Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [74]
The two Allens were unrelated. The attorney general had a classic Boston pedigree that the bank commissioner lacked. J. Weston Allen was descended from two Mayflower passengers, was the son of a former editor of the Boston Advertiser, and held degrees from Yale University and Harvard Law School. For more than a decade he had headed a prominent Boston law firm; then he’d served two terms in the Massachusetts legislature before becoming attorney general. He considered the job a stepping-stone to the governor’s office and perhaps beyond. At forty-eight he was grim-faced and balding, with a wary eye toward anyone stepping onto his political or prosecutorial turf. He answered the bank commissioner’s inquiry about Ponzi with a curt reply: Keep out.
Joseph Allen backed off, but only briefly. On July 15, Hanover Trust officials reported, as required, that they had completed their sale of new stock. Checking around, Joseph Allen learned that most of the new shares had gone to Ponzi, and that was unquestionably within his realm. He called the attorney general’s office a second time, this time not to ask permission but, as a courtesy, to announce his plans to investigate Charles Ponzi, his Securities Exchange Company, and his ties to Hanover Trust. The two Allens agreed that the attorney general’s office should remain involved, and J. Weston Allen assigned two assistant attorneys general, Albert Hurwitz and Edwin Abbott Jr., to work with the bank commissioner. Their first step was to meet Ponzi.
An invitation was sent to 27 School Street asking Ponzi to attend a meeting at the State House with Bank Commissioner Joseph Allen, the two assistant attorneys general, and a vice president of a Boston bank brought in as an expert on foreign exchange and currency transactions. Ponzi knew that Allen could not compel him to attend, but his pride got the better of him. “I couldn’t very well stay away and let him think that I was afraid,” he said later. “After all, his questions were not apt to embarrass me. What he didn’t know about coupons and foreign exchange would have filled a good-sized library.”
Ponzi walked into Allen’s well-appointed State House office, exchanged cordial greetings, and was thoroughly unimpressed. He thought the bank commissioner underestimated him, viewing him the way “a cannibal greets a missionary.” Ponzi imagined Allen smacking his lips in anticipation of serving him on a platter to Boston’s established financial and political powers.
Ponzi sat down and calmly gave his standard speech about International Reply Coupons. He wheedled the foreign exchange expert into endorsing the feasibility of exploiting fluctuating exchange rates with fixed-price coupons. The only questions Ponzi declined to discuss were the identities of his foreign agents and the countries where they bought and exchanged coupons. “I was almost ashamed to match wits with them,” he said later. “It was like stealing candy from a baby. But they were the challengers. And I couldn’t very well let them get away with their lollypops.”
Hurwitz, the assistant attorney general, found himself enjoying Ponzi’s company. Like Ponzi, Hurwitz was an immigrant and an outsider, a Russian Jew who had arrived in the United States in 1892, when he was eight years old. Not much taller than Ponzi, with a long face, prominent nose and jaw, and deep-set eyes, he had years earlier made a brief foray into Boston’s Brahmin- and Irish-dominated world of politics. In 1905, he’d run for the Common Council when he was a twenty-one-year-old law student at Boston University. He had run as a Republican and been thoroughly trounced.
Sitting in the bank commissioner’s office, Hurwitz respected the confidence and ease with which Ponzi carried himself, the touches of humor in his answers. He took note of Ponzi’s impeccable fashion sense, admiring his custom-tailored suit, the sparkling jeweled pin in his tie, and the soft gray spats on his glossy shoes.