For a few brief months during 1920, Charles Ponzi dazzled investors in Boston with an investment scheme that promised unheard-of returns. No one, of course, realized that all he was doing was simply paying old investors money derived from new investors. Instead of actually putting the cash to work, investors were unwittingly getting their own money returned to them.
Yet Ponzi neither invented this type of fraud—which has been described as robbing Peter to pay Paul—nor was he its most successful purveyor.
There was, for example, Leo Koretz, a lawyer in Chicago who, during a span from 1908 to 1923, ran a Ponzi scheme that robbed as much as $20 million from investors. As Dean Jobb remarks in Empire of Deception: From Chicago to Nova Scotia—The Incredible Story of a Master Swindler Who Seduced a City and Captivated the Nation, “Leo, the Bernie Madoff of the Roaring Twenties, operated his swindle for far longer and with more panache” than Ponzi...
Bruce Livesey is a Toronto-based investigative journalist and author of Thieves of Bay Street: How Banks, Brokerages and the Wealthy Steal Billions a Year from Canadians, published by Random House in 2012.
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