Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [85]
When Ponzi left the State House, a clutch of reporters was waiting for him. No longer would the Post be alone on the Ponzi story; competition had arrived en masse. Official action had been taken, and now Ponzi and the Securities Exchange Company were fair game. Not only were reporters from several other Boston papers there, the news had also attracted stringers for out-of-town papers, including the New York Times. But if the reporters expected their prey to be frightened or flummoxed by his ordeal, they found the opposite. He merrily waved a slip of paper showing his $1.5 million certificate of deposit in the Hanover Trust Company and airily promised that he had more than enough money to meet all obligations.
“He was the same Ponzi of the day before,” one reporter marveled, “just as debonair, just as dapper, just as smiling.” When the reporters shouted questions to Ponzi, McMasters dragged him away.
“I can’t say anything now—I’m hungry,” Ponzi called breezily over his shoulder.
Ponzi poses for a newspaper photographer in his School Street office in August 1920.
Boston Public Library, Print Department
CHAPTER THIRTEEN
“MASTER OF THE SITUATION”
The next morning, Tuesday, July 27, Ponzi spent the half-hour ride from Lexington to Boston assessing his situation and refining a daring survival plan he had hatched the night before.
Ponzi was certain that his move to suspend deposits and agree to an audit kept him in the driver’s seat, “master of the situation,” as he put it. Gallagher and Pelletier seemed willing to wait patiently for the results of the audit while congratulating themselves publicly on pressuring Ponzi to suspend his business. Of course, what they did not realize was that Ponzi welcomed the chance to stop taking investments, as each new dollar he accepted put him deeper into debt. Conversely, his debt fell with each early withdrawal: “Every time I refunded the principal,” he gloated privately, “I would save the 50 percent interest.”
Allen, the attorney general, was a bit of a rogue elephant, but Ponzi was not terribly worried. “He wasn’t likely to make any trouble because, with two district attorneys on my side, he didn’t have a chance either with the courts or the public.” If the attorney general sought information or tried to demand an audit of his own, Ponzi could simply tell him to speak with the local and federal prosecutors. Ponzi gave no thought to the bank commissioner, believing that he had already allayed Joseph Allen’s concerns.
The biggest problem on his mind was what to do when an independent auditor tallied his liabilities and he needed to prove he had enough assets to cover them. At the moment he was well short—Ponzi was dependent on new investors to pay old. When the music stopped, there would be no chair on which to sit.
Ponzi did some rough calculations. He had issued promissory notes for about $15 million. He was not quite sure, but he believed he had about $8 million at his disposal, which meant he was $7 million short. But that was not the whole story. He anticipated massive withdrawals in the coming days by frightened note holders, and he optimistically predicted that those withdrawals would wipe out as much as $4 million of liabilities. Better, but still $3 million in the red.
It was a high-stakes poker match, with millions more at stake than the card games he’d consistently lost during his college years in Rome and aboard the ship that had carried him to America. He was sunk, he reasoned, “unless I happened to have a couple of wild deuces up my sleeve.” Irrepressible as always, Ponzi believed he did. The only thing was, he would have to rob a bank to get them.
Ponzi’s wild cards were in the vaults of the Hanover Trust Company. He estimated that the bank had at least $5 million in negotiable securities plus significant reserves of cash. As a major stockholder and the bank’s single biggest depositor, he believed he