HOW THE WORTHLESS CERTIFICATE WORKS.
Stock Transfers From Worthless Stock to Worthless Stock a Game That Fools the Uninitiated.
How the Rhodus Boys Worked the Old "Come-On."
One of the most open frauds, one which should not for a minute have deceived any investor in "securities" and things, was unearthed by Detective Clifton R. Wooldridge, and the results of his work were shown in Chicago when Thomas Rhodus and Birch F. Rhodus were indicted by the federal grand jury.
The Central Life Securities Company in Chicago was apparently a sound concern. The managers were always careful to keep money in the bank and any insinuation that this was not a sound company was immediately refuted by bankers who were handling the Rhodus money.
But Detective Wooldridge had seen so much of "guaranty" and "security" that he was suspicious of all companies which made this name a rallying point in their literature.
Also the Rhodus brothers seemed to be using the same old catch-words which had beguiled men into the fake underwriting schemes. So the detective was not impressed by "security" or "guarantee." He proceeded to investigate the record of the Rhodus brothers.
And ere the great scandal began to open out and assert itself, Wooldridge found that the Rhodus brothers had been in the lottery business in Denver in 1889 and 1890. Now it does not conduce to belief in the soundness of a firm to find that its managers have been common, cheap lottery workers. So Wooldridge went into the record.
In the course of his examinations he discovered that the Chicago Independent in January, 1899, contained the following notice:
In 1889 and 1890, Thos. Rhodus and Birch F. Rhodus were operating the Denver Lottery Company, later called the Denver State Lottery. The following are extracts from the Chicago Independent, January, 1899, number: "The attention of the postoffice authorities was attracted to this scheme by seeing circulars of the Denver Lottery Company about August 20, 1890, saying, 'All remittances to be addressed to A. C. Ross & Co.,' who were none other than Thomas F. Rhodus, Jr. Ross, or Rhodus, Jr., was arrested by postoffice authorities October 5, 1889, fined $100 and costs, which was paid November, 1889. A. C. Johnson, alias A. C. Ross, alias Thomas F. Rhodus, Jr., was arrested March, 1890, and was at that time running what was called the Denver State Lottery Company, having changed its name from Denver Lottery Company. They kept arresting him daily for over forty days. The federal grand jury found five indictments, with over one hundred counts, against A. C. Johnson, alias Thomas Rhodus, Jr., for fraudulent use of the United States mails. He then changed his business to the name of Bank of Commerce. Was arrested several times, and then sold out, or pretended to do so, to Birch F. Rhodus.