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.