Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [128]
The banks where Ponzi did business came under closer scrutiny than ever. In late September, the Cosmopolitan Trust Company followed Hanover Trust into failure. Bank Commissioner Joseph Allen had begun focusing on Cosmopolitan when its panicked depositors had made heavy withdrawals in the wake of Hanover Trust’s collapse. When he looked closely, Allen found that Cosmopolitan president Max Mitchell and his cohorts were so reckless with depositors’ money that they would have embarrassed even Ponzi. Oddly enough, just a week before Allen seized the bank, Mitchell had publicly hailed the bank commissioner for his “fairness, skill and courage.” The Fidelity Trust Company failed three days after Cosmopolitan, in part because of unsound practices but largely because of a run of withdrawals by nervous depositors. Simon Swig’s Tremont Trust also suffered a run. Several months later it failed, too. Swig, Mitchell, and Henry Chmielinski, president of Hanover Trust, not only lost their banks; all three ended up in bankruptcy court.
Joseph Allen remained bank commissioner until 1925, seeing Massachusetts through the worst banking crisis in decades. He left the state’s financial institutions on solid, solvent footing and took a job as vice president of the American Trust Company. He returned to Springfield and resumed the quiet life he craved. Calvin Coolidge, who by then had ascended to the presidency, remarked that of all the appointments he’d made as Massachusetts governor, his choice of Allen made him the most proud.
Ponzi and his former publicity agent, William McMasters, continued their feud in court. Despite the money he was paid for the Post exposé, McMasters sued Ponzi for $4,067.50 he claimed he was still owed for his publicity work. Outraged, Ponzi pressed forward from jail with his lawsuit seeking return of fourteen hundred dollars he had paid McMasters for ads that were never placed. Ponzi gained a small measure of satisfaction when he won both suits. McMasters went on to a career writing fiction, including novels and plays, one of which, The Undercurrent, played on Broadway in 1925. He ran unsuccessfully for governor in 1936, and taught journalism at Mount Ida College in Newton, Massachusetts, before his death in 1968.
Clarence Barron continued to revel in his role as a living legend of financial journalism, though the years after his clash with Ponzi were marked by a losing battle with his already expansive girth. He became a regular visitor to the celebrity weight-loss clinic at the Battle Creek Sanitarium in Michigan, where he died, at age seventy-three, in 1928. His death deprived him of covering the biggest financial news story of the century, the stock market crash of 1929.
One year after Ponzi’s arrest, his lawyer Dan Coakley and Suffolk County District Attorney Joseph Pelletier faced the music for their long-running sexual extortion scheme. Both were disbarred along with a third member of their ring, Middlesex County District Attorney Nathan Tufts. Pelletier died soon after in what was widely believed to be a suicide triggered by his humiliation. Federal prosecutor Daniel Gallagher, whose closeness to Pelletier tarred him by association, faded from public view.
Meanwhile, although disbarred, the irrepressible Coakley successfully defended himself against criminal charges related to the extortion scheme. He ran unsuccessfully for mayor of Boston, but bounced back to win election to the Executive Council, which confirmed gubernatorial appointments and performed other vague duties. That cushy job ended in 1941 when Coakley was removed from office