Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [84]
Then Ponzi sprang an ingenious trap, a risky but potentially viable way for him to begin his transition out of the postal coupon business for good.
“Mr. District Attorney,” Ponzi said, “it occurs to me just now that it might be an impossible task for an auditor to determine my liabilities, if I should continue to issue notes every day throughout the investigation.”
“I guess it would be, at that,” Pelletier agreed, taking the bait. “Couldn’t you stop issuing those notes?”
“I could,” Ponzi said, as though the thought had never occurred to him. “But I haven’t had the time to consider whether it would be expedient for me to do so. However, the suggestion has an appealing feature. Because it offers me the opportunity to spike certain insinuations which are being made by the press, I will do it.”
“You will stop issuing notes?” Pelletier asked. “When?”
“Right now,” Ponzi said. “May I use your phone?”
Ponzi called his School Street office, and Lucy Meli answered. He told her to post signs inside and outside their office announcing that, effective immediately, the Securities Exchange Company would take no new deposits but would continue redeeming matured notes with the promised 50 percent interest. Worried investors who did not want to wait for their notes to come due could receive refunds of their initial investments, without interest. Ponzi instructed her to wire or phone the same instructions to all their agents and subagents.
From the courthouse Ponzi and McMasters took the short walk to 85 Devonshire Street, the offices of the United States district attorney. They spent the next two hours in Gallagher’s ninth-floor office with the federal prosecutor and two postal inspectors who had been making regular visits to Ponzi’s office. The conversation was largely a repeat of the meeting with Pelletier, and Gallagher agreed to consider Ponzi’s offer to abide by the findings of a single auditor selected by investigators.
At one point, Gallagher asked why Ponzi had continued to invite the public to invest with him when he had already amassed a personal fortune.
“I don’t need the money, but eventually I will need the people,” Ponzi said.
Gallagher asked why and Ponzi said, “I don’t know. It is possible I may want to run for office.” Surprised, Gallagher asked Ponzi if he was a citizen. “Almost,” Ponzi replied, when in fact he had never taken out naturalization papers, knowing that his past prison terms might well disqualify him.
Ponzi also spun for the federal prosecutor a tale of his plans for a profit-sharing banking system and hinted at his shipping company idea. He told Gallagher that he intended to make Boston the largest import and export center in the country. Ponzi mentioned casually that he anticipated profits of $100 million, though he added magnanimously that he intended to keep only $1 million for himself and to spend the rest on philanthropy.
Next they headed toward the State House to see Attorney General Allen, but on the way Ponzi wanted to look in on what was happening at 27 School Street. Word was just getting out that Ponzi would accept no new deposits. Scores of nervous investors had begun lining up to cash in their notes well before their maturity dates. Ponzi knew the storm of withdrawals would intensify by the next morning, after news of his stoppage was spread by reporters and by a notice he’d agreed to place on the front page of the Post. As a precaution, Ponzi called the Pinkertons to provide added crowd control.
The meeting with the attorney general and his staff took nearly three hours, with no resolution. He was not under oath, so Ponzi tossed out a welter of confusing, exaggerated figures and claims, from how he operated his business to which banks he used to move money in and out of the country, all of which a stenographer duly recorded. Through it all, J. Weston Allen remained uninterested in the auditing deal that Ponzi had