Evening star. [volume], June 15, 1941, Page 4, Image 93

About Evening star. [volume] (Washington, D.C.) 1854-1972

Image provided by: Library of Congress, Washington, DC

                
HOW NOT TO SPEND YOUR MONEY
Five simple rules that will keep you from being a sucker — by
the man who has sent more than 500 slick swindlers to prison
by John J. Bennett, Jr.
Sw* of NW VM
An Article Complete on This Page
h h ★
A majestic figure of a man stalked into
my office not long ago, frowning as he
came. A bodyguard of five lawyers
surrounded him, demanding to know by
what right we had summoned him It was
really simple routine, but the man acted as if
the State of New York were committing list
majestt. Nobody in the room — except the
guilty man himself guessed that we were
on the trail of a series of swindles amounting
to more than $500,000.
In examining the books ot a shady stock
broking firm, we had found the name of
William F. Peterson and invited him to come
in and answer some questions. That was all.
When his lawyers stopped thundering about
the outrageousness of questioning a man of
his standing, they consented to have him
sworn as a witness, to be examined in a few
days. But the man himself had no such inten
tion. He skipped town. Two days later his
wife, fearing he had been kidnaped, asked the
police to look for him. The newspapers print
ed the story, and that brought his swindled
customers in swarms to our office, many of
them too ashamed to testify.
Peterson's office was a gorgeous suite on
the fifty-seventh floor of a Pine Street sky
scraper. He and his wife lived at the Sherry
Netherland and spent thousands entertaining
friends who invested with him — and who
introduced other victims, he was careful to
adapt his talk of profits to fit his clients, offer
ing ten per cent to smart businessmen, as
high as 1,860 per cent to trusting women.
The police finally caught Peterson in Mil
waukee and brought him back to New York.
He put up $15,000 cash bail — and ran away
again. Fate did not overtake him until last
June, when he crashed his car into another,
in Kansas, and was killed.
When all was reckoned up. it turned out
that he had stolen $516,745 in New York.
His victims got nothing.
Peterson's case should be of special interest
to every one of us right now, for as soon as
the billions of dollars of national-defense
money get into wide circulation, thousands
of swindlers just like him will swing into
action. More people will have more funds to
invest than they have seen since the boom
days of 1929, and wherever that money is,
in big city or small town, the smooth talkers
will smell it out and get millions of it — un
less the public wakes up and learns how to
fight them off. And 1 hope that by telling
how these smart swindlers operate — and I
have caught thousands of them during ten
years as Attorney General of New York State
— I may be able to give the public a few
pointers for that fight.
Perpetual-Motion Hoax
First, beware the '‘scientific" sharper.
Science has made such wondrous progress
that a crook who can mix a little science jar
gon in his sales talk rakes in money as fast
as he can spend it. Arthur Lingelbach posed
as an engineer. He was small, suave, dignified
and gray, and he told tales of his Super Utili
ties Company and his perpetual-motion ma
chine that charmed thousands of dollars out
of the pockets of simple folks. The machine
was to be enclosed in a refrigerator. You
wound up his marvelous secret spring and this
kept the box cold without the use of gas or
electricity. There would be millions in it!
When Lingelbach testified at our investi
gation he claimed every scientific achieve
ment imaginable. He swore that he had per
fected Edison's phonograph, helped Burbank
and Michelson develop synthetic rubber
shown Ford how to design his Model T car.
A pudgy seeress who held spiritualistic
seances in a Broadway hotel had steered
suckers to him. "Trust him,” she would in
tone in an awesome voice, "and you will
gather great wealth.”
They did trust him but they did not
Pay rolls are soaring—and there’s a
new army of swindlers lying in wait
gather great wealth. In the midst of our in
vestigation I received a petition, signed by
scores of Super Utilities stockholders, urging
me to "stop persecuting this great and good
man.” They flatly refused to testify against
him. All we could do was to get an injunction
forbidding him to sell stock, but he later was
sent away to federal prison. How this old
fellow could charm people into buying stock
in anything as overworked as a perpetual
motion machine is a mystery. Vet his victims
were not all fools by any means. The first
complaint was made by an intelligent busi
nesswoman who had invested $1,070.
It isn’t only the phony inventions that trap
the suckers. Crooks exploit every important
new invention. When the newspapers began
to proclaim the wonders of television they
were unconsciously spreading bait for suckers.
A group of promotors organized the Tele
vision Corporation of America, ’’Capital
$6,000,000.” shares at SI each. It seemed
honest. They had patents which they said
television couldn't get along without.
They 9old nearly 300.000 shares, then there
came a lull. The list of stockholders’ names
and addresses was used hy William II. Milne,
a Schenectady broker, and Fred Knapp and
Lewis Duell. his salesmen, as a means of
selling more stock to these people. They sold
tins stock at $3, $5 or $10 a share to aged
men and women who had already invested
in Television Corporation of America.
Witnesses, some in their late seventies and
eighties, testified that Knapp and Duell called
at their homes, casually mentioned the local
preacher, and then waxed eloquent about big
profits in Television, letting drop that they
were going to sue Radio Corporation of Amer
ica for $12,000,000 because "they stole our
patents.” One man went with Knapp to
Albany, drew $200 from the bank and bought
forty shares at $5 each. Soon Knapp came
back and sold him sixty shares more; then
he came a third time ("last chance to buy at
$5 a share”) and sold forty more.
“I have never seen Mr. Knapp since,” was
the end of his story.
An eighty-one-year-old widow gave Duell
her check for $250 for fifty shares, but, grow
ing suspicious, stopped payment on it. Duell
called again, declared that if the check didn’t
clear right away she’d have to pay $10 for
the stock — and she let the check go through
Convicted of grand larceny, Milne and
Knapp were sentenced to Sing Sing for from
five to ten years. Duell turned State's evi
dence and got three months in prison.
Partial to Rich Widows
^ATIdows are a special target of the swin
dlers — and many are shorn of their wealth.
Robert E. Lancaster was getting ready to
offer them 9ome astonishing bargains in secu
rities when we began an inquiry that stopped
his career. We stumbled on him by accident
— found that he was connected with a sus
picious investment firm — and subpoenaed
him as a witness. When he fled, we examined
his books and issued a warrant for his arrest,
charging him with selling $500,000 worth of
fraudulent securities. He had been making
money fast, living in a penthouse and enter
taining in a big way. He was picked up in
Florida and sent to federal prison on mail
fraud charges that resulted from our investi
gation. When that term is finished he will face
sentence in New York State courts.
The most interesting thing we found in his
office was a list of fifteen hundred widows
whose fortunes ran from $100,000 to $1,000,
000, with their addresses, the names of their
children and other details useful to a swindler.
I wrote a letter to each of them, telling cf
Lancaster's list and warning them to beware
of all strangers who might try to coax them
to put their money into a marvelous invest
ment. I hope they all took warning, but,
knowing how cunning the high pressure sales
men are. I fear some of them may have been
swindled by this time.
I hese are only two or three of thousands
of similar cases we have handled during my
years in office. We have sent 500 swindlers to
prison. We have obtained injunctions against
5,500 others, forbidding them to sell securi
ties in the State. And we have recovered
$10,000,000 of the stolen money — only a
fraction, of course, of their total haul.
Yet there are still thousands of swindlers
and hundreds of thousands of suckers. And
there will be more of both when the defense
billions get into wider circulation.
Most people are so dazzled by the prospect
of getting something for nothing that they
forget to take the commonest precautions.
But every man and woman who reads these
lines can escape the swindler’s trap by re
membering five simple points:
1. Big profits always mean big risks.
2. Strangers offering to “make big money
for you” are, ninety-nine times out of a hun
dred, really trying to rob you.
3. Before investing get your lawyer’s or
your banker’s advice, especially if the offer
seems to be in the sure-thing class.
4. When a stranger offers you a marvelous
speculation, be sure to have him tell his story
before witnesses. Honest men don't mind wit
nesses; crooks fight shy of them.
5. In buying securities take at least as
much care as you would in buying a car.
And here’s the best investment tip of all:
Put your money into United States Defense
Bonds. They are safe and they are patriotic.
The End
6-15-41