Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [13]
As the promised interest came due, Zarossi needed to find ways to make the relatively exorbitant payments. If he paid his depositors 6 percent through traditional means, he would soon be bankrupt. An alternative, albeit illegal, was staring him in the face: the money immigrant workers sent to their families via the bank. Zarossi began dipping into those funds, knowing it would be weeks or months before word got back to Montreal that the money had never arrived. He would buy more time by claiming he had sent the money and the fault rested with the mails or whoever received the money in Italy. If a depositor raised a stink, the bank would send money from its fresh deposits. Zarossi figured the cycle of finger-pointing and late payments could keep the scheme afloat long enough for him to come up with another way to pay. If that failed, he would have enough time to gather his profits and his family, and flee.
But events moved more quickly than Zarossi had anticipated. Depositors wanted their interest, immigrants demanded to know what had become of the money they’d sent home, and authorities began investigating the bank for embezzlement. In mid-1908, less than a year after Ponzi came to work for him, Zarossi packed a bag full of cash and fled alone to Mexico City. In the aftermath, one employee killed himself, and another, Antonio Salviati, disappeared when authorities accused him of stealing $944.85 from a customer named Francesco Charpaleggio, who had come to the bank to send money to his family in Italy. The suicide and Salviati’s disappearance raised suspicions that the fraud went deeper than Zarossi. Eventually the bank collapsed, costing depositors even more. It was unclear how much Ponzi knew, but as bank manager he made a clear target for investigators.
Yet unlike Salviati, who ran, Ponzi stayed put in Montreal. For several months, though jobless, he watched over Zarossi’s family, which included not just Angelina but three other daughters and Zarossi’s wife. But by August 1908, Ponzi grew tired of domestic life and feared that he might face arrest, deportation, or both. It was time to hit the road. As usual, though, he had spent whatever money he had earned. The twenty-six-year-old Ponzi made a decision he would long regret.
On Saturday morning, August 29, 1908, he went to the offices of a shipping firm called the Canadian Warehousing Company, a client of Banco Zarossi. Ponzi had been there many times before to collect receipts and to handle other business matters. He raised no suspicions when he walked into the empty office of the manager, Damien Fournier. While no one was looking, Ponzi went to Fournier’s desk and found a checkbook from another bank where the company had an account, the French-owned Bank of Hochelaga. Ponzi tore a blank check from the back of the checkbook and left as quickly as he had come.
That afternoon, Ponzi filled out the check in the legitimate-seeming amount of $423.58. He signed it “D. Fournier” and presented it at a branch of the Bank of Hochelaga. He asked the teller for four one-hundred-dollar bills in American currency, but the teller told him that would not be possible. Agitated, Ponzi accepted forty-two ten-dollar bills, three singles, and the rest in coins. Cash in hand, Ponzi left the bank and began outfitting himself for his return to the United States. He went from store to store, buying two suits, an overcoat, a pair of boots, and a watch and chain. He completed the spree with thirty-two dollars’ worth of shirts, collars, cuffs, ties, and suspenders from a men’s clothing store called R. J. Tooke.
Before Ponzi could leave town, officials at the Bank of Hochelaga began having serious doubts about