Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [70]
In the meantime, Ponzi took the precaution of opening bank accounts in other people’s names, to keep them out of reach of Daniels or anyone else. Sometimes the names were fictitious, such as his Lucy Martelli account at Hanover Trust, a name created by combining Lucy Meli’s first name with her mother’s maiden surname. As a further precaution before Daniels’s attachment took effect, Ponzi emptied his account at the Cosmopolitan Trust Company, taking home $283,710.62. He could rebuild the account later; at the moment, he wanted piles of cash on hand.
Ponzi knew the Post story would prompt some depositors to demand refunds out of fear that the lawsuit would destroy the Securities Exchange Company and swallow their investments with it. Indeed, the story ignited a two-day “run,” as several thousand nervous investors asked for their original deposits back, forfeiting the 50 percent interest. Ponzi gladly obliged; the result was addition by subtraction. Each refund demonstrated that he was a man of his word, prompting even more investors in the days that followed. By mid-July, Ponzi was taking in more than a million dollars in new investments a week. Each day was better than the one before.
The story about Daniels’s suit piqued the interest of Richard Grozier. He was especially troubled when he learned that Ponzi’s investors included scores of Post employees, most notably the low-wage workers in the pressroom. On one of his regular tours through the building, Grozier stopped at the desk of his city editor, Edward J. Dunn, whose soft features and sun-deprived skin masked the steel spine of a no-nonsense newsman. A Boston native, Dunn had joined the Post eighteen years earlier, in 1902, and had served as a City Hall and State House reporter, a war correspondent, and a political editor before being named city editor in 1917.
Just as Richard Grozier had abruptly taken over for his stricken father, the forty-year-old Dunn was newly in control of the day-to-day news operations, having stepped in during the summertime absence of managing editor Clifton Carberry. Grozier told Dunn he was intrigued by the story of the lawsuit against this Ponzi fellow. How could anyone promise 50 percent profits in forty-five days? If Grozier was correct in his doubts, Post readers and employees were headed for a painful fall. He instructed Dunn to deploy a couple of reporters to look more closely at Ponzi.
Grozier and Dunn both knew they needed to be careful. Four months earlier, when Edwin Grozier had bet the paper against Curley, he had done so with confidence, knowing that no proof existed showing he had sold out the cause of Irish independence. Now, with Edwin Grozier still hospitalized and unable to speak, his son, the untested young acting publisher, was taking a far greater risk. Richard Grozier had just told his city editor to investigate a private businessman, one with seemingly limitless resources and a thriving company to protect. If the paper damaged his reputation with unsupported charges, Ponzi might replace the Grozier family as owner of the Boston Post.
Recognizing the danger, Grozier had one more message for Dunn: Don’t worry about the consequences. I’ll take full responsibility if anything goes wrong.
Daniels’s lawsuit made Ponzi realize he could wait no longer to transform the Securities Exchange Company into a legitimately profitable business. He was supremely confident he could do just that, having spent untold hours hatching moneymaking ideas. Now he had the distinct advantage of wheelbarrowloads of cash lined up behind him, and one thing Ponzi believed above all else was that money made money.
One approach might have been to sell