After being released on bond on August 13, 1920, Ponzi marches through downtown Boston, certain that he has suffered only a temporary setback.
Boston Public Library, Print Department
CHAPTER SEVENTEEN
“I’M NOT THE MAN.”
While Baldwin spent the day linking past to present, Ponzi plotted ways to soften the previous day’s blows: the freeze on his accounts, the bankruptcy filing, the attorney general’s accusations, and the call for his investors to report to the State House. He ordered the offices of the Securities Exchange Company closed until further notice and spent the morning in Lexington, where he assessed the damage, girded for battle, and listened to a summer thunderstorm. He was determined to make some thunder of his own rather than surrender without a fight.
In the meantime, the officers of Hanover Trust tried desperately to balance their books. They calculated that Ponzi had overdrawn his account by $441,778, a potentially devastating dip into the red that could send the bank to its death. Treasurer McNary decided on the only course of action he thought possible to save the bank: He would use part of Ponzi’s $1.5 million certificate of deposit to cover the overdraft. Ponzi would not have gained access to that money until August 27—thirty days after he gave notice that he wanted to withdraw the money—but this was an emergency and McNary made up the rules as he went along. After returning Ponzi’s checking account to zero, McNary made out a new certificate of deposit to Ponzi with a balance of $1,058,222, having deducted the amount of the overdraft from the certificate.
Before the latest uproar, Ponzi had agreed to return this day to the weekly luncheon of the Kiwanis Club. This time, though, the club’s president had arranged a “battle royal” between Ponzi and a celebrated psychic named Joseph Dunninger, a friend of Harry Houdini’s and Thomas Edison’s. The club advertised that the mind reader would “throw the X-ray of clairvoyancy on the subtle brain of the little Italian and reveal what he found to the audience.” So many people hoped to hear Ponzi’s secret formula that the Kiwanians oversold the Hotel Bellevue ballroom and had to feed guests in shifts.
The afternoon was slipping away and still the show had not begun. Ponzi hated to disappoint his public, so at two forty-five he climbed onto a table, cigarette holder dangling from his fingers, and agreed to take questions. Before he could begin, someone called out, “Three cheers for Ponzi!” The crowd answered with gusto. Ponzi then regaled the room with his version of his rise from obscurity and poverty to fame and, apparently, fortune, tailoring his story to fit some of the latest developments. He said he obtained reply coupons directly from foreign governments, and that was why his activities were not reflected on the published tallies of how many coupons were issued in recent years. Ponzi also said those governments had profited from the deals, and that was why he had to keep his overseas contacts confidential. He vowed to reopen by Saturday, smiled incessantly, and needled the attorney general: “He has a good job, but mine is better.” The audience roared. Ponzi got the same response when he paid mock respects to “my opponents, the bankers.”
Finally it was time to pit Ponzi against Dunninger, wizard against wizard. First, Dunninger agreed to lower the stakes by promising not to reveal Ponzi’s business secrets. The mystic asked Ponzi to write a sentence on a piece of paper and place it in his pocket.
“First,” said Dunninger, “is the letter ‘I.’ ”
“Correct,” agreed Ponzi.
“The next letter is ‘P,’ ” said Dunninger.
“Correct,” Ponzi repeated.
Encouraged, Dunninger claimed to have received a vision of the complete sentence in Ponzi’s pocket: “I propose to apply to banking the principle of giving the people full value for the use of their money.” It was, indeed, what Ponzi had written, and the audience left the ballroom satisfied and enthralled at the magic they had witnessed. It was 1920, and anything seemed possible.
While Ponzi cavorted with the Kiwanians, offers of money flooded his offices. Hundreds of letters arrived at 27 School Street containing checks in amounts from twenty-five to ten thousand dollars, that last sum from a man in Savannah, Georgia. But Ponzi’s clerks sent them all back on his orders. Ponzi spoke only briefly with reporters, using them to send a message to his investors: Hang on and do not cooperate with the attorney general. Nevertheless, about a hundred Ponzi note holders turned up at the State House.
Pride continued to refine his calculations, while federal prosecutor Dan Gallagher and Attorney General J. Weston Allen held one meeting after another to plot their next moves. Meanwhile, Bank Commissioner Allen took aim at a more established institution than Ponzi: the Hanover Trust Company.
As midnight approached, Herb Baldwin’s copyrighted story rolled off the Post presses with a cannon’s roar:
CANADIAN “PONSI” SERVED JAIL TERM
Montreal Police, Jail Warden and Others Declare That Charles Ponzi of Boston and Charles Ponsi of Montreal Who Was Sentenced to Two and Half Years in Jail for Forgery on Italian Bank Are One and the Same Man
State Authorities Now Active and Promise at Least One Arrest in Case Soon
The headline writer had nailed it, though in his excitement he’d overstated the “promise” of an impending arrest. The story said only that one or more arrests were expected “momentarily,” and no state officials were quoted, even anonymously, making such a claim. Baldwin also overstepped a bit, making it seem as though Ponzi’s forgery conviction was directly related to Zarossi’s scheme of swindling his depositors by stealing money they intended for their relatives in Italy. Despite those minor missteps, Baldwin’s story was as damaging as Ponzi had feared it would be when Santosuosso had first called to inquire about his Montreal past. For the moment, though, Ponzi refused to acknowledge it.
An hour after midnight, another Post reporter, Harold Wheeler, rushed to Lexington with a copy of the August 11 Post still warm and redolent of ink. Hours remained before it would hit the streets, and Grozier and Dunn wanted Ponzi’s reaction to Baldy’s scoop. Whatever Ponzi said could be added to a later edition; the Post was driving the story forward, and its leaders did not want to cede the next news break—Ponzi’s response—to the afternoon papers.
Wheeler made his way past the guards who surrounded the Slocum Road house and handed Ponzi the paper. Ponzi read Baldy’s story slowly, deliberately, with a poker face. Wheeler studied him as he read, but could see no reaction—not a muscle in his face moved, nor did his eyes betray the gravity of the situation. When he had finished, Ponzi shrugged his shoulders.
“I’m not the man,” he said. “It does not concern me.”
“We think this is the truth,” Wheeler answered, “and we’re going to print it.”
“Then you are going to get the presses ripped out of your building,” Ponzi threatened.
If Ponzi imagined that the Post would retract its story, by dawn he knew that any such hope was false. He met reporters again on his front porch at eight in the morning, dressed in a silk bathrobe with his Colt .25-caliber in the pocket. Seeming on the verge of coming unglued, he pulled it out and explained to the startled reporters that he intended to use it for self-protection against two men he had noticed loitering near his house.
Asked about the Post story, Ponzi seemed uncertain about the best approach. He began with a rambling, awkward statement referring to himself in the third person that sounded like the start of a confession about his Montreal past. “If the statements printed in certain morning papers are true,” he said, “I feel that either he is one of many who have made some mistake and paid for it, or that he paid for some mistake of another, and a perusal of the records there might hide a deeper motive than it would be expedient to establish at the present time.” Ponzi then took a shot at the Post: “It is evident that some of the local papers are endeavoring to hurt him for purposes which are as clear to him as they are to the public.” Suddenly he interrupted himself and began a new statement. After starting and stopping two more times, Ponzi got into the Locomobile and went to Boston to meet with his lawyers.
By noon, Ponzi was ready to meet the press once again. The reporters were admitted into Daniel McIsaac’s imposing law offices on the tenth floor of the Pemberton Square building known as Barristers’ Hall. They found Ponzi seated behind a large desk, hunched down in a chair, looking smaller than they had ever seen him. His gold cigarette holder dangled from his hand. The reporters looked for his smile, but it was gone.
“The statement that I am about to make I should probably have made before, in view of the notoriety given me by the press,” he began, a stenographer recording his every word. “However, I felt that my past had no bearing on the present situation. If several years ago I sinned—if I made a mistake and paid for it—I had every reason to believe that society owed me another chance.
“I am not the first one to commit a sin. I am not the only one, even in the city of Boston. And when I see others who have been under the same circumstances years ago and are today occupying prominent positions I do not see why I should be made an exception to the general rule and become an object of persecution on the part of either the authorities, the press or the public.”
He paused and turned to McIsaac. They spoke for several minutes about one of Ponzi’s former prison mates, not in Montreal but in Atlanta, a man who had enjoyed the support not only of President Taft but also the very same Clarence Barron who had helped lead the charge against Ponzi. To speak of “Ice King” Charles Morse, Ponzi would also have to disclose his own prison term in Atlanta, but at the moment that seemed the least of his concerns. McIsaac gave him the go-ahead.
“Charles W. Morse, at one time a prominent banker, was also convicted in the United States court,” Ponzi said, “and sentenced to fifteen years in Atlanta, Georgia. I know it because I was there with him. Released after serving a very small part of his sentence, he has been out occupying for three years a position greater than he occupied before. He is a banker, mingles with bankers, deals with the United States government, and associates with the most respectable men in the United States.
“I do not mean in any way to imply that he is not deserving the respect of the public. But I merely ask, if he is as deserving why shouldn’t I be?”
Ponzi paused again to let that sink in. Then, to lighten the mood, he gave a half smile and announced to the reporters surrounding him: “A new paragraph.”
“The Montreal records,” he continued, “show that a man of my description was convicted of forging in 1908 and sentenced to three years in the penitentiary of Saint Vincent de Paul, and served twenty months. That is all that the public in general cares to know. However, I feel that it is also very important for the people at large to know that, although I am the man who was convicted and sentenced for that crime, I am not the man who perpetrated that crime.”
Grasping for a life preserver, Ponzi spun a fanciful tale in which he claimed to have taken the blame for a forgery committed by his former boss Zarossi, who had been enticed into the illegal act by an extortionist. Ponzi said he’d acted to save Zarossi because his boss had a wife and four children. Halfway through the complicated story, Ponzi’s lawyer, McIsaac, had heard enough; he put on his coat and hat and said he would be back later.
“I am not trying to pose as a hero,” Ponzi insisted even as he did just that. He claimed that at least two other men in Boston could vouch for his story, though he declined to name them.
Having opened the door on his second conviction, Ponzi felt compelled to address it. Again he assumed the pose of a wrong-place-at-the-wrong-time Samaritan.
“My next unfortunate experience,” he began, “did not come of my own volition, but happened as a consequence of my first mistake. Released from prison without a friend, without a dollar, and without credentials—they didn’t give me anything—I tried to earn a living as best I could. Within ten days of my release I was asked to escort five Italians into the United States. I did not smuggle them in. I crossed the border on a train—openly—and was placed immediately under arrest. I didn’t dodge the consequences and I pleaded guilty. I expected leniency in view of the fact that the crime was only a misdemeanor and not a felony and that I didn’t resist conviction. Yet I was sentenced to two years at the federal prison at Atlanta, Georgia, and my sentence was the maximum ever imposed for a similar offense.
“There isn’t much more to be said. The public knows the facts and whether the same are such to make me unworthy of their confidence is for them to decide.”
Ponzi then announced that he would resign, at least temporarily, as a director of the Hanover Trust. He displayed a measure of optimism, however, by insisting that the disclosures about his past would not prevent him from paying off all Ponzi notes “within the course of a few days.”
When he had finished his statement, Ponzi waved off the reporters’ questions. He slumped back in the chair. The sparkling energy that had made him a star was spent.
Before the reporters left, Ponzi added two codas that in many ways were the truest parts of his confession. First Ponzi told the reporters that he worried that news of his prison record would lead to his deportation. But even that was not his greatest fear.
Not knowing that his mother had secretly told Rose about his prison past before their marriage, Ponzi said his biggest regret, the biggest mistake of his life, was not having told his wife about his time behind bars. His eyes filled with tears at the thought of losing Rose. Somehow, Ponzi said, he hoped to keep his prison record from her at least a little longer. He told the reporters he had ordered all the newspapers kept out of their house. “I want to keep all this news from my wife,” Ponzi said. “It would kill her.”
“My nerves can’t last forever,” Ponzi added before the last reporter filed out. “I’ve got to go rest. I’m not going to give out any more statements for a while. I’m going to keep away from people—not come downtown.”
If Ponzi thought the worst part of the day was over, he was mistaken. The next blow came at one forty-five in the afternoon, when Bank Commissioner Joseph Allen posted a notice on the door of the main branch of Hanover Trust. Above his signature, the sign read: “Under the authority vested in me by law, I hereby take possession of the property and Business of the Hanover Trust Company.” It was the most dramatic act in the arsenal of a banking regulator, and it was the first time Allen had used the power since taking office six months earlier.
The examination Allen had ordered of the bank’s books had revealed problems that went far deeper than Ponzi’s overdraft. Under its president, Henry Chmielinski, and its treasurer, William McNary, Hanover Trust had exhausted its reserves and issued unsafe and illegal loans. Loans to companies with connections to bank insiders exceeded legal limits, and in some cases the accounts of those companies carried huge overdrafts. For instance, Chmielinski treated Hanover Trust like a rich relative, secretly borrowing money to finance real estate purchases and a company he ran called the Polish-American Finance and Trading Association. But Ponzi’s overdraft was the last straw. Allen described how he had expressly prohibited McNary from tapping into Ponzi’s certificate of deposit to cover the overdraft, yet McNary had done it anyway.
Hundreds of people raced to the Washington Street bank. Most came out of curiosity or to catch sight of Ponzi. As word spread a small number of depositors arrived and jostled their way through the horde to rattle the locked doors and demand their money, to no avail. A cordon of police officers surrounded the bank, but the excited mob pushed and pressed against them. After forty-five minutes of shoving, the police regained control and the crowd dispersed.
When Ponzi heard of Allen’s move, he issued a statement without his usual vigor. “I learn with regret that the bank commissioner has ordered the Hanover Trust Company to close its doors. I feel that this action on the part of the bank commissioner is merely a new attempt on his part to prevent me from gaining possession of the one-point-five-million dollars which I have in that institution, in the hope that I will not be able to meet my obligations to note holders.” Ponzi continued to insist that he had at least $4 million in assets. That would be more than enough, he declared, to meet his liabilities and move on to his new business. Publicly, he estimated that Pride would find no more than $800,000 in liabilities, though privately he certainly knew that the number would be many times higher.
Ponzi left Barristers’ Hall at about five o’clock. As usual, a crowd gathered the moment his Locomobile pulled to the curb to carry him home. He flashed his smile and stepped into the car just as a newsboy leapt onto the running board. Amused, Ponzi bought copies of all the evening papers to read on the ride to Lexington.
As night fell, reporters took their places outside the house on Slocum Road. Around eight o’clock, they heard the sound of a woman weeping inside.
A few minutes before midnight, Ponzi paced along the gravel walkway outside his home. If he could find any solace, it was in knowing that the events of the past twenty-four hours had not disproved his claims about his solvency or demonstrated that he had done anything illegal in building his fortune. Though his credibility was damaged, he still had fervent believers, among them thousands of people who had already profited from the Securities Exchange Company. At that moment, editors of the Boston Traveler were preparing an editorial about him, marveling at “the grip which this apostle of rapid finance is able to retain upon thousands of people.” The editors even urged that Ponzi “receive the benefit of every doubt” and likened him to Jean Valjean in Les Misérables. Ponzi and the fictional Valjean spent their lives “striving to live down some misdeed, and oftentimes society appears to conspire against them.”
Ponzi had one last flickering hope: He could preserve the life he had built if he could somehow cover the liabilities counted by Pride’s audit, which was scheduled to be revealed at noon on Friday.
As he walked, a thought occurred to him, one he wanted to share with the public. He asked his guards to summon two reporters he knew were keeping vigil nearby. But by the time they’d arrived he had changed his mind and momentarily lost his bearings.
“Get away from here!” Ponzi shouted.
“One of your guards said you wanted to see a reporter,” one of the newspapermen said.
“I made two statements today—that’s enough,” Ponzi answered. He pulled out his blue steel pistol and began waving it in the air.
“My guards’ power is limited, but mine is unlimited,” he yelled. “When I shoot I hit. Get away or there’ll be some tall shooting.”
Of all Ponzi’s concerns, none had shaken him more than his belief that Rose had been unaware of his prison record and would now think less of him. But early the next morning, Thursday, August 12, he learned the truth: Rose confessed that she had known all along and had loved and married him regardless. Relief swept over him. He regained the composure he had lost the night before.
His personal fears resolved, it was time to confront the rest of his worries. Since Monday, Ponzi had been thinking about the preview he had been given of Pride’s audit. Even with the Securities Exchange Company’s maddening bookkeeping system, the diligent accountant had calculated that Ponzi’s liabilities were about $7 million, maybe more. Ponzi had spoken briefly with Pride again on Wednesday, and it appeared that this would be the figure facing him at the showdown set for Friday in the federal prosecutor’s office.
During the two weeks since Pride had begun his tally, Ponzi had done everything possible to marshal his resources. He had closed his far-flung bank accounts, pooled his money in Hanover Trust, and gathered the certificates and titles to the stocks, bonds, and real estate he had purchased during his shopping spree. Repeatedly, he’d tried to cash his certificate of deposit by selling it at a discount to another bank, but there had been no takers. Ponzi had also sought help cashing the certificate from Thomas W. Lawson, a legendary Boston stock speculator and longtime enemy of Clarence Barron’s. Lawson’s fame derived in part from a book he’d written called Frenzied Finance, about stock market abuses. An endorsement from Lawson would go a long way. But Ponzi was too late. Weeks earlier, Simon Swig of Tremont Trust had approached Lawson for his opinion on Ponzi, and Lawson had concluded that it was almost certainly a swindle. Even if Lawson had agreed to help Ponzi turn his certificate of deposit into cash, his assets totaled only $4 million—$3 million shy of Pride’s number.
As the Friday deadline approached, Ponzi’s slim hopes of closing that gap disappeared. His last chance was his plan to temporarily “borrow” assets in the vaults of Hanover Trust. But the bank commissioner had unwittingly foiled that far-fetched idea by seizing the bank and locking its doors. Time was fast running out.
If Ponzi had any doubts about what would happen next, he needed only to look at the screaming headline atop the front page of that morning’s Post:
ARREST IN PONZI CASE MAY BE MADE TODAY
Below were four photographs that made Ponzi cringe. Two were twelve years old—the grim-faced mug shots from his Montreal forgery arrest. Below those were two recent photographs of the smiling Ponzi, but a Post illustrator had added a mustache on one “for the purpose of comparing it with his Canadian pictures,” the caption read. Inside the paper was the latest sketch by Ritchie, titled “Ready to Burst.” Cartoon images of four men—Gallagher, Pride, and the two Allens—stood atop the federal building and the State House using spears to poke holes in a balloon labeled “The Ponzi Get-Rich-Quick Bubble.”
Ponzi knew what he had to do. He dressed in a somber suit with a chalk stripe, a fashion choice that reflected his decision as much as it fit the cloudy weather. Speaking briefly with the reporters camped out on Slocum Road, Ponzi gave no indication of what he had planned, addressing only suggestions that he might run and the disclosures about his record.
“I am not going to flee,” he said, “but will stay here and face the music. I am going to prove that I am on the level now. The past has nothing to do with the present.”
He went back inside but a short time later slipped out a back door, ducked into the Locomobile, and pulled down the window shades for the ride to Boston. It was a long enough ride for him to think about how miserable he’d felt in 1908 when two Montreal police detectives had surprised him at his apartment and placed him under arrest. He also had time to recall his shock in 1910 when the immigration inspector had seized him for smuggling aliens. This time, a decade older and wiser, he was determined to change the script. Ponzi wanted to remain as much in control as possible under the circumstances, deciding when, where, and by whom he would be taken into custody.
Attorney General Allen was greedy to do the honors, having spent nearly three weeks battling accusations that he had bungled the investigation. But Ponzi was loath to give him that satisfaction. Federal prosecutor Dan Gallagher had played straight with him and, more important, the federal prosecutor was a friend and ally of Ponzi’s lawyer Dan Coakley. If the time came to cut a deal, Ponzi wanted Coakley by his side and Gallagher on the other side of the table. He told his driver to take him to Coakley’s office.
With Coakley in tow, Ponzi went glumly to Gallagher’s office on Devonshire Street, his walking stick hanging limp on his arm and his jaunty cigarette holder nowhere in sight. When Gallagher received them, Ponzi admitted no wrongdoing and asserted his belief that Pride had overestimated his debts.
“But you have agreed to accept the auditor’s figures,” Gallagher said.
“Yes,” Ponzi acknowledged. “I have agreed to accept his figures.”
At that moment, Ponzi knew he was defeated, but he had no intention of remaining that way. He would take his medicine but surely rise again, next time even higher than before. “No man is ever licked, unless he wants to be,” Ponzi told himself. “And I didn’t intend to stay licked. Not so long as there was a flickering spark of life left in me.”
Ponzi told Gallagher he was ready to turn himself in. Gallagher readily accepted. They left Gallagher’s office and crossed the street to the federal building. Ponzi walked into the office of U.S. Marshal Patrick J. Duane, an eccentric who was dressed, as usual, as if for a wedding, in a tall silk hat, striped pants, and a long, double-breasted frock coat.
“Mr. Ponzi wishes to surrender,” Gallagher said, beaming. They sat around Duane’s office while a warrant was hastily drawn up charging Ponzi with using the mails in a scheme to defraud. With Ponzi putting himself at Gallagher’s disposal, it made no difference that the charge was almost comical. His only use of the mails had been to send letters to investors urging them to collect their money, which he’d gladly paid when they’d showed up. Gallagher glossed over that fact, focusing the clamoring reporters on Ponzi’s admission that he could not meet the debts Pride had counted. Gallagher even borrowed a phrase from turncoat publicity agent William McMasters, declaring that the financier who had gripped the nation was now “hopelessly insolvent.”
Ponzi waited quietly in Duane’s office for Coakley to summon a bail bondsman named Morris Rudnick, who dutifully put up the twenty-five thousand dollars in cash needed to secure Ponzi’s freedom.
Meanwhile, Attorney General Allen continued to collect names and stories from Ponzi note holders who seemed certain to reclaim only a fraction of their investments. They came from all walks of life, young and old, new arrivals and the deeply rooted. Some were on the verge of panic. Others took their expected losses philosophically. A printer from the North End had invested his life savings, four thousand dollars, in the hope of buying a house. “Wife and I were going to buy a real palace if Ponzi doubled my money,” he said. “Guess it’s a dog house now.”
Still others refused to give up. “You bet he’s all right,” said one man in a North End grocery store. “He could have gotten clean away with it if he’d wanted to. Would he have been fool enough to stick around if he’d been crooked?” Nearby, two children negotiating the sale of a rusty pocketknife spoke the language of Ponzi. “Give you 50 percent,” said one.
A reporter found Edwin Pride still sifting through Ponzi’s receipts. “Don’t you think Ponzi started out all right—with some sort of a coupon scheme?”
“Well, I don’t know,” Pride said. “Ponzi may have had, and may still have, the best intentions in the world. But I think he ‘played the game’ from the start.”
By the time Ponzi had entered his innocent plea, made bail, and emerged on the street, some of his vigor had returned. He began swinging his walking stick again, and as he promenaded through Post Office Square, scores of onlookers fell into step behind him. They did not cheer as they had in days past, but it was still one last parade for the biggest little man in town. Ponzi’s starched white shirt glowed bright against his dark tailored suit, and his shoes shone with high gloss as they clicked against the trolley tracks embedded in the cobblestoned street. Office workers rushed to see him. Soon every window in the square was filled with the faces of the curious and the furious. The procession passed in front of a horse-drawn carriage. Its driver surveyed the scene, peering out from under a hat tipped low on his forehead to block the sun. He kept his hands on the reins and a scowl on his face. A boy wearing knee britches, high socks, and a messenger’s cap ran alongside Ponzi’s group, smiling and calling out to the famous man. Ponzi shot the boy a crooked half grin. He still had his fans, and they still hoped he would prove the doubters wrong.
Ponzi darted into a car, but before he could get away two Boston police inspectors flashed their badges. They served him with a warrant from Attorney General Allen charging Ponzi with three counts of larceny. Once again, Allen had to settle for second place. Ponzi delayed his return home for another court appearance. He again pleaded innocent and posted an additional ten thousand dollars’ bond.
When Ponzi arrived at Lexington, he had little to say to reporters. “I am going to stay home tonight. I am not going away,” he said. “If I had planned to run away at any time I certainly would not have done what I did today.”
But Rose, who had shunned the limelight her husband had so craved, recognized that this was the moment she needed to speak for them both. Having never told Rose the true nature of his business, Ponzi could not have asked for a more loyal or trusting advocate. They stood together in the garden, her arm linked with his, a brave smile on her face.
“I love him more than ever,” she began. “My faith in my husband is as unshaken as it was before. Somehow, I am rather pleased with what happened today, for it gives me a chance to show the world and to give added evidence to my husband that I love him.”
“Of course he is innocent,” Rose continued. “He has been terribly persecuted. Allow him and he will be able to meet every obligation honorably. I suppose that not everybody has the faith in him that I have. That is because everybody does not know him as well as I. To meet my husband is to like him—at least. To know him well is to love him. I would not be able to enjoy life with ill-gotten riches. It is not in my makeup. Yet at the moment I feel almost perfectly contented for I am certain that my husband’s gains were honorably received. He is a big man who will face the danger of having his skin grafted on a woman he did not know, and serve a prison term to absolve a friend. My husband did both, and he is a bigger and more honorable man today than he ever was.”
Rose capped her speech by calling Ponzi her “ideal.” Hearing that, he pulled her close and kissed her. They went together into the house and closed the door.
Later that night on Washington Street, the lights were blazing inside the Post newsroom as the staff raced to make the deadline for the next morning’s paper. For nearly three weeks, Richard Grozier and his staff had pursued Ponzi. Now they were ready to beat their chests and yell to the heavens.
Cartoonist William Norman Ritchie began work on a new sketch showing “Ponzi’s Pot of Gold” smashed atop caricatured bank officials and Ponzi note holders, with a smiling Ponzi looking on from behind bars. That would be followed by a half-biblical, half-puritanical editorial from Richard Grozier urging readers to reflect on the satisfaction of earning one’s keep. The editorial proclaimed that “poverty is not the curse which many think it is, but the blessing which makes men strive to attain a higher standard of living.”
The most urgent work was the writing and editing of the lead news story for the next morning’s paper, printed under a triumphant banner headline:
PONZI ARRESTED; ADMITS NOW HE CANNOT PAY—$3,000,000 SHORT
By the time it went to press, the story was polished as brightly as Ponzi’s shoes. Eschewing the usual dividing line between news and opinion, the story heaped scorn on Ponzi and unleashed pent-up fury that previously would have been potentially libelous. “He was ignorant of business, knew little or nothing of banking, his knowledge of foreign exchange was ludicrous, his statements to newspapers and business men’s clubs were grotesque in their absurdity,” it sneered. “He painted halos around his head, but the facts have shown only sordid swindles.”
Yet even as it condemned Ponzi, fairness demanded that the Post concede he was something special. Grudgingly, the story acknowledged “his bubbling vivacity, his boundless imagination, his smooth and ready tongue, coupled with a remarkable and winning charm.” Finding a balance between the images of the debonair and the debased, the Post gave Ponzi a backhanded compliment for the ages: “Of all the get-rich-quick magnates that have operated, Ponzi is the king.”
The day the story appeared, bail bondsman Morris Rudnick got cold feet and withdrew the twenty-five thousand dollars he had put up to secure Ponzi’s freedom. At about four o’clock that afternoon, Ponzi returned to the federal building, a dour look on his face. At first, he hoped to quickly find a new bail bondsman, but soon he realized he would have to spend the night in jail. He called Rose in Lexington and told her he needed to stay overnight in Boston “on business.”
Ponzi exited the federal building flanked by federal marshals. With his captors at his side, Ponzi rushed past reporters and photographers and hopped into a taxicab waiting to take them to the East Cambridge Jail. When the cab pulled up to the jail, Ponzi leapt out and ran to the door to escape the photographers he had once courted.
“You didn’t get me, did you?” he called back to them as he rushed inside. “You didn’t get me.”
Soon his spirits flagged, and as he shuffled toward the jail’s receiving desk, a frightened look settled on his face. He looked up at a calendar on the wall and shuddered at the date: Friday the thirteenth. Like a deposed monarch stripped of his scepter, Ponzi surrendered his walking stick. In short order he was booked, bathed, and taken to a cell for a dinner brought from a nearby restaurant: breaded veal chops, fried potatoes, a pot of coffee, a bottle of ginger ale, and a cantaloupe. A jailer brought him a briar pipe and a pouch of tobacco, and he smoked as he read week-old newspapers in his cell before falling asleep.
Ponzi thought he would soon regain his freedom, at least on bail, but it was not to be. Attorney General Allen made it known that if Ponzi were freed again from federal custody, the state would immediately file more charges and ask a judge to set bail so high that no bondsman would bet that heavily on Ponzi.
So Ponzi spent the next three months holed up in the East Cambridge Jail, awaiting trial on the federal charges. Rose was crestfallen by his imprisonment but remained as loyal as ever. She was certain he would satisfy all his investors, beat the charges, and return to her. In the meantime, one of her sisters moved in to keep her and Ponzi’s mother company in the big house on Slocum Road.
As the weeks passed, federal and state indictments rained down upon Ponzi. He became the subject of what quickly shaped up as the biggest and most complex bankruptcy proceeding in Massachusetts history. Meanwhile, Pride expanded his work to include a search for hidden assets, but it was a mission doomed to fail. Ponzi had believed that the good times would keep rolling; he had not squirreled away so much as a dime.
In November, Ponzi faced trial in federal court on two lengthy indictments of using the mails to defraud the public. Federal prosecutors had located scores of people who had received Ponzi letters telling them their notes had matured—any use of the postal system in a fraud scheme was potentially a criminal act—so the two indictments contained eighty-six separate counts.
Before the trial began, lawyers Dan Coakley and Daniel McIsaac met with Ponzi and Rose at the jail. For two hours they talked about the best course of action. Time and again, Coakley and McIsaac urged Ponzi to plead guilty. They had spoken with their good friend Dan Gallagher and cut a deal. Ponzi would enter a guilty plea to one of the eighty-six counts against him, and all the rest would be placed permanently on file. He would receive a prison term of no more than five years, but likely would serve only twenty months with the rest waived for good behavior. Once he had served his federal sentence, Coakley said, the state would almost certainly leave him alone. Coakley had never heard of anyone being prosecuted on essentially the same facts in both the federal and the state court, so Ponzi and Rose would be free to begin life anew. The alternative, Coakley warned, was a high likelihood of a guilty verdict and more time behind bars.
Rose wanted to know if Coakley was making the recommendation because they had no money to pay legal fees. She knew that Coakley and McIsaac had already returned to the bankruptcy trustees the fifty thousand dollars Ponzi had paid them; they would be working for nothing. Coakley and McIsaac pledged to defend Ponzi, fee or no fee, if he decided not to plead. That convinced Rose.
“I think Mr. Coakley is right,” she said. But Ponzi would not hear of it. He insisted that he was innocent and wanted to fight to the end. He told Rose and the lawyers that he did not care if he was sentenced to thirty years—he would not plead guilty.
After three months of holding her chin up, Rose could take no more. She gasped, then fainted. When she was revived, tears washed her rounded cheeks. The lawyers left them alone to talk.
“What difference does it make what the world thinks, as long as I know you’re innocent?” Rose pleaded. “When you come out we’ll start life over again.”
Still Ponzi resisted. He worried that she might think he truly had been guilty if he entered such a plea, and he abhorred the thought of being separated from her. “I might as well be dead as away from you for five years,” he told her.
But what if something went wrong, Rose wanted to know, and he was away for twenty years?
They went around and around, neither giving ground, until Ponzi finally said he would spend the night thinking and, uncharacteristically, praying about it.
The next morning, when Rose and the lawyers returned to the jail, Ponzi told them his decision: no plea. Rose shrieked and fell to the ground. Looking up at her husband, she begged him once more to take her feelings into consideration.
When they filed into the fourth-floor federal courtroom on November 30, 1920, reporters noticed that Ponzi appeared to be the same dapper gent they had spent the summer chasing all over town. He wore a brown, double-breasted suit with a dark blue silk handkerchief peeking from the pocket. But something seemed different about him. Then it struck them: He seemed nervous, unsure of himself. Rose, dressed for mourning in a black dress, a black hat, and a gray squirrel wrap, sat in the front row of spectators, sobbing.
Clerk Arthur Brown read the charges against Ponzi and reminded him that he had originally pleaded not guilty. Asked if he now wanted to change that plea, Ponzi remained silent. Standing behind him, Coakley whispered, “Yes.” The clerk persisted, asking Ponzi if he wanted to plead guilty or not guilty. Again Coakley prompted him, “Guilty.”
Ponzi seemed startled. But in a timorous voice, he said the word: “Guilty.”
Coakley dug deep into his rhetorical tool kit and made a plea for leniency. “It is very hard for him to stand in this court and admit it,” the lawyer began. “So he has asked me to present certain considerations to your honor. He had seven million dollars in banks that he could have got in half an hour. He had a passport for Italy and he could have taken a boat along with his seven million dollars. So, he said to me: ‘Would I, if I had any intent to defraud, and if I did not intend to pay my creditors, have acted as I did? Would I go to the United States district attorney and ask him to put an auditor on my books and also offer not to take any more money?’ He did that and he paid out the seven million dollars.”
“The auditor says that he is insolvent. It appears that because of poor investments and paying out millions to his creditors, the entire amount Ponzi gained was about twenty-five thousand dollars, or ordinary living expenses.”
Judge Clarence Hale interrupted: “Is there anything you can say that the court can conclude this was not a wild scheme?”
“I don’t believe the defendant considers it a wild scheme,” Coakley answered. “Ponzi absolutely believed that if he was not arrested that he would have paid dollar for dollar and be a millionaire standing here now. . . . He is not a malicious criminal. He is not a criminal of the stamp of 520 Percent Miller. . . . He paid out and today he has not got a dollar and his wife has not a dollar. You must not consider this case as that of a man who got seven million dollars and spent the money in riotous living.”
When Gallagher’s turn came, the prosecutor came down hard.
“He is a strange mixture of childishness and duplicity,” he declared before demanding a lengthy prison term. “He committed the government to the scheme which he must have known was fraudulent. The postal department regards this as the most flagrant case of its kind. Ponzi made the government an acquiescent observer of his scheme. And in view of the fact of the postal department, and widespread losses, I ask you to impose the maximum jail sentence.”
Judge Hale considered the opposing lawyers’ arguments and made a pronouncement of his own: “The court is impressed with much that Mr. Coakley has said. But the court has a great duty to perform to the public as well as to the person immediately before it. . . . Here was a man with all the duties of seeking large money. He concocted a scheme which, on his counsel’s admission, did defraud men and women. It will not do to have the world understand that such a scheme as that can be carried out through the United States’ instrumentality, without receiving substantial punishment.”
With that, Hale agreed with Gallagher and sentenced Ponzi to five years in prison. Rose fainted when she heard it, even though that was what Coakley had told her to expect. She was quickly revived, then fainted again. The judge’s one concession was to order Ponzi to serve the sentence in the Plymouth County Jail, near enough for him to assist in the bankruptcy proceedings and for his family to visit.
Rose cried softly. For what seemed like the first time in his life, Ponzi was silent. He sat deflated, shrunken, a little emperor without a shred of clothing. Before a marshal led Ponzi away, he scribbled a note on a legal pad. Reaching over the rail separating him from the crowd of spectators, he passed it to the clutch of reporters in the front row.
It read, “Sic transit gloria mundi.” The scholars in the press corps duly translated: “Thus passes worldly glory.”