Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [113]
Allen’s authority was on the line. He dictated a written order to Hanover Trust insisting that no more Ponzi checks be honored and implying that McNary and the bank’s other officers would be held liable for any losses if there were. The order reached Washington Street at two forty-five in the afternoon; this time McNary and bank president Henry Chmielinski complied.
Within minutes of Allen’s initial call to Hanover Trust, he had launched the second half of his carefully choreographed attack. Three Ponzi depositors, with combined investments of a mere $750, appeared in court to file an involuntary petition seeking to declare Ponzi bankrupt. Allen denied having orchestrated the bankruptcy filing, but his involvement was unmistakable. Under normal circumstances, Ponzi could laugh at such a petition and quickly pay off the investors. But filed in concert with the bank commissioner’s declaration that Ponzi’s account was overdrawn, it carried heavy symbolic weight, just as Allen certainly knew it would when he walked into the State House press office to hand a statement to reporters.
“I have directed the Hanover Trust Company not to pay any more checks of Charles Ponzi, the Securities Exchange Company, or any of his agencies, as the account of Lucy Martelli, trustee, against which these checks are charged, is now overdrawn,” it read. “As commissioner of banks I have no supervision over the affairs of Charles Ponzi or the Securities Exchange Company. The moment I learn, however, that he is overdrawing his account in a trust company, which is under my supervision, it is my duty to interfere.”
The reporters instantly understood: Bank Commissioner Joseph Allen, who neither sought nor liked publicity, had acted decisively while federal, state, and local prosecutors—Daniel Gallagher, J. Weston Allen, and Joseph Pelletier—had spent weeks battling one another and keeping a weather eye on public opinion. Even more than the others, Attorney General Allen, already subject to ridicule and second-guessing over his handling of the case, realized he was watching his political future vanish before his eyes.
Hoping to steal back some thunder, the attorney general immediately issued a statement built on the meager findings of the New York trip taken by his assistant Albert Hurwitz. Hurwitz had gone searching for banks Ponzi used to transfer money to and from Europe. He had learned that the banks that fit the description Ponzi had given had done only token business with him, nothing on the scale that Ponzi had claimed. Hurwitz believed he had cracked the case, though in reality it was small potatoes. Ponzi had not been under oath when he had met with Attorney General Allen, and he’d had no obligation to detail his business methods or his banking relationships. Hurwitz’s discovery that Ponzi had apparently misled the attorney general was a slender thread on which to hang a charge of larceny by false pretenses. Ponzi could easily say he had misspoken, set the record straight, and move on. But in his moment of political desperation, the attorney general believed he had something to crow about.
What Attorney General Allen’s statement lacked in substance it made up for in length, detailing Hurwitz’s work and its tenuous findings. Its strongest line demonstrated its flaws: “Although Mr. Ponzi claims that his dealings in International Reply Coupons have been conducted upon a very large scale, aggregating millions of dollars, the investigation has disclosed nothing to confirm his statement.” Allen