Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [109]
While Ponzi closeted himself away, investigators held a flurry of meetings in the offices of Dan Gallagher. The federal prosecutor had so trumped his state counterpart, Attorney General Allen, that the Post flatly stated that Governor Coolidge “is far from satisfied with the way in which Mr. Allen has been conducting the case.” Allen’s embarrassment increased in the afternoon when he had to traipse to Gallagher’s office to deliver the transcripts of his meetings with Ponzi.
In the meantime, Ponzi’s rival and imitator, the Old Colony Foreign Exchange Company, quietly capitalized on the attention being paid to Ponzi. Without fanfare, and without drawing attention from investigators, Old Colony continued to accept deposits from investors who otherwise would have preferred to deal with Ponzi.
Ponzi’s private recess upstairs from the bank gave him a chance to reflect on his situation. He wanted desperately to launch his new company, but the more he thought about it the more he realized that it would be impossible until he proved to the world, and particularly to his investigators, that he could satisfy all the liabilities of the Securities Exchange Company. If he immediately began collecting investments in the Charles Ponzi Company, he would fuel suspicions that he was robbing Peter to pay Paul, and then the investigations would only intensify. Also, his resuming business, regardless of whether he operated under the banner of a new company, might trigger a confrontation with the authorities and prompt them to shut him down immediately.
Ponzi realized that he needed to begin his new, relatively more conservative venture with a clean slate. And that meant holding off until he’d answered Pride’s audit with dollar-for-dollar evidence of his solvency. The question remained: How to accomplish that? Two weeks of investors collecting their principal before maturity had certainly lowered his liabilities, and regaining control of the money frozen by Daniels’s attachment had helped as well. But the simple fact remained that his business plan, by design, guaranteed that he would be in the red. Without new investors in either his old or new companies, Ponzi was down to two choices: a fast and highly unlikely sale to the New York financiers, or a raid on the vaults of Hanover Trust.
During the seven hours Ponzi spent alone working out his options, a rumor took hold that he had fled. The story gained momentum when he skipped a two o’clock meeting he had promised to reporters who needed interviews for the Sunday papers. As the dinner hour approached, Ponzi heard his name being yelled by newsboys. “Ponzi is missing!” they cried, repeating the afternoon headlines. Amused, Ponzi wandered downstairs to read for himself about his disappearance. As he stood on the corner of Washington and Water Streets, word spread that the wizard had miraculously reappeared. Swarms of people rushed to see him, and soon more than two hundred surrounded him, pressing him backward against the building. Ponzi spent a few minutes greeting and shaking hands with his relieved fans before ducking into a nearby doorway. He might as well have chosen a lion’s den. Ponzi had taken refuge in the Boston Post building.
He had already broken his vow never to speak with a Post reporter, so why not climb the stairs to the second floor and have a look around? Soon enough he was up to his usual patter, trying to charm the entire newsroom. For a half hour he held court among the paper-strewn desks in the city room, a crowded, messy, poorly ventilated space with the ambience and dimensions of a bowling alley. Then he got down to business.
“Why are you doing this to me?” Ponzi demanded of Eddie Dunn. “Why are you hounding me? Why do you print such lies about me?”
Dunn responded softly. “I’m ‘hounding’ you, as you call it, because I don’t think you’re honest.”
“I’m not a crook,” Ponzi shot back. “I have met all my obligations. My investors have made