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.