennett's.

True bills were voted against proprietors of "get-rich-quick" turf concerns by the grand jury. Indictments were returned in court, and capiases for the arrest of the accused persons placed in the hands of the sheriff. Those against whom bills were voted are:

Frank E. Stone, alias Eddie Dunne, Security Savings Society, for bookmaking. W. R. Bennett, Security Savings Society, for bookmaking. W. I Bennett, Security Savings Society, for bookmaking. D. W. Moody, Security Savings Society, for bookmaking. Louis Morrison, alias L. M. Morrison, Co-Operative Trust Company, for bookmaking. Edwin E. Farley, for keeping a common gaming house and poolroom. Charles Carroll, for keeping a common gaming house and poolroom. J. W. Turner, alias J. W. Taylor, for keeping a common gaming house and poolroom. Miss S. Beck, stenographer for W. R. Bennett, for bookmaking.

One puzzling feature of the prosecution of the turf people is that although the bills accuse them of keeping common gaming houses and operating poolrooms, officers and lawyers interested in the cases say the promoters of the concerns never really attempted to win their advertised profits by betting on the races. It has been alleged that not one of them speculated with deposits, but simply sent dividends back to investors out of their own money. It is now suggested that the accused persons will either have to admit they were gambling or confess that their alluring statements about winnings on the race tracks were glittering frauds.

The turf swindle was prosperous until February, 1903, when the crash among the St. Louis contingent precipitated a "run" on all of the concerns then in operation. As it was not the policy of the swindlers to pay, they either closed their doors and fled or the police conveniently interfered with their business.

Prior to the crash at St. Louis there were several notable failures and disappearances. On July 9, 1902, the Al Fetzer Co., of Hammond, Ind., "failed," and about a week prior Turf Commissioner W. W. O'Hara, of Cincinnati, absconded. Both of these events shattered many dreams of riches. In the Fetzer case heavy rains were said to have broken the sure-thing combination by which the company was to win fortunes from bookmakers on the race tracks.

The amounts lost by the credulous investors in Fetzer's scheme, which, it was declared, "could not lose," reached into the hundreds of thousands. The towns that suffered the most were Hammond, Ind., and Appleton, Wis. It was reported that the people of the latter town had suffered to the extent of $50,000, and dozens of small cities are believed to have fared almost as badly.

The clients of the concern in Appleton included a number of well-known business men and people of all classes. They lost from $25 to $200 each. A poor widow who had put in all her savings was left penniless and was obliged to seek aid from the city authorities.

Fetzer conducted a large part of his business through the mails. He advertised extensively in the newspapers and found many who were willing to "play the game." Dividends of $5 a week for $100 invested were promised and were paid punctually up to about July 1, 1902. He said he had a system of playing the races that could not be beaten, and the success of the early investors convinced the doubting ones that his system was all right. The information of the "snap" spread rapidly and Fetzer's business increased accordingly. No one thought that dividends of 260 per cent were improbable when they read of the "long shots" that won races on the Chicago tracks.

Fetzer attributed the downfall of his business to the rainy weather and said that he had been unsuccessful in picking "mudders." His system of betting, which was to make everyone rich by the end of the summer, went to pieces with each succeeding thunder shower, and the investors received the doleful information that the company had lost its own capital, as well as the money entrusted to it.

An investigation into the affairs of O'Hara at Cincinnati revealed a state of affairs almost beyond belief. More than 4,000 letters which were received within a week after O'Hara's disappearance were opened. They were from every state in the country, and many were from Canada. Amounts from $5 to $500 in checks and mail and express orders were enclosed. The total amount of the money in the letters opened was $5,518, and Inspector Holmes stated that O'Hara got away with $7,500 which came in the mail the same week, making a total of over $12,000 for one week's business. O'Hara's books showed that from July, 1900, when he commenced operations, until he skipped out in June, 1902, he had received from credulous "investors" the enormous sum of $465,000.

The inevitable crash came early in February, 1903, and the police and grand juries at Chicago, St. Louis, New York and other cities got busy, but the money had been transferred to the pockets of the swindlers, who had the choice of paying lawyers and possible fines or traveling in foreign climes until the excitement blew over.

February, 1903, Detective Clifton R. Wooldridge raided and closed the following named turf investment companies in Chicago:

H. B. Blackstone, E. J. Arnold, 95 Dearborn street.

Harry Brolaski, "Brolaski & Co.," 356 Dearborn street.

Henry Thompson, "Brolaski & Co.," 356 Dearborn street.

Mattie Woodin, "Benedict & Co.," 225 Dearborn street.

M. J. Beck, "Benedict & Co.," 225 Dearborn street.

W. J. Mason, "Benedict & Co.," 225 Dearborn street.

"Mid-Continent," 185 Dearborn street.

Prey on Chicago Teachers.

From papers found in the Mid-Continent offices it appears this company had been doing a loan as well as an investment business. A letter addressed to Chicago school teachers invited deposits for investment on which 2-1/2 per cent monthly interest was guaranteed.

If the teachers needed money it was offered them at 3 per cent a month. The company's methods and those of the banks were compared in the letter, to the disadvantage of the banks.

Medical students, stenographers, maids in hotels, women of various classes, farmers in many sections of the country and hundreds of men in different employments in the city were disclosed as the dupes.

The following telegram from St. Louis to a Chicago paper briefly outlines the situation on the second day of the raiding there:

St. Louis, Mo., Feb. 11, 1903.—Runs were made on the E. J. Arnold Turf Investment Company, the International Investment Company, The Christie Investment Company and John J. Ryan & Co. yesterday by hundreds of men and women who during the last six months have invested their savings with these co-operative bookmaking concerns in the hope of enormous profits. The International and Christie companies paid all the stockholders who appeared, at first. Then they decamped.

Arnold & Co., in accordance with their announcement which caused the panic among the "turf speculators" yesterday, refused to pay back any stock certificates, although still claiming to be perfectly solvent, and determined to pay the usual weekly dividends until affairs of the company are wound up.

At the offices of John J. Ryan, owner of the Newport (Ky.) Race Track, a riot was averted by the presence of the police; and the excited investors, who were reminded that their stock certificates are payable only on thirty days' notice, went off in a state of rage and anxiety at once amusing and pitiful.

How Arnold Inspired Confidence.

Arnold was a wise one. He knew how to work the game. First he sent to New York and bought the famous race horse Gold Heels. This horse had won many of the great Eastern classics. He broke a tendon and was useless, but Arnold's investors did not know that. They would swear by Gold Heels. Then he caused his "bank" to issue a letter along the following lines:

American Central Trust Company.

Capital—$1,000,000. Surplus—$500,000.

S. Schnurmacher, President. Wm. S. Simpson, First Vice-President. Joseph Wachtel. Second Vice-President. Franklin P. Hunkins, Third Vice-President. Edward Bauder, Secretary and Treasurer.

Directors.

Shepard Barclay, Edward Bauder, G. A. Bauder, John N. Drummond, Jr., Henry W. Gehner, Morris Glaser, Frank Griesedieck, G. A. Gurner, Franklin P. Hunkins, John D. Manley, H. I. Mills, John A. Nies, H. F. Powitzhy, Leo S. Rassieur, B. Schnurmacher, Wm. S. Simpson, Joseph Wachtel.

St. Louis, Mo., May 15, 1902.

To Whom It May Concern:

The firm of E. J. Arnold & Company, of this city, is one of our largest depositors, and we consider them amply responsible for every obligation they may assume.

American Central Trust Company, By Edward Bauder, Sec'y & Treas.

The disaster was brought about by the appointment of a committee by the Missouri legislature to investigate the "get-rich-quick" situation. St. Louis had become the haven of every conceivable class of swindlers, who swarmed there in such numbers that the legislature deemed it wise to look into the matter. What motive inspired it to take this action was a mystery. Sufficient, however, to observe that when it came to following out its own recommendation to pass laws that would drive the "get-rich-quick" companies of all kinds out of the state something stopped the legislation.

The investigation of the "get-rich-quick" concerns in Missouri by the State Senate Committee resulted in an elaborate report, which was presented March 3, 1903. This report had the following to say of the turf investment companies:

"These institutions are of modern origin. The pioneer in this field, especially in this state, seems to have been E. J. Arnold & Co. Then followed Ryan & Co., the International, The Christian Syndicate, Brolaski, Thomas Walsh, Maxim-Gay and others.

"These concerns were presumably prosperous until the examination which was begun by the grand jury, instigated by the circuit attorney of St. Louis, Hon. Joseph W. Folk, and your present committee. When the crash came, company after company closed its doors or refused to pay back to depositors on demand, and upon examination of these companies, we found them to be mere shells, with little or no money or available assets on hand, and the millions of dollars handled by them either paid out in dividends, squandered and gambled away on race tracks, or absorbed by the officers and managers of the said companies.

"The evidence discloses the fact that E. J. Arnold is supposed to be in Mexico, the books of said company being in the hands of the grand jury. So far as the search under legal process has developed, no assets of Arnold & Co., except a stock farm and stock thereon, office furniture and fixtures, and a few hundred dollars in cash, were found.

"Ryan & Company claim that they have on hand $200,000, which has been attached and garnisheed, in the hands of the depositories, and the same process has been used to take possession of the real estate holdings and other personal property.

"George A. Dice, inspector of the postoffice, in charge of the St. Louis department, testified that he had made an examination of E. J. Arnold & Co. and John J. Ryan & Co., and that on their showing Arnold & Co. had on hand $160,000 more assets than their liabilities; that two different examinations of these concerns were made by him and his deputies, and that in the last report of November and December, 1902, his report to the department recommended that they be cited to appear before the department and answer as to their liability for criminal use of the mails, and that so far as his report went they were notified that there was a case pending against them; that the ruling of the department was not in accordance with his recommendation; that from the evidence it appears that the department at Washington, by some process or other unknown to your committee, overruled the recommendations of the inspector, dismissed the cases pending against these companies, and they were allowed to proceed with their process of absorbing the people's money. Had the department at Washington acted promptly and properly upon the recommendation of the inspector, millions of dollars would have been saved to the people of the State of Missouri and other states.

"In order to protect the people who are attracted by the fair promises and the payment of extraordinary profits or dividends, and to prohibit the improper and vicious misapplication and absorption of the money of the people who confide in the representation of investment companies, your committee recommends that a law be passed which will prohibit the doing of business by said turf investment companies or other like institutions in this state."

If one should moralize on the turf swindles it would only be to repeat the old story—avarice. Nothing else explains why they are permitted to flourish and rob, and then a newspaper story and no more.

Justice, blind and decrepit, is unable to scale the insurmountable barrier of the swindlers' "bank roll." But there is still hope, for from Washington we hear from day to day that another boodler has been landed in the grand jury net—thanks to President Roosevelt, who, if he knew all, would do more.

When the last paragraph was written the finale had not been reached. But the strong arm of the federal government has at last been felt and the turf investment companies are no more. It is impossible for even the veriest sucker to be taken in by them any more, and their literature would be barred from the mails in an instant. It is all over with the turf investment companies. "Requiescat in pace." May they rest in peace.