Original subtitles

This is the city, Los Angeles, California.

It's a big city,

and a lot of money can be made here.

The great majority spend their time

working hard to support themselves and their families.

There's a small minority who spend their time

thinking up ways to separate these people

from their hard-earned pay.

It's my job to try and stop 'em.

I carry a badge.

It was Monday, March 13th.

It was cool in Los Angeles.

We were working the day watch

out of Frauds Division, Bunko Section.

The boss is Captain Lambert.

My partner's Bill Gannon.

My name's Friday.

We began the day with our usual Monday morning routine:

reading and checking the Business Opportunities Section

of the daily newspapers.

On occasion, an ad in the paper

has led to a successful bunko investigation and prosecution.

The story you are about to see is true.

The names have been changed to protect the innocent.

You two see this in Sunday's paper?

"Wanted, Sales Personnel, $800 a month guaranteed.

"Experience unnecessary. Fabulous discount service.

"Double earnings in a month. Double them again in two.

"Unlimited potential. Earn over $100,000.

"Proof available. Win new Cads and T-Birds.

Phone Mrs. Horton, Bonnie Bates, 93373."

That's the old pyramid deal.

Sound familiar?

Horton Bates, didn't he work this same scam

three, four years ago?

That's right. Looks like his wife inherited the scheme.

Bates died of a coronary, didn't he, about a year back?

Yeah, as a free man.

We never could come up with anything more than 17500 B & P.

Slowed him down, but it didn't stop him.

Yeah, that's about all a false advertising charge ever does.

He was working something he called Creative Marketeers,

organized it in '63, sold out for $140,000.

Like the ad says, "Earn over $100,000."

That's one of the reasons

we couldn't lean on him last time.

His lawyer used that as proof that the ad didn't misrepresent.

Got another idea this time.

What's that, Skipper?

322PC... operating a lottery,

more effective than Business and Pro.

They applied it to a bunk case up in Washington,

got a conviction, and it was upheld.

Prove there's an element of chance, huh?

Might work. I'd like to establish

that precedent here in L.A.

These pyramid deals are vicious.

The victims are generally old people

who put up their last dime,

or young ones who borrow to invest,

thinking they're going to get rich quick,

like a chain letter. One person writes to two,

two write to four, four write to eight.

Before you know it, you've got 1,000 people on the hook.

And only the ones in early ever collect a penny,

and not much at that.

Get on it right away.

I want you to work full time, starting now.

Yes, sir.

Let's see if we can't knock a building block or two

out of Bonnie Bates' pyramid.

Bill telephoned the number given in the ad.

Bonnie Bates' assistant answered.

It was a short conversation but a fruitful one.

Naturally, they wouldn't give me anything over the phone.

Said if I'd come to a meeting tomorrow night,

I'd meet the great lady and walk out a rich man.

Who'd you talk to?

Says he's Bonnie Bates' assistant,

gave the name Everett Tottle.

Where's the meeting?

Brookfield Hotel, Corinthian Room.

That's out of the high-rent district.

This Tottle guy said to bring three things to the meeting.

Yeah, what's that?

Love, faith, and an interested friend.

Well, now, I don't know about those first two,

but that last item you've got.

Tuesday, March 14th, 7:30 p.m.

We left the office and drove over to West 5th Street

to the Brookfield Hotel.

8:10 p.m. The meeting was underway by the time

we reached the Corinthian Room of the Brookfield Hotel.

Everett Tottle introduced himself as the man

who had spoken to Bill on the telephone,

and he welcomed us with whispered enthusiasm.

The meeting just got underway.

- You haven't missed a thing. - Oh, that's good.

Copies of the Dollar Wise Pledge

and the Dollar Wise Song,

if you want to join in at the end of the program.

- Sure will. - Thank you.

♪♪

Look up here, friends! Look up here!

Look up here and see who's smiling down on us!

♪♪

Horton Bates, my dear departed husband.

God rest his soul. God rest your soul, Horton.

Smile down on us, Horton, dear.

We're doing all kinds of good tonight.

He spent his last years

proving the things I say are true.

I hold here in my hands a copy of the $140,000 check...

he got in 1964.

Good and faithful friend, Brother Everett Tottle,

you tell the folks about Horton.

All I can tell you, folks,

is that I knew Horton Bates since I was a boy.

We grew up making our money the hard way!

Oh, I thought he was a dreamer

until he showed me that check of his!

Now I know he was a mathematical genius, folks!

You tell 'em, brother!

But they're not folks anymore, Brother Everett.

They're brothers and sisters,

because we're all in this together!

After I show you how to save money,

I'm going to show you how to make it.

How many of you pay retail prices for the things you buy?

Did you ever buy a thing,

then right after find it up for sale

at almost half the price you had to pay?

Yes!

Did it make you angry?

Yes!

Did it make you mad?

Yes!

Did you feel that you were taken?

Yes!

Would you like to have it stopped?

Yes!

Well, that's what we're here to teach you,

teach you how to make it stop!

S-T-O-P!

Yeah!

Take this vacuum cleaner. Oh, you take it.

I don't want it at that price.

Fair trade, they say.

Can't get it anywhere for less than 67.50!

$41 through our Dollar Wise Catalog!

A 26.50 savings! Top brand mixer!

Do I have to tell you what it cost?

37.90.

The Dollar Wise price $22, signed, sealed,

guaranteed and delivered right to your door.

15.90 savings to our members.

Is that a buy?

Yes!

You bet it is!

Everything you'll want, brothers and sisters,

at only 10% above the wholesale manufacturer's price.

You tell me, dear hearts, is that buying power?

Yes!

I ought to hear it again! Is that buying power?

Yes!

Well, I'm here to tell you

that buying power is all well and good,

but what about making power?

If you ain't got, you can't get!

Now, anybody here want to make $300 a month

working two spare nights a week?

I do!

Who wants to make 600 for four spare nights?

I do!

Well, pay attention.

I'm going to show you how.

You see this tiny figure?

199.99.

That's your cost of membership for ten whole years.

You give me this figure, I'll make you prospectors

in the Dollar Wise Market Service.

Besides the great savings I've told you about,

I'm going to give you more money,

and each new brother or sister you bring in,

I'll give you $30 cash money.

If each of those people become prospectors

and bring in new members,

I'll give you $4.00 cash money

for each new member they bring in.

Let me show you, friends, how easy this really is.

Four prospectors a week from among your friends,

relatives, and neighbors will put $544

into your very own pocket every month.

Have you ever, in your lives, heard of so much free money?

Free money, free money, free money, free money!

Everybody!

Free money, free money, free money, free money,

free money, free money free money, free money!

9:30 p.m.

One thing you could say about Bonnie Bates...

She was a great salesman.

Isn't that something?

No prospector can pan any gold without one of these.

Sales promotion kit, 19.95.

That one hour reel of tape's worth the price.

The Bonnie Bates sales pitch recorded for posterity.

10:10 p.m. Bonnie Bates really had them rocking and rolling.

Brother Black, stand up, and let's talk well.

When did we first meet?

Last month, Sister Bonnie.

Brother Black is a pharmacist.

Drug store right around the corner.

How much did you make your first week as a prospector?

$260.

What about the second week?

700. Oh, no, no, I lost one.

Make that 660.

Oh, you lost one, Brother Black!

Oh, I am sorry about that! I am sorry!

Tell us about the third week.

840.

That's $1,760 for the month so far!

Thank you, Brother Black.

And that's not counting overrides or merchandise,

and the new members, his members,

and his members' members are going to bring him.

By the time his final tally for the month is in,

he will have made $10,000 from our growing pool of dollars!

10:42 p.m.

After eliciting testimonials

from a number of successful members,

Bonnie Bates made a big production

out of paying off the old members.

The new members crowded around to sign up.

They couldn't wait to give her their money.

Isn't Sister Bonnie wonderful?

Yes, ma'am. This is my third meeting.

I just can't make up my mind.

How's that, ma'am?

199 doesn't seem like much to some people,

but my land, it's almost $200.

Yes, ma'am.

Well, no sense being an old scaredy cat.

Ma'am.

Hm?

Can you keep a secret?

Why, yes, I think so.

Well, now, I understand they're running

a half price special a week from tonight,

part of the new membership drive.

Half price?

Well, that means I'll save almost $100.

That's right.

Now, please, don't spread that around, will ya?

Cross my heart.

Bless you, brother.

Wednesday, March 15th, 10:40 a.m.

We listened to Bonnie Bates' sales tape.

We were fairly certain we could get a conviction

on a false advertising charge.

We brought in Nick Gowers,

one of the department's statisticians

from Information Services

to help with the lottery angle.

He said he'd go to work on it right away.

12:45 p.m.

Just talked to the City Attorney.

Yes, sir?

Bust her.

1:10 p.m., Bill and I arrived at Corinthian Hall

with a warrant for Bonnie Bates' arrest.

Thank you very much.

This is exactly what I was looking for.

You know, I'm a salesman by trade,

and I think I can do pretty good

bringing in new prospectors.

Indeed, you should, brother.

And as I told you, you can become a manager

with the profits you'll be making as a prospector.

I don't know how to thank you.

Try calling this number in about an hour, fella.

I don't understand.

Police officers, Mrs. Bates.

We have a warrant here for your arrest,

charging 17500 B & P Code, false advertising

and Section 322PC, operating a lottery.

Now, now, gentlemen!

Better just stand quiet, Mister.

What's all that mishmash,

all those fancy numbers you're throwing around there?

- Funny thing, Mrs. Bates. - What's that?

The jury's gonna want to know the same thing about you.

Monday, May 15th, 9:30 a.m.

Trial was held in Division 69

of Los Angeles Municipal Court.

Deputy City Attorney Hal Davies

handled the prosecution.

Bonnie Bates was represented by Palmer Forrest.

And that's when Sergeant Friday

and Officer Gannon appeared at the hotel

and placed Mrs. Bates under arrest.

- Is that right? - Yes, sir, that's correct.

Your witness.

No questions.

9:38 a.m. Bill was called as the next witness.

Davies began laying the groundwork

for the false advertising count.

Do you, of your own knowledge,

know of anyone who got a salesman's job

without paying a fee to Mrs. Bates?

No, sir.

You ever hear of anyone obtaining such a job?

Objection.

Sustained.

Well, to the best of your knowledge and belief,

did anyone get a salesman's job

without paying the defendant?

No, sir, they did not.

Thank you. Your witness.

No questions.

He's sharp.

He doesn't want to prejudice the jury.

He knows he can't beat the false advertising rap,

so he's saving his edge for the lottery count.

10:12 a.m. Bonnie Bates' taped sales pitch,

which she had recorded live at one of her meetings,

gave an accurate picture of the meeting

which we had attended.

The court listened to the full hour.

If it please the court, I waive cross examination

of this particular, uh, witness.

11:16 a.m. I was sworn in next.

Davies concentrated on the lottery angle.

And so it's called a pyramid because of the way

the membership spreads down and out?

Yes, sir.

Well, how rapidly does the membership multiply, Sergeant?

Quite rapidly.

You might call it a geometrical progression.

Does anyone make money out of it?

Only those who get in at the very beginning.

Like Mrs. Bates?

Objection.

Overruled.

If it please Your Honor,

the prosecutor is leading the witness.

It's been established that Mrs. Bates

started the Dollar Wise Marketing Service.

You may answer the question, Sergeant Friday.

Thank you, Your Honor.

Let me repeat the question, Sergeant Friday.

Yes, sir.

Would Mrs. Bates be one of the few

to make money out of this pyramid scheme?

Yes, sir. That's correct.

Does anyone lose money?

Yes, sir, the majority who join late

and are at the bottom of the pyramid.

Well, what determines who wins and who loses?

Objection.

The term "win" presupposes the element of chance.

I'll rephrase the question.

What determines who makes and who loses?

Well, that would be impossible to tell.

Why is it be impossible to tell?

Because it's just a matter of pure chance.

That's all. Thank you, Sergeant.

Sergeant Friday, what's the formula

for determining the square of a number to the ninth power?

I wouldn't know, sir.

How would you chart the incidence of recurrence

of digit X in a field of 73 variables?

I couldn't answer that, sir.

So you are not an authority

on the mathematics of geometrical progressions,

chance, probabilities, and applied calculus?

No, sir, I'm not.

Oh. You used the term "geometrical progression."

Isn't that correct, Sergeant Friday?

Yes, sir.

Well, that's my mistake, isn't it?

What's that, sir?

Why, I assumed you knew what you were talking about.

That's all.

Nick Gowers appeared as a witness in rebuttal.

Using charts prepared by the police department cartographer,

he showed his simplified proof of the element of chance

in Bonnie Bates' pyramid operation.

There was a sudden change in the jury's attitude.

You're a statistician, are you not, Mr. Gowers?

Yes.

And your job is to gather statistical material

for the police department's Information Services Section.

- Is that right? - That's right.

Now, correct me, if I'm wrong.

The type of mathematics in your work is primarily

adding, subtracting, multiplying, and dividing.

Isn't that so?

Primarily, yes.

The kind of math we all learn in high school.

- Is that right? - That's right.

So you are not a mathematical authority

on chance and the laws of probability.

Is that correct?

I may not be an authority...

Are you or are you not an authority on chance

and the laws of probability?

No.

No further questions.

11:43 a.m. The defense placed

its group of character witnesses

on the stand for Bonnie Bates.

They spoke about the money they made

and the reverent feelings they had

for the Dollar Wise organization.

Forrest was still drawing them out

when court was recessed for lunch.

2:30 p.m. Bonnie Bates took the stand.

Under Forrest's expert direction,

she wasn't selling promises of profits to prospectors.

She was selling faith to the jury in Bonnie Bates.

And then they come and accuse me of lottery.

Well, I'll tell you how much I know about lottery.

I thought they meant playing bingo at the church.

I don't take money. I give money.

And when I give, other people receive

more than they've ever received.

It's like I've said and lived by all my life.

Yes, Mrs. Bates?

It is more blessed to give than to receive.

After an hour on the stand,

Forrest turned Mrs. Bates over for cross examination.

Hal Davies took over.

Mrs. Bates, I'm going to ask you again.

Were there any prospectors or managers

who didn't make a profit?

I always say, if a member of Dollar Wise

can't make lots of money,

then he sure ain't no prospector or no manager.

Were there some who lost money?

Mr. Lawyer, some people can do two things at once.

Well, I'm not one of them.

I have all I can do to keep track

of all that money I'm handing out.

Your Honor, this witness is just not responsive.

I must caution you again, Mrs. Bates.

Just answer the questions.

Well, I'm trying, Your Honor.

Lord knows I'm trying.

Mrs. Bates, isn't it true

that you and your deceased husband

were involved in a venture called Creative Marketeers?

Objection!

- Sustained. - If Your Honor please,

I intend to establish a connection.

Mr. Davies, one case at a time, please.

Now, directing yourself to Mr. Gowers' chart,

isn't it true that the levels of membership

could never really go beyond the first few levels?

Oh, no! No.

With good, honest work and God's help,

it could go on and on and on and on!

Right on through the 12th, 13th, 14th, even 15th levels?

Absolutely, Mr. Lawyer.

No more questions, Your Honor.

And now, if it please the court,

the defense would like to call its expert witness,

Dr. Edgar Peter Sundstrom.

Raise your right hand.

Do you solemnly swear to tell the truth,

the whole truth, and nothing but the truth,

so help you God?

- I do. - Be seated.

Would you please state your full name, Doctor?

Edgar Peter Sundstrom.

And, Dr. Sundstrom,

you are a Professor in Quantitative Analysis

at the University of Southern California.

Is that not correct?

That is correct.

You are also an acknowledged authority

on the laws of chance and probability.

Is that also not correct?

My contributions to that field

are regarded by some as significant.

And you have been present throughout these proceedings,

- have you not? - That's correct.

And do you feel, with the evidence

that has already been presented,

that you can structure a feasibility analysis,

based on Mrs. Bates' operational planning;

in other words, determine if it will work

as Mrs. Bates has said it will?

Yes, I have all the, uh, data that I need.

Fine. Dr. Sundstrom,

please consider this question carefully.

Is it theoretically possible for Mrs. Bates' plan to work?

Theoretically?

Theoretically.

There's no doubt in my mind

that it is theoretically possible

for Mrs. Bates' plan to work.

Thank you very much, Dr. Sundstrom.

Your witness.

Just hold on.

I think I can lock the barn door.

Doctor, I understand you say that Mrs. Bates' plan

is theoretically possible.

That's correct.

Would you consider it practical?

Engineers are experts on practical matters.

I'm a mathematician.

I understand. Just one more question.

You heard Mrs. Bates testify that the levels of membership

could go right on through the 12th,

13th, 14th, even 15th levels.

Now, to reach the 12th level, how many members would it take?

For the operational plan to succeed,

the base of the pyramid must be broad enough,

have sufficient membership

interested in the service feature only.

Excuse me, Doctor. Would you tell us in numbers?

Well, certainly.

For the plan to work, it would require

at least a minimum membership of 360 million people.

Dr. Sundstrom,

are you familiar with the Census Report.

Census Report?

Yes, according to the Census Bureau,

the population of the United States.

What would you say that figure is?

I don't know precisely.

Well, as close as you can come.

I'll take round numbers.

Well, I'd say about 200 million people.

About 200 million people in the United States.

Yes, sir. Well, then, Professor,

in order for Mrs. Bates' pyramid scheme to work,

it would take a total of 160 million more people

than the entire population of the United States.

That is exactly correct.

♪♪

The suspect was found guilty of operating a lottery,

as well as on a charge of false advertising.