Ponzi's Scheme (39 page)

231

Anxious investors began gathering in Pi Alley: “Great Run on Ponzi Continues Until Office Is Closed for Day,”
Boston Post,
August 3, 1920, p. 1; “Mobs Flock to Ponzi's Office,”
Boston Post,
August 3, 1920, p. 2; “Ponzi Absolutely Denies He Is Insolvent—Alleges Malice,”
Boston Evening Globe,
August 2, 1920, p. 1; “All Demands Met by Ponzi, Investigators Still at Sea,”
Boston Daily Globe,
August 3, 1920, p. 1; “Big Run on Ponzi, but All Get Cash,”
New York Times,
August 3, 1920, p. 15; Hundreds Paid by Ponzi,”
Boston American,
August 2, 1920, p. 1; “Ponzi Pays, Smiling, as Pi Alley Rages and Mob Beats Door,”
Boston Herald,
August 3, 1920, p. 1.

232

Ricardo Bogni: “Sub-Agent Is Sure State Ruined Ponzi,”
Boston Traveler,
November 2, 1922; “Defence to View Ponzi Documents,”
Boston Post,
November 2, 1922.

232

De Masellis gathered his belongings: “Ponzi Manager Returns $10,000,”
Boston Post,
August 26, 1920, p. 1; “Coakley to Testify in Ponzi Court Fight,”
Boston Traveler,
August 26, 1920, p. 1.

233

twirling his snappy walking stick: “Ponzi Absolutely Denies He Is Insolvent—Alleges Malice,”
Boston Evening Globe,
August 2, 1920, p. 1.

233

“My hat is in the ring”: “Great Run on Ponzi Continues Until Office Is Closed for Day,”
Boston Post,
August 3, 1920, p. 1.

233

Ponzi responded true to form: Ponzi's response to reporters on August 2, 1920, was pieced together from the following: “Great Run on Ponzi Continues Until Office Is Closed for Day,”
Boston Post,
August 3, 1920, p. 1; “Mobs Flock to Ponzi's Office,”
Boston Post,
August 3, 1920, p. 2; “Ponzi Absolutely Denies He Is Insolvent—Alleges Malice,”
Boston Evening Globe,
August 2, 1920, p. 1; “All Demands Met by Ponzi, Investigators Still at Sea,”
Boston Daily Globe,
August 3, 1920, p. 1; “Big Run on Ponzi, but All Get Cash,”
New York Times,
August 3, 1920, p. 15; “Hundreds Paid by Ponzi,”
Boston American,
August 2, 1920, p. 1; “Ponzi Pays, Smiling, as Pi Alley Rages and Mob Beats Door,”
Boston Herald,
August 3, 1920, p. 1; “Storm Ponzi for Money,”
Boston Traveler,
August 2, 1920, p. 1.

234

“as calm and undisturbed as a mill pond”: “Ponzi Absolutely Denies He Is Insolvent—Alleges Malice,”
Boston Evening Globe,
August 2, 1920, p. 1.

234

an impassioned poem: James Francis Morelli, “Chas. Ponzi Says: ‘My Dog Never Leads Me.' Who Is the Dog?” An undated copy of the poem was found in the Ponzi clip files of the
Boston Globe.

235

Gary Johnson of Houston wrote: “All Demands Met by Ponzi, Investigators Still at Sea,”
Boston Daily Globe,
August 3, 1920, p. 1.

235

Ponzi wandered outside: The scene is told in several papers, but the best version is in “All Demands Met by Ponzi, Investigators Still at Sea,”
Boston Daily Globe,
August 3, 1920, p. 1. The
Globe
spells her name Percheck, but that is almost certainly a phonetic spelling, as Mrs. Perchek, according to the reporter, was illiterate. When asked to sign her name, she could only make a mark, which Ponzi had one of his clerks cosign as a witness.

235

“You're the greatest Italian in history!”: Ibid. There are numerous versions of this exchange, all essentially the same but with minor variations. The
Globe
account seems the most reliable because it is told in context, strongly suggesting that the unnamed reporter witnessed the scene firsthand in close proximity to Ponzi.

236

Edwin Pride continued his audit: “Ponzi Absolutely Denies He Is Insolvent—Alleges Malice,”
Boston Evening Globe,
August 2, 1920, p. 1.

236

Pelletier and Attorney General Allen traded barbs: “Great Run on Ponzi Continues Until Office Is Closed for Day,”
Boston Post,
August 3, 1920, p. 1.

236

“wiping Peter's nose with Paul's handkerchief”: “All Demands Met by Ponzi, Investigators Still at Sea,”
Boston Daily Globe,
August 3, 1920, p. 1.

236

William “520 Percent” Miller: George Boothby, “Reformed Wizard Discusses Ponzi,” New York
World,
August 3, 1920. Reprinted in the
Boston Post,
August 3, 1920, p. 2.

237

“I shall never say anything”: “Great Run on Ponzi Continues Until Office Is Closed for Day,”
Boston Post,
August 3, 1920, p. 1.

237

“Shall you go on paying claims tomorrow?”: “All Demands Met by Ponzi, Investigators Still at Sea,”
Boston Daily Globe,
August 3, 1920, p. 1.

237

“Money boy!”: “Ponzi and McMasters Sue Each Other—Run Continued Today,”
Boston Evening Globe,
August 3, 1920, p. 1.

237

“Well, they didn't break me yesterday”: “Department of Justice Joins in Probe of Ponzi's Business,”
Boston Post,
August 4, 1920, p. 1.

237

“Mountains of money available”: “Another Day's Run Sees Ponzi Smiling,”
New York Times,
August 4, 1920, p. 6.

237

“How are your newspapers selling?”: “Ponzi and McMasters Sue Each Other—Run Continued Today,”
Boston Evening Globe,
August 3, 1920, p. 1.

237

suing McMasters for two thousand dollars: “Department of Justice Joins in Probe of Ponzi's Business,”
Boston Post,
August 4, 1920, p. 1; “Ponzi Sues Agent, $2,000; Agent Sues Ponzi, $5,000,”
Boston Herald,
August 4, 1920, p. 4.

237

McMasters understood the game: Ibid.; Wilton Vaugh, “M'Masters in Reply to ‘The Wizard,' ”
Boston Post,
August 3, 1920, p. 1.

237

even another attack by Barron: “Entire Issue of Coupons Last Year Only $60,000,”
Boston Post,
August 4, 1920, p. 6, reprinted from the previous day's
Boston News Bureau.

238

“Everybody's but my own!”: “Mounted Police Rout Ponzi Clients; Frantic Thousands Mob Defender; Federal Agents to Speed Up Inquiry,”
Boston Herald,
August 4, 1920, p. 1.

238

a sign appeared that day: “Ponzi Greatest Man in Country, North End View,”
Boston Daily Globe,
August 4, 1920, p. 1.

238

“the most talked of man in America”: Photo caption alongside story “Crisis for Ponzi,”
Boston American,
August 3, 1920, p. 1.

238

Ponzi paid a visit: “Another Day's Run Sees Ponzi Smiling,”
New York Times,
August 4, 1920, p. 6.

239

more than $400,000: “Crisis for Ponzi,”
Boston American,
August 3, 1920, p. 1.

239

“After this investigation”: “Department of Justice Joins in Probe of Ponzi's Business,”
Boston Post,
August 4, 1920, p. 1; “Another Day's Run Sees Ponzi Smiling,”
New York Times,
August 4, 1920, p. 6.

240

a very public night out: “Ponzi Wants to Be an Actor,”
Boston Post,
August 4, 1920, p. 2; “Ponzi Pays All Comers; Federal Agent Arrives,”
Boston Daily Globe,
August 4, 1920, p. 1.

241

Fewer than a hundred people: “Ponzi Baffles Probers,”
Boston American,
August 4, 1920, p. 1.

242

clothes fit for an angel: Floyd Gibbons, “Ponzi Pays as Probers Work,”
Boston Post,
August 5, 1920, p. 1.

242

Ponzi's only comment for investigators: “Ponzi Refuses Inquiry to Show His Assets; Run on His Boston Office Practically Ended,”
New York Times,
August 5, 1920, p. 15.

242

“The exposé by the man: “Run on Ponzi Dwindles,”
Boston Traveler,
August 4, 1920, p. 1.

242

Ponzi had paid out another $313,000: Floyd Gibbons, “Ponzi Pays as Probers Work,”
Boston Post,
August 5, 1920, p. 1.

242

capitalized on the chaos: Ponzi, p. 165; “Questions Ex-Secretary,”
Boston Globe,
October 25, 1922. Ponzi's autobiography and the newspaper articles about Lucy Meli's testimony do not name Cassullo, but both provide enough detail to allow one to conclude that he was the culprit. Also, given his criminal past, his blackmailing of Ponzi, and his eventual disappearance, the shoe fits.

242

Ponzi returned to the theater: “Ponzi Poses for Movies on Boston Theatre Stage,”
Boston Daily Globe,
August 5, 1920, p. 10.

243

Only fifty-seven people showed up: “Palmer Takes Up the Ponzi Case,”
Boston Daily Globe,
August 6, 1920, p. 1.

243

$168,000: “Ponzi Case Probe Shifts to Capital,”
Boston Post,
August 6, 1920, p. 1.

243

Ponzi's pals Louis and Charlotte Blass: “Ponzi Winners Include Coupon Wizard's Wife,”
Boston Traveler,
August 24, 1920, p. 1; “Two Witnesses Sought in Ponzi Case Disappear,”
Boston Herald,
September 12, 1920, p. 1; “Sued for $90,000 by Ponzi Trustee,”
Boston Globe,
March 8, 1925; “Blass Denies He Was an Agent for Ponzi,”
Boston Globe,
November 9, 1920.

243

Ponzi's humble days in Mobile, Alabama: “A Leaf out of Ponzi's Past,”
Boston Daily Globe,
August 5, 1920, p. 1.

243

The lowlight of Ponzi's day: “Ponzi Case Probe Shifts to Capital,”
Boston Post,
August 6, 1920, p. 1; “Four New Yorkers Ask Ponzi Backing,”
New York Times,
August 6, 1920, p. 6; “Ponzi Joins New York Promoters, Forming $200,000,000 Concern”
Boston Herald,
August 6, 1920, p. 1. Also see Ponzi, pp. 161–71. In his autobiography, Ponzi suggests that Herman and his partners might well have invested in his business and at one point even displayed a $10 million check. Ponzi's point appears to be to suggest that if he had only been given a little more time he could have weathered the storm and righted his ship. However, it is more plausible to believe that even if Herman did wave a check before Ponzi's face, it could never have saved him. Ponzi had no secret to sell Herman, and although Herman might have been willing to become partners in an operation based purely on Ponzi's charisma, it is difficult to imagine he would pay $10 million for that privilege.

244

Joseph Allen discovered the first sign: Annual Report of the Massachusetts Commissioner of Banks, 1921, p. vii–viii.

244

Ponzi knew he could wait no longer: “Call Lansing in Ponzi Case,”
Boston Post,
August 7, 1920, p. 1; “Ponzi Agents Tell of Receipts,”
Boston Globe,
October 27, 1922; “Refuses to Tell Where Money Went,”
Boston Post,
October 5, 1920;
In re Ponzi,
268 F. 997 (District Court, Massachusetts, November 12, 1920); “Daniels Withdraws Suit Against Ponzi,”
Boston Evening Globe,
August 6, 1920, p. 1; “Ponzi Settles Claim for Million, Taking Daniels as Partner,”
Boston Herald,
August 7, 1920, p. 1; Ponzi, pp. 132–33.

246

“I am now on the offensive”: “Ponzi Settles Claim for Million, Taking Daniels as Partner,”
Boston Herald,
August 7, 1920, p. 1.

246

“Are you a Bolshevist?”: “Daniels Withdraws Suit Against Ponzi,”
Boston Evening Globe,
August 6, 1920, p. 1.

247

“the financing of Soviet Russia”: “Call Lansing in Ponzi Case,”
Boston Post,
August 7, 1920, p. 1.

247

“Are you . . . ? Are you . . . ?”: Ibid.

247

New York Times
sensed the pendulum: “One Record at Least Is Broken,”
New York Times,
editorial, August 6, 1920, p. 8.

247

a puritanical and decidedly racist cloak: “Something for Nothing,”
Boston Evening Globe,
editorial, August 6, 1920, p. 10.

251

Ponzi could withdraw the $185,000: “Unite upon Ponzi Case,”
Boston Post,
August 8, 1920, p. 1; “Ponzi Defies Arrest,”
Boston American,
August 7, 1920, p. 1; “Consulted Lansing on Ponzi's Operations; Return of Assistant Attorney General Abbott,”
Boston Evening Globe,
August 7, 1920, p. 1.

251

a sarcastic “good morning”: “Ponzi Defies Arrest,”
Boston American,
August 7, 1920, p. 1.

251

Ponzi had to settle for his son: “Consulted Lansing on Ponzi's Operations; Return of Assistant Attorney General Abbott,”
Boston Evening Globe,
August 7, 1920, p. 1.

252

investigators held a flurry of meetings: “Unite upon Ponzi Case,”
Boston Post,
August 8, 1920, p. 1; “Ponzi Starts Scare by Seven-Hour Absence,”
Boston Sunday Globe,
August 8, 1920, p. 1; “Ponzi Defies State or Nation to Stop Him from Opening Tomorrow,”
Boston Sunday Herald,
August 8, 1920, p. 1.

252

Governor Coolidge “is far from satisfied”: “Unite upon Ponzi Case,”
Boston Post,
August 8, 1920, p. 1.

252

Old Colony continued to accept deposits: “Ponzi Starts Scare by Seven-Hour Absence,”
Boston Sunday Globe,
August 8, 1920, p. 1.

252

a chance to reflect on his situation: Ponzi does not specifically detail his true reasons for his about-face regarding collecting money for his new company. When he announced his decision immediately upon emerging from Hanover Trust, he spoke only of doing what was best for his investors. However, the more complete rationale suggested here is more plausible, given the intensity of the investigations and even some newspapers' suggestions that his new company might be viewed as repaying the debts of the Securities Exchange Company. See “Ponzi Opens Offices in His New Company,”
Boston Traveler,
August 9, 1920, p. 1.

253

a rumor took hold: “Unite upon Ponzi Case,”
Boston Post,
August 8, 1920, p. 1; “Ponzi Starts Scare by Seven-Hour Absence,”
Boston Sunday Globe,
August 8, 1920, p. 1; “Ponzi Defies State or Nation to Stop Him from Opening Tomorrow,”
Boston Sunday Herald,
August 8, 1920, p. 1; “Ponzi to Refuse Money in His New Venture,”
New York Times,
August 9, 1920, p. 6.

253

his name being yelled by newsboys: “Unite upon Ponzi Case,”
Boston Post,
August 8, 1920, p. 1.

253

trying to charm the entire newsroom: “Unite upon Ponzi Case,”
Boston Post,
August 8, 1920, p. 1; “Ponzi Starts Scare by Seven-Hour Absence,”
Boston Sunday Globe,
August 8, 1920, p. 1.

253

“Why are you doing this to me?”: Curt Norris, “Ponzi,”
Yankee,
November 1975, p. 115.

254

“I have decided”: “Ponzi Will Wait,”
Boston Post,
August 8, 1920, p. 14.

254

bid on the entire fleet: “Ponzi Defies Arrest,”
Boston American,
August 7, 1920, p. 1.

254

“This will be all the security”: Ibid.

254

“They call me the ‘Millionaire Kid' ”: “Ponzi to Resume Monday,”
Boston Sunday Advertiser,
August 8, 1920, p. 1.

255

dressed in a bathrobe: “Ponzi's Debts Known Today,”
Boston Post,
August 9, 1920, p. 1.

255

the ninety-three-degree heat: “Relief from Heat Today,”
Boston Post,
August 10, 1920, p. 1.

255

waving a telegram from Herman: Ibid.

255

telling
Post
reporter P. A. Santosuosso: “Ponzi Relates Story of His Life,”
Boston Post,
August 9, 1920, p. 16. The story does not carry a byline, but there are several reasons to believe it was the work of Santosuosso. He was responsible for day-to-day coverage of the case (see Kenny, p. 197) and he had also heard the rumor about Ponzi spending time in jail in Montreal (Kenny, p. 197), which would explain why the story explicitly pointed out the lengthy gaps in Ponzi's account of his life.

255

a rumor that Ponzi had spent time: Kenny, p. 197.

255

sharing what he knew with Richard Grozier: Ibid.

256

Her eyes brimmed with tears: “Ponzi Relates Story of His Life,”
Boston Post,
August 9, 1920, p. 16.

256

she abhorred people staring at her: Charles Merrill, “His Pretty Girl Wife Sorry When Ponzi Quit $50 Job,”
Boston Globe,
August 8, 1920, p. 8.

256

“I would much rather that he was a bricklayer”: “Ponzi Relates Story of His Life,”
Boston Post,
August 9, 1920, p. 16.

256

Later that day, a telegram arrived: “Ponzi Shown Dispatch,”
Boston Post,
August 11, 1920, p. 18. This brief story details how and when the
Post
got wind of Ponzi's Montreal conviction and also describes the phone call to Ponzi asking for comment or confirmation. Again, as described above, it is reasonable to deduce that the phone call was made by Santosuosso. Also see Ponzi, pp. 165–67, for his account of this episode. Separately, on p. 169, Ponzi describes another version of the event in which he says “a city editor came up to my house in Lexington about midnight. Flashing a telegram from Montreal.” Based on the
Post
's account and other elements of the chronology, there is strong reason to believe that Ponzi was confusing this event with a later one, in which he was shown a copy of the
Post
shortly after midnight on the day the story broke.

256

Grozier called for his ace: Kenny, p. 197.

257

Ponzi knew he could not avoid: Ponzi, p. 166. See “It was vital for me to delay the exposure until after the show-down [with Pride].”

257

Ponzi estimated that his holdings: “Register, but Keep Money,”
Boston American,
August 9, 1920, p. 1.

258

“call the bluff of all the public authorities” Ibid.

258

“After I have been proved on the level”: Ibid.

258

Joseph Bonina: “Register, but Keep Money,”
Boston American,
August 9, 1920, p. 1; Also 1930 U.S. Census data.

258

pharmacist Louis Mantani: “Ponzi Funds Tied Up; Bankruptcy Petition Filed by 3 Clients,”
Boston Herald,
August 10, 1920, p. 1; “Stop Ponzi Checks: Say He's Bankrupt,”
New York Times,
August 10, 1920, p. 1.

258

Ponzi received an invitation from Gallagher: “Ponzi Stops Payment—Not to Take Up Any Notes upon Loans,”
Boston Post,
August 10, 1920, p. 1; “Ponzi Account Overdrawn; All Checks Ordered Stopped,”
Boston Evening Globe,
August 9, 1920, p. 1; “Ponzi Funds Tied Up; Bankruptcy Petition Filed by 3 Clients,”
Boston Herald,
August 10, 1920, p. 1.

259

Ponzi's main account at the bank:
Cunningham v. Commissioner of Banks,
144 N.E. 447; Annual Report of the Massachusetts Commissioner of Banks, 1921, p. vii–viii.

259

thirteen thousand dollars in the Martelli account: Ibid.

259

tried over the weekend to replenish:
Cunningham v. Commissioner of Banks,
144 N.E. 447; Annual Report of the Massachusetts Commissioner of Banks, 1921, p. vii–viii; “Ponzi Assails ‘Bank Ring,' ”
Boston Traveler,
August 10, 1920, p. 1; Ponzi Stops Payment—Not to Take Up Any Notes upon Loans,”
Boston Post,
August 10, 1920, p. 1. For a brief time Ponzi claimed, erroneously, that New Hampshire officials had illegally transferred the money in his Manchester account to an account controlled by his Manchester agent, Joseph Bruno. There was no evidence to support that claim, which was strongly and convincingly denied by New Hampshire officials. Far more likely was that Ponzi had simply overestimated the amount of money in the account and had bounced his checks.

259

Joseph Allen dialed the Hanover Trust Company:
Cunningham v. Commissioner of Banks,
144 N.E. 447; Annual Report of the Massachusetts Commissioner of Banks, 1921, pp. vii–viii.

260

his carefully choreographed attack: “Ponzi Stops Payment—Not to Take Up Any Notes upon Loans,”
Boston Post,
August 10, 1920, p. 1;
Cunningham v. Commissioner of Banks
144 N.E. 447; “Stop Ponzi Checks: Say He's Bankrupt,”
New York Times,
August 10, 1920, p. 1; “Ponzi Funds Tied Up; Bankruptcy Petition Filed by 3 Clients,”
Boston Herald,
August 10, 1920, p. 1; “Ponzi Account Overdrawn; All Checks Ordered Stopped,”
Boston Evening Globe,
August 9, 1920, p. 1. Joseph Allen never took responsibility for the bankruptcy filing, but it is impossible to believe its timing was a coincidence. Indeed, Allen's efforts to distance himself from the filing only serve to tie him more closely. In his annual report and in court testimony, Allen or his assistants maintained that the bankruptcy filing was made at 1:40
P.M.
on August 9, or five minutes before the order to stop paying Ponzi checks. Newspaper reports from that day, however, say the filing actually came closer to 3:00
P.M.,
which is more credible because the claim of bankruptcy would have been credible only after the commissioner's stop-payment order.

260

“I have directed the Hanover Trust Company”: “Ponzi Stops Payment—Not to Take Up Any Notes upon Loans,”
Boston Post,
August 10, 1920, p. 1.

261

attorney general immediately issued a statement: “Allen Finds Discrepancy in Ponzi's Statement of His Financial Operations,”
Boston Herald,
August 10, 1920, p. 2.

261

an office he had set up in the State House: Allen bought space to run the announcement on the front page of the
Post
on August 10, 1920.

262

Ponzi rushed to the tenth floor: “What He Told Allen Was Bull, Says Ponzi,”
Boston Daily Globe,
August 10, 1920, p. 1.

262

nibbling on the remnants of a box lunch: Ibid.

262

“I have played fair”: “Ponzi Stops Payment—Not to Take Up Any Notes upon Loans,”
Boston Post,
August 10, 1920, p. 1.

262

“All I told Attorney General Allen”: “What He Told Allen Was Bull, Says Ponzi,”
Boston Daily Globe,
August 10, 1920, p. 1.

263

“That I am solvent”: “Ponzi Stops Payment—Not to Take Up Any Notes upon Loans,”
Boston Post,
August 10, 1920, p. 1.

263

the shouts of newsboys: Ibid.

263

“Don't you fellows knock me”: “What He Told Allen Was Bull, Says Ponzi,”
Boston Daily Globe,
August 10, 1920, p. 1.

263

“I am broke”: Ibid.

264

Harry Frazee: “Ponzi Very Sore over Treatment,”
Boston Post,
August 10, 1920, p. 2.

264

a devoted Red Sox fan: “Ponzi Helped Himself to $1,000 Deposits,”
Boston Herald,
Sept. 6, 1920, p. 1.

264

Ponzi ducked outside for a snack: “Ponzi Very Sore over Treatment,”
Boston Post,
August 10, 1920, p. 2. Although the story is unbylined, the candor and comfort Ponzi displays with the reporter make it reasonable to conclude that it was the work of Santosuosso.

265

owlish glasses, receding hairline, and soft jowls: Photograph of Herbert Baldwin accompanying undated story found in library files of the
Boston Herald,
headlined “Baldwin Joins B & M Staff.”

265

“Baldy,” as his friends in the newsroom: “ ‘Baldy' Quits B & M Post,”
Boston Herald,
October 13, 1949.

265

while growing up in Everett: Biographical details on Baldwin came from 1920 and 1930 U.S. Census data, and also from an obituary, “Herbert L. Baldwin, 79, Former Boston Newsman,”
Boston Herald,
January 23, 1973.

265

“That's Ponsi”: Herbert L. Baldwin, “Canadian ‘Ponsi' Served Jail Term,”
Boston Post,
August 11, 1920, p. 1.

265

“Positively, that's the same man”: Ibid.

265

notorious Montreal padrone Antonio Cordasco: Ibid. Other details from Baldwin's trip to Montreal also come from his August 11, 1920, story.