Promoters of wildcat investment enterprises have used hundreds
of names as references which they had not the shadow of right to
use--calculating that persons credulous enough to be interested in the
proposition would also be credulous enough to say, "These references
will speak well enough for the enterprise, else their names would
not be given out for this purpose," and to act without making any
inquiries of them.
Again, some man of prominence and great faith may have been, at the
start, a believer in the enterprise and willing to say, within certain
limitations, that he believed the venture could be made a success if
conducted according to certain plans and under given restrictions.
This does not signify that he will continue to retain that confidence
or that he is willing to be understood as giving the venture his
unqualified endorsement, or to say to the public which respects his
name and position:
"Come and share this enterprise with me; put your money into it, for
it's a good thing."
Detective Wooldridge, who has examined many of these concerns, desires
to place special emphasis upon the crafty use which these companies
make of the names and services of reputable "trust" companies. He uses
the word "services" because a trust company may execute a "trust"
in connection with bonds, stocks, property or securities without
really assuming any general financial or moral responsibility for
those securities or without becoming a sponsor for them. In a word,
the trust company may engage to act as an escrow agent to see that a
certain technical transaction is completed, and nothing more. That
means this: The trust company consents to hold the stakes between two
parties, but without the slightest responsibility as to the value of
those stakes or what may be done with them after the stipulations as
to the conditions precedent to delivery have been fulfilled.
Because a trust company acts as the trustee of a certain bond issued
there is no warrant for a prospective investor to feel that the
resources of the trust company are in any sense behind these deeds as
a guarantee of values.
Another word of caution: Whenever you see the name of an educator, a
pastor or a popular politician, or any other leader having a hold on
the sentiment of a community used in connection with an investment
offering, look into it carefully and take no step until the person
mentioned has been questioned directly by you.