Front Money

In New York and other financial centres last week the Securities & Exchange Commission began cleaning up an international "front money" racket. As uncovered by SEC on the West Coast, the racket works as follows: a broker with a luxurious office advertises he can obtain capital up to $100,000 for persons with ideas or assets to capitalize. The sucker pays $250 to $2,500 to file a prospectus, smaller fees to organize a corporation and qualify its securities in New York. One Paul E. Reinhardt, front man for front money in Los Angeles, told SEC that for none of his 150 clients had he ever sold a single security.

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