[8] He returned home to Minnesota in 1890, and in 1892 he worked as stenographer in Duluth with the Merritt Brothers, developers of iron ore deposits of the Mesabi Range.
[citation needed] Tappan believed that he could help reconcile the differences dividing the Western agricultural, logging and mining states and Wall Street, and promote financial independence for ordinary citizens.
Tappan later recounted, “I conceived of the idea of a thrift plan upon a conservative honest basis, that would appeal to people as a means of investing small amounts with the safety and yield that was secured by larger investors.”[10][11] In 1894, Tappan and local Minneapolis attorney Henry Farnham submitted articles of incorporation for a new firm, Investors Syndicate.
[12] After receiving approval from the state commissioner of insurance, the company was organized under the general incorporation statute of Minnesota in July 1894 with $50,000 in capital.
[12] The higher yield made them attractive to investors who were looking to increase the earning power of their savings without taking the risks of corporate stocks.
Then the company's president, George McDonald, was jailed for “swindling” after being convicted of selling bonds by making false claims.
Though the investment certificate did not have a gambling feature, in January 1897 the postmaster general of Washington State accused Investors Syndicate and Tappan of “being engaged in a lottery for the distribution of money”.
[16] Tappan scrambled to prove the validity of his investment certificates, but the company was eventually accused of fraud and lost its mailing privileges.
Tappan immediately set out for Washington, D.C..[19] He believed that the Post Office attorney was in effect extorting business out of investment companies with the help of postal inspectors.
In reality, the feature existed to make the certificates more attractive by speeding up the time when the investor saw his or her return, but the postal investigators found it to be gambling.
[20] The Minneapolis Journal reported on the story, and the successful resolution of the problem only served to reinforce their conviction that the “face amount certificate” was legitimate and legal.
Later that year Tappan filed a claim and established homestead rights in the burgeoning hamlet of Angora, forty miles north of Duluth.
Hibbert established a geographically extensive agency and built on Tappan's already prominent insurance template for sales.
Tappan's law firm was also thriving, enhanced by his nephew Thomas F. Gallagher, later a Justice of the Minnesota Supreme Court and gubernatorial candidate.
Four months into the trip, Tappan was blindsided when his associates John Hibbert and A. W. King sent him a telegram announcing that they were selling their shares in Investors Syndicate.