Ponzi's Scheme (29 page)

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:

P
ONZI
A
RRESTED;
A
DMITS
N
OW
H
E
C
ANNOT
P
AY
—$3,000,000 S
HORT

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.”

T
he 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.”