The Resort Years
Clarence Cochran and Associates on Trial for Mail Fraud
1929, the Independence Beach property owned by First Investment Company was mentioned in a huge federal mail fraud trial accusing Clarence Cochran and 23 associates of running a pyramid scheme that led to investor losses totaling $2 million dollars. The other primary defendant was Andrew Nelson, former commissioner of securities for the state of Minnesota, who participated in and facilitated the fraudulent scheme. Most of the victims were elderly people from Minnesota and nearby states who lost their life savings. The trial was front page news in the Minneapolis papers, featuring long articles about the complex financial transactions detailed during the trial.
Cochran and his partners incorporated numerous businesses, inflated their value, and then sold bonds and promissory notes supposedly backed by the company’s assets. One of these companies was the First Investment Company, which in addition to the Independence Beach property, purchased interests in two St Paul apartment buildings and a sanitarium under construction near Loring Park. Other businesses involved in the scheme included the Hardstone Brick Company, Minnesota State Tidening, Volkszeitung Printing and Publishing Company, and several others.
Cochran fled to Chicago but was captured and returned to St. Paul for the trial in Federal District Court in January 1928. After a long trial, Cochran and Nelson were both found guilty ande sentenced to 20 years at Leavenworth.
Because a state official had been a key player in the deception, after much debate the State Legislature passed a bill establishing a fund to reimburse victims.