Golden Fleecers

With no more equipment than a telephone, sharp Canadian stock promoters have fleeced gullible Americans of millions by palming off worthless oil and uranium shares at inflated prices. Until two years ago, the U.S. could do nothing to stop the practice, since most of the operations were conducted by phone from Canada, and the U.S. had no power to extradite Canadian citizens for such an offense. But in 1952 the two countries signed an extradition treaty to cover stock frauds. In Detroit last week, marking the first use of the treaty, a U.S. federal grand jury indicted two Montreal brokerage houses, T. M. Parker, Inc. and Laurentian Securities, Inc., and 14 of their salesmen on charges of fraudulent stock sales. Charged the indictment: a year ago the group bilked U.S. citizens of some $300,000 in only ten weeks.

The way they did it, according to the indictment, was in the best tradition of Canada's fly-by-night promoters (TIME, Oct. 15, 1951). The two Canadian firms dealt in such stocks as "Stampede Petroleums Ltd.," "Oakridge Mining Corp." and "Candoo Metals & Oils Ltd." Their persuasive salesmen, charged the grand jury, called likely prospects with phony reports of new oil and uranium strikes. A favorite trick was to quote a stock at one price, then lei a sucker buy it for less, pretending he was getting a tremendous bargain when actually the stock was worthless. One promoter made a sale by gasping over the phone that he had "just run in from the field" where a new well was brought in.

In all, the indictment listed 224 false statements by the Canadian promoters. Penalties on each count run up to five years and fines up to $10,000.

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