Henry Billings Brown

“ Rep. 508, the misrepresentation of existing facts is not necessary to a conviction under a statute applying to 'any scheme or artifice to defraud.' As was observed by Mr. Justice Brewer (p. 313, L. ed. p. 711, Sup. Ct. Rep. p. 511) : 'Some schemes may be promoted through mere representations and promises as to the future, yet are none the less schemes and artifices to defraud. . . . In the light of this the statute must be read, and so read it includes everything designed to defraud by representations as to the past or present, or suggestions and promises as to the future. ”

“ It is true it may occasionally happen that he would detain a letter having no relation to the prohibited business; but where a person is engaged in an enterprise of this kind, receiving dozens and perhaps hundreds of letters every day, containing remittances or correspondence connected with the prohibited business, it is not too much to assume that, prima facie at least, all such letters are identified with such business. ”

“ In becoming a co-operator each new member evidently contemplates that a large number, probably a large majority, of those subscribing will drop out before the end of five years; that some will and some will not induce others to become members, and that the amount ultimately realized depends not only upon his own prompt payment of dues, and his own exertions, but upon a corresponding action by other co-operators. One thing, however, is entirely clear, and that is, the success of the scheme depends wholly upon the ability of the members to increase the number of subscribers ”

“ In the careful and satisfactory report of the master the plan of the complainant is briefly described 'as a plan for securing money from a constantly increasing large number for the benefit of a constantly increasing smaller number, with an absolute certainty that when the enterprise reaches an end for any reason the large number will lose every dollar they have put into it, and in the meantime the smaller number will have realized such amounts as may have resulted from the growth of the larger number ”

“ The return to members who have been able to secure a large number of other members, and to pay their own monthly dues, may be very large in comparison with the amount paid in, but the amount of such return depends so largely, and, indeed, almost wholly, upon conditions which the member is unable to control, that we think it fulfils all the conditions of a distribution of money by chance. ”

“ Temporary deprivations of liberty or property must often taken place through the action of ministerial or executive officers or functionaries, or even of private parties, where it has never been supposed that the common law would not afford redress.' If the ordinary daily transactions of the departments, which involve an interference with private rights, were required to be submitted to the courts before action was finally taken, the result would entail practically a suspension of some of the most important functions of the government. ”

“ The scheme lacks the elements of a legitimate business enterprise, and we think there was no error in holding it to be a lottery within the meaning of the statute. Indeed, we think that no scheme of investment which must ultimately and inevitably result in failure can be called a legitimate business enterprise. ”

“ There is no uncertainty as to the amount to be paid, as in this case, nor does it depend upon the conduct of other persons insured in the same company, but simply upon payment of premiums by insured. The only contingency is the time as to when the policy is to mature, and the profits are calculated upon the theory that the premiums paid, with the interest thereon, will in the end amount to more than the sum becoming due upon the happening of the contingency. ”

“ All members joining the league during the same month constitute a class by themselves and are entitled to realize in all respects precisely the same amount, and at the same time, excepting the member who obtains new co-operators may receive his realization in yearly instalments instead of in one lump at the end of the five years' period. ”

“ As the only fund provided in this scheme are small monthly payments which are constantly being divided in the shape of monthly realizations, there is no possibility of a reserve fund for the security of the co-operators. The uncertainty of the amount realized upon these settlements is evident from the fact that while a member may possibly realize as high as $15 for every dollar invested by him, he may realize no profit at all ”