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By Root 498 0

Securities Exchange Company. It was more money than Ponzi would have seen in almost a decade of working for J. R. Poole. Ponzi made his uncle John S. Dondero an agent, paying him 10 percent of whatever he brought in. He assigned John A. Dondero to manage the office when he was out and to greet customers when he was in. John A. Dondero was paid thirty-five dollars a week, double what he was earning at the Faneuil Hall markets, plus 5 to 10 percent of investments made when he was working the door.

Things were going so well that Ponzi began to worry that something might go wrong. He began paying off old debts whenever possible, including the two-hundred-dollar loan the furniture dealer Joseph Daniels had given him the previous December. To further satisfy Daniels, in March Ponzi bought more office furniture for his growing business.

Yet Ponzi still had some outstanding debts, and he feared his creditors might try to horn in on his business. He was especially afraid that the Fidelity Trust Company might file an attachment against him that would freeze his bank accounts and other assets. To shield himself, on March 12 Ponzi filed new papers at City Hall declaring that he was the manager of the Securities Exchange Company, in partnership with his uncle John S. Dondero and a second man, Guglielmo Bertollotti of Parma, Italy. Neither Dondero nor Bertollotti knew anything about the supposed partnership. Ponzi chose Dondero for his early confidence and family ties. Bertollotti had been Ponzi’s landlord at one time in Italy. Bertollotti was at least seventy when Ponzi last saw him, so Ponzi figured he must be long dead, which made him an ideal silent partner. Ponzi’s fears were well-founded. Three days after he filed his new corporation papers, Fidelity Trust brought a lawsuit against him seeking repayment of his debts.

Ponzi took other precautions as well. One afternoon he walked a few blocks from his office and trotted up the granite stairs of Boston police headquarters in Pemberton Square. He stopped outside the office of Commissioner Edwin Curtis.

“Does anyone accept funds for the relief of the widows and orphans of the members of the police force?” Ponzi asked Captain Thomas Ryan, the commissioner’s aide.

“There is a Boston Police Relief Association,” Ryan answered, “and that association has a fund and frequently accepts contributions for the benefit of the heirs of its members.”

“Well,” said Ponzi, “you have an excellent police force in Boston, and there are some fine men among them. I desire to make a small contribution to the fund for their relief.” He placed $250 in crisp new banknotes on the counter, alongside his card. “This is my contribution—for the present.”

Ponzi’s comment about the “fine men” of the Boston police was grounded in firsthand knowledge. Inspectors from the detective bureau had been dropping by 27 School Street ever since Frank Pope, the state’s supervisor of small loans, had urged the police to keep a lookout. Mostly, though, they kept watch on their own investments. Two detectives sent to talk to Ponzi about his operation had been so impressed that they’d pulled out their wallets and invested on the spot. In time, five Boston police inspectors and a lieutenant would hold certificates of the Securities Exchange Company, along with hundreds of rank-and-file officers. Several policemen even worked for Ponzi as agents, collecting the usual 10 percent and, even better as far as Ponzi was concerned, lending his enterprise the respectability of their badges.

Yet the more successful he became, the more perilous Ponzi’s life grew. Each dollar he accepted put him deeper into debt. Unless he could figure out a way to carry out his idea on a large scale, or come up with some other way to pay 50 percent interest on short-term investments, he would drown in red ink. He shared his concerns with no one, outwardly maintaining his chipper appearance. If anything, his apparent success seemed to exaggerate his savoir faire. But inwardly the pressure was beginning to take a toll. His guts were churning. Acid was drilling