Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [86]
Hanover Trust was on the corner of Washington and Water Streets. Gallagher’s office was only a half block away, at the corner of Devonshire and Water. Ponzi would press for the showdown with the auditor to take place at Gallagher’s office, a reasonable expectation, considering that the federal prosecutor outranked Pelletier and the attorney general had not even signed on to the idea of a winner-take-all audit. When the auditor was ready to disclose the total of Ponzi’s liabilities, Ponzi would gather all his bank books and other assets. But he would not go directly from 27 School Street to Gallagher’s office at 85 Devonshire. He would stop on the way at Hanover Trust and make a highly unauthorized withdrawal of enough cash and securities to cover any shortfall. Ponzi expected the showdown to last only an hour, after which he would casually drop by Hanover Trust once again to redeposit his borrowed assets.
“The investigation would have ended right there and then. The authorities would have to certify as to my solvency,” Ponzi figured. He would go into a new business with an official stamp of approval. “All considered,” he thought, “I was far from licked yet.”
When Ponzi arrived at 27 School Street, the adoring crowd he’d found a day earlier had been replaced by a larger, edgier horde, their bodies drenched in sweat, their eyes alive with dread and anger. Some carried the morning Post, its lead headline triumphantly predicting Ponzi’s demise and feeding investors’ fears: PONZI CLOSES; NOT LIKELY TO RESUME.
The story knocked into also-ran status the latest news of the America’s Cup races and a report that Pancho Villa was holding an American businessman for ransom. Below the story about Ponzi’s agreement to suspend business was the front-page announcement he had promised to buy:
PUBLIC NOTICE
I have made a personal agreement with District Attorney Pelletier to cease receiving funds from the public for investment with the SECURITIES EXCHANGE CO. 27 School St. Boston and all branches, until after an official audit is made to determine my solvency and satisfy him that my methods of financial operation are thoroughly legitimate. Meantime, I shall pay all maturing obligations as fast as presented. Further, during the auditing of the books any persons holding unmatured notes can receive back their original investment, without interest, if they desire. Signed, Charles Ponzi
Hundreds of people had assembled well before the opening hour of eight o’clock. When Ponzi arrived he could see there were no police officers in sight, the first time in weeks School Street had not enjoyed ample protection. Enraged, Ponzi suspected that the officials investigating him were hoping for a melee they could use as a pretext to shut him down for good. In the absence of the police, even the strong-armed Pinkertons seemed helpless to prevent the crowd from becoming a mob. Temperatures were climbing only toward the mid-seventies, but the crush of bodies made School Street the hottest block in Boston.
Ponzi stayed only a short time at his offices, relying on Lucy Meli and a corps of perhaps two dozen clerks and agents to issue the refunds. His workers had nothing better to do now that Ponzi had suspended taking new investments. Ponzi went around the corner to the Hanover Trust Company, holing up again in Chmielinski’s office and plotting his next moves.
He called Eddie Dunn, city editor of the Post, to complain about the “Not Likely to Resume” portion of that morning’s front-page headline. Neither Ponzi nor the prosecutors had said any such thing. It appeared that the Post was