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FED ER AL RESERVE BANK
OF NEW YORK
Fiscal Agent of the United States
r Circular No. 6958'1
L

June 21, 1972

J

Reappearance of Chain Letters Involving United States Savings Bonds
To A ll Issuing A gen ts for United States Savings Bonds
in the Second Federal Reserve D istrict:

The T reasury D epartm ent has asked us to bring the following statem ent to your attention:
T h e D e p a rtm e n t of th e T re a s u ry h as receiv ed in fo rm a tio n th a t ch ain le tte r schem es in v o lv in g th e use of
U n ite d S ta te s S av in g s B o n d s h ave re a p p e a re d th ro u g h o u t th e S eco n d F e d e ra l R e serv e D istric t. D esp ite its
long a n d co n tin u in g efforts, in asso ciatio n w ith th e U . S. P o sta l S erv ice, th e F e d e ra l R e serv e B a n k s an d
issu in g ag e n ts, to sto p such activities, th ese schem es co n tin u e to a p p e a r a n d m ay be ex p ected to rea p p ear from
tim e to tim e.
T h is re m in d e r is bein g issu ed to re ite ra te an d to em phasize th e T r e a s u ry ’s o p p o sitio n to such schem es,
an d to solicit y o u r co o p e ratio n to refu se ap p lica tio n s fo r th e p u rc h a se of sav in g s bo n d s w h ere you k now o r
h ave rea so n to believe th a t th e bon d s a re b eing p u rc h a se d in con n ectio n w ith a ch ain le tte r schem e.
W h e re p u rc h a se rs q u estio n y o u r refu sal to sell bonds, o r w h en in q u irie s a re received ab o u t th e m a tte r,
th ey m ay be fu rn is h e d the follow ing in fo rm atio n receiv ed fro m th e P o sta l S e r v ic e :
C h ain le tte r schem es a re re g a rd e d as v io latio n s of th e P o sta l lo ttery an d fra u d law s (T itle 18, U n ite d
S ta te s C ode, S ectio n s 1302, 1341) if th ey call fo r th e sen d in g of m oney o r som e o th e r th in g of v alue
upo n a p ro m ise o f a r e tu rn , th e rea liza tio n of w hich d ep en d s u p o n th e activ ities of th o se w ho follow in
the chain. T h e schem es violate th e lo tte ry law because th e am o u n t of o n e’s benefit is d ep en d en t upon
chance. T h e fra u d s ta tu te com es in to play because of th e m is re p re se n ta tio n of th e p o ten tial of such v en tu re s.
T h e p en a lty fo r violation of S ectio n 1302, as defined in th e sta tu te s, is a fine of n ot m o re th a n $1,000.00
o r im p riso n m e n t fo r n o t m o re th a n tw o y ea rs, o r both. T h e p en alty fo r v io latio n of S ection 1341 is a
fine of n o t m o re th a n $1,000.00 o r im p riso n m en t fo r n o t m o re th a n five y ea rs, o r both.
I t is also noted, in asm u ch as sta te m e n ts a re u su ally m ade by th o se seeking to fu rth e r th o se schem es th a t
th e m ails a re n o t used, th a t th e P o sta l S erv ice h as s ta te d : “ I t m akes no difference w h e th e r th e lists of p a r ­
tic ip a n ts a re circ u lated th ro u g h th e m ails o r p assed fro m h an d to h a n d ; so long as th e m oney, bo n d s o r
receip ts a re m ailed, th e schem e is illegal.” T h e T re a s u ry is aw a re th a t because o f th e v ery n a tu re of th e ir
o p e ra tio n it is inevitable th a t in v irtu a lly all cases th e m ails w o u ld h ave to be utilized in o rd e r to m ake
deliv ery of th e bonds.

If any issuing agent receives inform ation about the operation of a chain letter scheme in its
area, such inform ation should be promptly transm itted to the Office of the Commissioner of the
Public Debt, T reasury D epartm ent, W ashington, D. C. 20220, or at its discretion, to the Office of
the Postal Inspector, through the local postmaster. In cases where evidence is uncovered show­
ing the active operation of chain letters, it may prove more expeditious to refer such m atters to
the latter office.
Additional copies of this circular will be furnished upon request.




A lfred H a y es,

President.