Scheme of the Company.
The brokers in the alleged fraudulent transactions would represent to the proposed victim that they would get no returns for their work unless they actually sold the stocks, and that they would be content with a commission of from one-half to 1 per cent on such stock as they sold. They assured the victims that there could be no doubt that the stock underwritten would be sold, as the capitalists to whom the victims had been introduced would be certain to buy them.
The brokers would then take the men seeking the underwriting to the offices of the guarantee companies and arrange for guaranteeing the bonds on payment of a fee of 1 per cent of the amount of underwriting.
The men arrested never entered into a proposition on which less than $100,000 was involved, and that they, in some cases, obtained $5,000,000 worth of stock to underwrite.
Detective Wooldridge secured proof that the application fee which was paid by the officers of the corporations to the underwriting companies was always divided among those companies and the fraudulent brokers who had sent the corporation's officers to the supposed underwriters.