Hanover Trust Company (Boston, MA)

Episode Information

Episode UID
5016171448
Episode Type
Run β†’ Suspension β†’ Closure
Bank Type
trust
Bank ID
501617 routing
Routing Number
5-0161
Start Date
August 10, 1920
Location
Boston, Massachusetts (42.358, -71.060)

Metadata

Model
gpt-5-mini (chosen from majority vote of a three-model LLM ensemble)
Short Digest
383205b4a836b151

Response Measures

None

Description

Failure directly tied to the Ponzi scandal; bank closed by the state bank commissioner and capital reported impaired.

Events (2)
1. August 10, 1920 Run
Cause
Bank Specific Adverse Info
Cause Details
Heavy withdrawals driven by the collapse/investigation of Charles Ponzi and large Ponzi deposits and checks presented to the bank.
Measures
Paid out large sums on Ponzi checks; later safe-deposit boxes used by Ponzi sealed by commissioner as precaution.
Newspaper Excerpt
the Hanover Trust has paid out $300,000 a day on Ponzi checks.
Source
newspapers
2. August 12, 1920 Suspension
Cause
Government Action
Cause Details
State Bank Commissioner Joseph C. Allen ordered the Hanover Trust Company closed/taken charge of after its capital was declared probably wiped out.
Newspaper Excerpt
The bank was closed by the commissioner yesterday.
Source
newspapers

Newspaper Articles (22)
1. August 10, 1920 The Evening World New York, NY
Article from The Evening World, August 10, 1920

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PONZI IS BOASTFUL OF HOW HE FOOLED STATE AUTHORITIES (Continued From First Page.) and part of the $1,500,000 is assigned to Γ§over his shortage. For the last tw odays the Hanover Trust has paid out $300,000 a day on Ponzi checks. "Hot air, all hot air, I gave him hot air and I shall give him more of it if he wishes; I shall ball him up more and more." Thus spake Charles Ponzi as he sat in a weaklegged chair-the only one in "the vacated office of the E. and E. Construction Company on the tenth floor of the Hanover Trust Building, at No. 268 Washington Streetwhen commenting on the alleged facts he had give to Attoreny General Allen of Massachusetts. Concerning his transactions in foreign exchange Joseph C. Allen, Bank Commissioner of Massachusetts had just ordered payments on all Ponzi checks stopped, and newsboys below were yelling: "Ponzi fails!" "Ponzi fails!" "Ponzi bankrupt!" "After what I have told Mr. Allen, he stops my business and all the poor people who have given me their money cannot get it back because he ties up my money not only here, but in New Hampshire, New Jersey, everywhere," continued the financial wizard. "My genius it is not appreciated. You gentlemen all know whatever else I am, I am not a damn fool. I give them bull-much bull. And I say if I could not meet my liabilities I would have what you call in English flew de coop two weeks ago." "Yes," said a reporter, "you wanted to 'flew de coop,' but you couldn't get your passports." "What!" gasped the little Italian waiter dishwasher banker financial wizard as his jaw dropped. He started. "Yes, yes. Oh, yes, I wanted to go La Bella Italia to see my old mother. near Parma, now that I was rich, but the business was SO good-oh, so many hundreds of thousands of lira. They come every day easy, easy-like-a dat. You know I could not go. Now the Government it spoil the trip, and I have my old mamma come to me. It is so nice to have her. "The public officials they are not ethical at all. They try to find out all about me. It is not fair." "Was it ethical to 'bull' the Attorney General?" "Ah, signor, that is another question. This is a free country. He try to ball me up and I ball him up. Is it not fair? I shall do it again. Yes, I give him 'bull'-plenty of it. And I give bull any time it suits me when they try to ball me up. "But I am solvent, gentlemen," he continued' after a slight pause in which he blew the cigarette butt from the holder and slowly snuffed it out under the toe of an immaculate buckskin Oxford. He reached to the floor for a cold bottle of ginger ale, but as he did so a deferential hanger-on gently took it from his hand, opened it for him and handed the drink in a glass. He was the picture of a vaudeville actor sitting in the wings between acts. On his right ring-finger flashed B. gaudy diamond. His shirt proclaimed itself silk and the Palm Beach suit was not smart but natty. INSISTS HIS ASSETS EXCEEDS HIS LIABILITIES. "My obligations are $500,000 and my assets are much more," he continued. "Right here in this bank (he pointed downward with his fore finger to the Hanover Trust Company on the first floor) I have $1,500,000 in cash, but they will not let me touch 1t. I have now on my person in this little bag another $1,500,000 in securities." "Then why don't you pay your claims with that was asked. "Ah, signor, that is my secret. I have my reasons. Charlie Ponzi is no damn fool, what?" "That you are not," a reporter answered. "You bet. Nobody knows Charlie Penzi's business better than himself. Don't you fool yourself about that, signor. You treat me nice-I treat you nice. When I open my business again you put all your money with me. And I make it grow, grow, grow millions. That is Charlie Ponzi-me and the newspaper boys are for the people. We are not the autocracy. "The autocracy stop my business becau % I earn big money for the people, and they cannot. Is it not so? They are what you call Jealous of Ponzi. Some day the people will rise." Here one could not help thinking of the early days of his notoriety when he passed along Washington and Tremont Streets and threw kisses to the yelping mobs that followed and lined the sidewalks to have a glimpse of the new wizard. "And now what will Signor Ponzi do since the autocracy has put its

2. August 10, 1920 Richmond Times-Dispatch Richmond, VA
Article from Richmond Times-Dispatch, August 10, 1920

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FORBIDS BANK TO HONOR CHARLES PONZI'S CHECKS Wizard Also Denied Right to Transfer Personal Account to Trust Fund. EXPECTS SMALL RUN TODAY Declares He Has in Hanover Trust Company More Than Six Times Enough to Meet Outstanding Notes-Will Fight to End. [By Associated Press. BOSTON, Augus: 3.-The response of Charles Ponzi, who claims to have made millions through dealing in International postal exchange, to bankruptcy proceedings brought against him and to orders issued by the State Bank Commissioner today forbidding the Hanover Trust Company to cash checks signed by him or his agents, was his declaration tonight that he would "not pay out 1 cent of money tomorrow" at his offices. "Though I anticipate there will be a small run on my company after today's developments," he said, "I will not pay the notes that have run forty-five days. Neither will I pay those which the depositors desire without any interest. But I will tell my depositors that the Hanover Trust Company would gladly honor these checks and cash them, but the bank commissioner says that this can not be done. Claims Big Balance. "In the Hanover Trust Company I have two accounts, my own personal account and another one. My personal account is over a million and a half, more than six times the amount I have out in notes, but the bank commissioner has refused to permit me to transfer my personal account to the other one, by what au thority I do not know." In a statement to newspaper men earlier in the evening. Ponzi discussed the statement issued today by Attorney-General J. Weston Allen, which charged that inquiries by State officials had SO far failed to confirm his statements that he had made his profits through the purchase of international reply coupons. "When Attorney-General Allen starts in to ascertain what my liabilities are. I will give him all the help possible." he said. "And when he is finished I will show him the money to cover them. But he is endeavoring to find out what my assets are, where they are, and how I made my money, rContinvel on Second Page )

3. August 11, 1920 The Laurens Advertiser Laurens, SC
Article from The Laurens Advertiser, August 11, 1920

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of Boston, Aug. 9. The response Charles Fonzi, who claims to have made millions through dealing in in( ternational postal exchange to bankruptey proceedings brought against him and to orders issued' by the state bank commissioner today, forbidding the Hanover Trust Company to cash checks signed by him or his agents, was his declaration tonight that he would "not pay out one cent of money tomorrow" at his offices. "Though I anticipate there will be a small run on my company after today's developments," he said, "I will not pay the notes that have run 45 days. Neither will I pay those which the depositors desire without any interest. But 1 will tell my depositors that the Hanover Trust Company would gladly honor these checks and cash them, but the bank commissioner says that this cannot be done. "In the Hanover Trust Company I have two accounts, my own personal account and another one. My person. al account is over a million and a half, more than six times the amount I have out in notes. But the bank commissioner has refused to permit me to transfer my personal account to the other one, by what authority I do not know." In a statement to newspaper men earlier in the evening Ponzi discussed the statement issued today by Attorney General J. Weston Allen, which -charged that inquiries by state officials had SO far failed to confirm his statements that he had made his prof1 its through the purchase of international reply coupons. "When Attorney General Allen starts in to ascertain what my liabilities are, I will give him all the help possible," he said. -And when he is finished I will show him the money to cover them. But he 1. is endeavoring to find out what my as). sets are, what they are and how I made my money and nobody knows 1that but Charles Ponzi, and nobody else is going to know. I will die betfore I disclose these facts to anybody L. "I have played fair with everybody I have paid all regardless of the at J. tacks and the impediments thrown in my way by the state authorities. The 1I am solvent there is not the slightest V. doubt in. anybody's mind. Why then, should my investors be delayed in reB. ceiving payments which are rightfully theirs when I have the cash available 1, to do so? I am not going to run away r, That is what the officials would lik to have me do. I am a fighter and -am going to fight them to the end fAnd I am going to win my fight." Attorney General Allen tonight sen J. to Boston newspapers the following iladvertisement: "All persons holding unpaid note E. of the Securities Exchange Trust Com pany or of Charles Ponzi, are request A. ed to notify in person or my mail, the k, department of the attorney general giving the number and date of the irnote, the amount loaned and M. amount due, the place where the loar was made and the address of the hold M. er. A copy of the note should be fur nished where possible. This informa tion is desired in completing the in vestigation now being made by th department." alls ies.

4. August 12, 1920 Evening Times-Republican Marshalltown, IA
Article from Evening Times-Republican, August 12, 1920

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Boston, Aus. 12.-Charles Ponzi was arrested today by the federal authorities, charged with using the mails to defraud. Attorney General Allen said that Ponzi's liabilities will run into the millions. Ponzi issued the following statement after his arrest; "I had an agreement with the district attorney to go tomorrow and meet my liabilities with cash. With the closing of the Hanover Trust Company and with other funds tied up, I find myself unable to do so. I felt it my duty to tell him and ask him to detain me." Bank Commissioner Allen announced this afternoon that the capital of the Hanover Trust Company probably had been completely wiped out. The bank was closed by the commissioner yesterday. Charles Ponzi had been a director up to yesterday. A creditors' petition asking for the appointment of a receiver for Charles Ponzi wal. filed in the federal court today.

5. August 12, 1920 The News Scimitar Memphis, TN
Article from The News Scimitar, August 12, 1920

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PONZI ARRESTED; USE OF MAILS TO DEFRAUD CHARGED Surrenders to U. S. Marshal Before Warrant Issued, Saying Closing of Bank Prevent's Settlements. BOSTON, Aug. 12.-Charles Ponzi today surrendered to the United States marshal and a warrant for his arrest was prepared. District Attorney Gallagher said Ponzi had surrendered because he felt himself unable to carry out promises he had made for redemption of his notes tomorrow. At the time Ponzi gave himself up, a hearing was being held before Judge Bennett, of the municipal court, sitting in chambers on a police application for the arrest of the financier. The hearing was secret. Bank Commissioner Allen announced that the capital of the Hanover Trust company probably had been completely wiped out. The bank was closed by the commissioner yesterday. Ponzi had been a director until yesterday. Ponzi was arrested soon after his surrender by the federal authorities on a charge of using the mails to defraud. Edwin L. Pride, federal auditor, said Ponzi's liabilities were upward of $7.000,000. Ponzi claimed assets of $4,000,000. PΓ³nzi issued the following statement after his arrest: "I had an agreement with the district attorney to go tomorrow and meet my liabilities with cash. With the closing of the Hanover Trust-company and with other funds tied up, I find myself unable to do so. I felt it my duty to tell him and ask him to detain me.' A creditors' petition asking appoint ment of a receiver for Ponzi was, filed in the federal court today. Ponzi announced early\today he would go into seclusion at his home to rest and recover from the nervous strain caused by events of the last few days. 'My nerves can't last forever," Ponzi said. 'I've got to rest. I am not going to give out any more statements for a while. I am going to keep away from people-not go down town. He continued to assert he was solvent and would pay all outstanding obligations. Guards were posted around Ponzi's home to keep people away from him. Ponzi, after learning of the closing of the Hanover Trust company issued the following statement through his attorneys: "I learn with regret that the commisisoner has ordered the Hanover Trust. company to close its doors. feel that this action on the part of the bank commisisoner is merely a new at. tempt on his part to prevent me from gaining possession of the $1,500,000 which I have in that Institution, in the hope that I will not be able to meet my obligations to my note holders. "I put my money in a state trust company approved year after year by the bank commissioners, examined, understand, within three months, and received a certificate of deposit for $1,500,000. good anywhere in the hands of any individual. bank or trust company, but not good now that the bank commissioner has taken charge and suspended payment of all the trust company's obligation. What merchant or banker could stand the strain of being compelled by the public authorities to meet obligations before they I came due, to pay notes upon which was merely an indorser. and at the same time be released of all liquid assets? Bank Commisisoner Allen was asked if Ponzi's certificate of deposit of $1,500,000 had anything to do with his action. The Hanover Trust officials, acting contrary to law and against the specific direction of the commisioner of banks, have paid either to Ponzi or to his agents almost $500,000 of the $1,500,000 represented in the certificate of deposit," he replied. As to the general condition for the bank. he said: "I fear its capital has been impaired.'

6. August 13, 1920 Amarillo Daily News Amarillo, TX
Article from Amarillo Daily News, August 13, 1920

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PONZI SURRENDERS ON FEDERAL CHARGE AND AWAITS TRIAL 13 10,000 INVESTORS INTRUSTED TO 20 MILLION DOLLARS TO FINANCIER OFFICIALS SAY DEBTS RUN INTO MILLIONS Declares He Is Unable to Meet Obli gations Since Boston Bank Ordered Closed: Bail Is Furnished By Associated Press BOSTON. Rug. 13.-Some forty thousand investors intrusted a total variously estimated at from $15,000,000 to $20,000,000 to Charles Ponzi in a money making scheme which postal offici 1. today declared to be absolutely impossible of fullfillment. Ponzi currenderd to the federal au thorities this aternoon, explaining he was unable to meet his obligations be cause of the closing yesterday of the Henever Trust company. where the balk of his funds were deposited. He was arrested charged with having used the mails to defraud. arraigned and held in bond of $25,000 for a hear ing August 19. Morris Rudnie a real estate man, furnished the surety Arrested on Second Charge Meanwhile a warrant charging Pon zi with larceny had been obtained by the state police in municipal court and upon leaving the federal building Pon zi was re-arested and held by the city court in $10,000 bail. for appearance August 23 Rudniek again went on Ponzi's bond and the latter was released. Developments followed thick and fast today As Ponzi was being ar raigned before a United States commissioner. Edwin 1. Pride who is examining the books of the Security Ex change company for the federal authorities. announced that it had already been shown that Ponzi owed $7,000,000 Liabilities Are Heavy State attorney general Allen, who is conducting a separate Investigation de clared Ponzi's liabilities would run in to millions. State bank examiner Joseph Allen is declaring the capisued a st tal of the T Trust company of which Ponzi yesterday was a director was seriously impaired and probably wiped out. State treasurer Fred J. Burrell attacked the bank commissioner for not having given him opportunity to withdraw state funds before the Hanover bank was closed and Governor Coolidge demanded that Burrell will make known how much state money had been tied up by clos intr of the trust company. Burrell notified the governor that the state deposit was $125,000 Ponzi's field appears to have included New England and New Jersey The line that formed daily in PI Alley, at the rear of his office. appears to have been fat from representative of his Mertele This was made up largely of foreigners Those Who "Bit" Anxious inquiries at newspaper offi. ces and feverish conversations in down town restaurants indicated that the proprietors of small businesses. professional men and women. clerks and stenographers, and laborers by the thousands, accepted the bait of "fifty percent" profit in forty-five days The mystery of Ponzi's methods add ed to the attractiveness of his promises It was said the possibilities of profit ably exchanging American dollars for French franes. and Franes for Italian lire and the latter for something else. seemed plausible enough without Hear comprehension of just how the thing worked out Among the amaz ing disclosures was that the bulk of Ponzi's millions were gathered in after the post office department had begun its investigation last February In leusing the Ponzi case Chief Post Office Inspector Hill 1: Month said that so for as their investigations had shown Ponzi had never done any business in international reply coupons H said he had warned hundreds of people against Ponzi when inquiries be gan to come in last February that no man or set of men could manipulate or speculate in international reply cod DONS in any such manner as they al leged Ponzi had explained to them evi We have obtained conclusive dence that there has been no abnormal issue or redemption of international re ply coupons while on the other hand 8 in some countries the use of coupons has been greatly curtailed to prevent this very scheme. said Mr Mosby

7. August 13, 1920 Every Evening, Wilmington Daily Commercial Wilmington, DE
Article from Every Evening, Wilmington Daily Commercial, August 13, 1920

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with larceny had been obtained by the State police in the municipal court and on leaving the federal building Ponzi was rearrested and held by the city court in $10,000 bail for appearance August 23. Rudnick again went on Ponzi's bonds and the latter was released. Developments followed thick and fast. As Ponzi was being arraigned before United States Commissioner Hayes, Edwin L. Pride, who is examining the book of the Securities Exchange Company for the federal authorities announced it had already been shown that Ponzi owed $7,000,000. State Attorney-General J. Weston Allen,, who is conducting a separate investigation, made known his opinion that Ponzi's liabilities would millions. a run aminer into Joseph the C. Allen issued of State the Bank statement Hanover Exdeclaring the capital Trust Company, of which Ponzi was until yesterday a director, was seriously impaired and probably wiped out. State Treasurer Fred J. Burrell attacked the bank commissioner for not having given him opportunity to withdraw State funds before the Hanover was closed, and Governor Coolidge demanded that Burrell make known how much of the State money had been tied up by the closing of the trust company. Later, Burrell notified the governor that the State deposit was $125,000. Ponzi's field appears to have included New England and New Jersey. This was made up largely of foreigners who were more interested in getting their money than in protecting their reputations as wise speculators. Anxious inquiries at itn newspaper offices and feverish COL orgations in downtown restaurants indicated that the proprietors of small businesses, professional men and women, clerks and stenographers by the thousand accepted the bait of "50 per cent profit in 45 days." Among the amazing disclosures wasthat the bulk of Ponsi millions were gathered in after the Postoffice Department had begun its investigation last February. In discussing the Ponzi case tonight, Chief Postoffice Inspector Hal P. Mosely said as far as their investigation had gone Ponzi had never done any business in International reply coupons. He said of to he against had Ponzi warned when hundreds inquiries began people come in last February that no man or set of men could manipulate or speculate in international reply coupons in any such manner as they alleged Ponzi had explained to them Further legal steps to protect Ponzi's note holders were taken today. In the Federal Court another bankruptcy petition was filed, this one being directed against "Charles Ponzi of Lexington, John S. Dondero of Medford, and Guglielmo Bertollotti of Parma. Italy, co-partners, doing business under the firm name and style of the Securities Exchange Company. Two similar actions already are pending, one a bankruptcy petition and the other seeking the appointment of a receiver In the earlier petitions no mention is made of Ponzi's partners. The actions are directed against Ponzi alone.

8. August 14, 1920 Evening Public Ledger Philadelphia, PA
Article from Evening Public Ledger, August 14, 1920

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Bank, Allied With Ponzi Trust, Closed Continued from Page One orous examination of Ponzi's affairs will speak for themselves. Referring to the possible transfer Mr. of large sums by Ponzi to his wife. Pride said be taken away from her her. and "It can be. It does not belong to that was pretenses. to be it fraudulent It fraudulent will is money purposes. In obtained going concealed used under after for may be called Ponzi's what we shall reach the large amount transferred assets to or deposited in the name of Mrs. Ponzi. Wife Still Loyal from his wife the surrender by his Ponzi of his withheld before bondsman. going to news telephoued to her He he was remaining in Boston books jail night to go over Mrs. Ponzi in her during with that the auditor. reasserted his she said, will her He faith an is honest, husband. end. "and I by him to the stay second of the two petitions that The been filed to have Ponzi adjudged have bankrupt was pending in the Federal Court today. three latest petitioners. holders The notes for a total of $2625. of two partners John S. Dondero, of asked namely Ponzi's that of of Medford, Parma, Ponzi, Guglielmo Bertollotti. and also be adjudged A petition bankrupt. filed Italy, for a receiver to administer by Ponzi's affairs also has been creditors. Examination of the books of the Co., which was Ponzi's and in a chief Hanover depositary Trust which continued he was and director, was by members of staff. Mr. stockholder today Allen's Bank Allen, Co. Commis- who sioner Hanover Trust last in a statement to reassure in that closed Wednesday the depositors intended institution said and in other trust companies, lead Nothing has developed so far to me to believe that the depositors Hanover will lose one dollar. The In Trust Co. is the only trust company in New England that is involved Ponzi's failure." Run on Trust Companies district was concerned when a run was trust companies. yesterday The several financial small financial due. was it made in on to reports that other t n stitutions said. would be involved in Ponzi's today There was no indication in of affairs. continuance of withdrawals other a than normal quantities. has caused the state seal f on all safe to Trust Co. used He Mr. the be Hanover placed Allen deposit bank. by Ponzi boxes in or employes of the or was done as a the possible removal the valuables against said officers this pending precaution of securid ties of the institution's general's office been settlement The or attorney other affairs. has in a study of the be whether engaged determine action legal who statutes may had to compel all persons notes on unmatured. to turn cashed and taken to their Ponzi. the for matured money equal back a common fund among all d of Brightwell his distribution The into arrest noteholders. the and came as part of extensive of by the and of other investigation associates Ponzi's affairs authorities companies in offering high rates of interest on vestments. The Old Colony Foreign 10. h Exchange Co. was organized July under a deed of trust. with Brightwell, Raymond Meyers and Funnar E. R. Lindblad, of Sweden. as trustees. They six offered to pay 100 per cent in months on investments and claimed At- to dealing in foreign merchandise. be General Allen said that he knew torney that the company had sent large sums abroad. Brightwell Threatened The office here was closed after of a run vesterday. the like not seen during the the run on Ponzi's which frenzied of was offices. wildest Doors days were smashed. threats against a and were windows made Brightwell handle and . of police was required to e when the announcement was the company that on detail made the crowd by payment Mon notes would be suspended until day Brightwell was ordered by the of the building on Devonshire in which one of to vacate an offices street. trustees was located. the company's within hour and a half. Shortly afterward the offices were closed and the arrests were made. from Philadelphia. Provi II Springfield, dence. Dispatches Fall River. Haverhill Law- told New Bedford and in those cities d of the company. or offices rence. of the closing investigations of branch them. under way with a view to closing 0 Lynn. Mass. Aug. 14 By A. P.) The local office of the Old Colony d Foreign Exchange Co. was surrendered by the management today to Assistant District Attorney Edward F. Flynn im and Inspector John T. Curry. who of d mediately started an examination the accounts They acted by direction of Attorney General Allen. PROBE CAPITOL FIRMS

9. August 14, 1920 The Union Daily Times Union, SC
Article from The Union Daily Times, August 14, 1920

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commonwealth on a blanket warrent issued in the municipal court, charging him with larcency in 53 counts, totalling $24,000. The authorities were said to be determined that the sensational financier should remain in custody, the principal reason for this being a desire to preserve for his creditors whatever assets he may have and the fear that Ponzi might seek to dissipate or trans_ fer them if out on bail. Edwin L. Pride, federal auditor of Ponzi's accounts has placed the latter's known liabilities at $8,000,000 and Ponzi claimed assets of about $4,000,000. Boston, Aug. 14.-Referring to the possible transfer of large sums by Ponzi to his wife, Mr. Pride said: "It can be taken away from her and it will be. It does not belong to her. It is money that was obtained under fraudulent pretenses, to be used for fraudulent purposΓ©s." Ponzi withheld from his wife the news of his surrender by his bondsmen. He telephoned to her before going to jail that he was remaining in Boston during the night to go over his books with an auditor. Mrs. Ponzi reasserted her faith in her husband. "He is honest," she said, "and I will stay by him to the end." Examination of the books of the Hanover Trust Company, in which he was a stockholder and director was continued today by members of Bank Commissioner Allen's staff. "Nothing has developed so far to lead me to believe that the depositors will lose one dollar," Mr. Allen said. "The Hanover Trust Company is the only trust company in New England that is involved in Ponzi's failure." The financial district was concerned yesterday when a small run was made on several trust companies, due, it was said, to reports that other financial institutions would be involved in Ponzi's affairs. There was no indication today of continuance of withdrawals in other than normal quantities. Mr. Allen has caused the state seal to be placed on all safe deposit boxes in the Hanover Trust Company used by Ponzi or officers or employees the bank He said this was donotary precaution against the moval of securities or other pending the authorient tution's affairs.

10. August 14, 1920 Bisbee Daily Review Bisbee, AZ
Article from Bisbee Daily Review, August 14, 1920

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ARREST BOSTON BANK OFFICERS (CONTINUED FROM PAGE ONE) Rayand treasurer of the concern; mond Meyers, office manager, and Fred Meyers, sales agent. They pleaded not guilty. Huge Frauds Charged That the activities of this company the have rivalled in extent of Ponzi's e was e might dealings change company, Securities intimated Ex- by h Hurwitz, assistant district atwhen he told the court n involved in its Albert amount torney, transactions the probably was hundreds of thousands be of dollars. The three men will given a hearing on August 24. Samuel been Zorn, said to have emy ployed by the company as an agent, on I was arrested at his home tonight of la the same charge as three officers and o the concern. No bail was fixed e he was locked up for the night. 1 Further criminal proceedings were the is taken against Ponzi today. In municipal court a blanket warrant was issued charging him with larceny The in 53 counts, totaling $24,000. in nuncipal court charges were held the c abeyance, as Ponzi went to jail on c federal warrants. k Further bankruptcy proceedings in partners of Ponzi were menr were brought in tioned, which federal holders court. The three petitioners were They is of Ponzi's notes for $2625. it asked that Ponzi and John S. Dondeof of Merford and Guglielmo BertalItti ro of Parma, Italy, named as parts ners in the Securities Exchange Comle pany, be adjudged bankrupt. e Rumors were current tonight that further developments bearing on "get in rich" schemes might be expected hint the near future but there was no as to their nature. Joseph C. Allen, state bank commissioner, said that he knew no foun9 for reports that Ponzi's crash involve any banking might dations Trust institu- comtions except the Hanover which was closed. Ponzi was d pany, director in this bank. through dolof which a he checked out millions of lars. e 11 Mr. Allen made known today he the state seal to y all the safe deposit ed had on caused boxes be by plac- P/n- in Hanover institution used st officers or a He said this was nbank. zi the or by employes done of as the n precaution against the possible removal of securities. to 's State Treasurer F. J. Burrell reh to make any statement $125,000 of state on ing fused the funds Company. regard- dein in the Hanover Trust is arrest of officers of Foreign Exchange g Colony posit The company the note Old il after a frenzied run by n the company's came holders upon One offices result n. on Devonshire Street. run was an President of served this upon imperative Brightwell vacate notice by the trustee of the building to his quarters within an hour and a half. Shortly afterward the offices were closed. S More than 100 note holders were in exchange company's outer office, announced that by no ip and the district attorney payments order three of the on or would be made fof w Brightwell said d was erroneous announcement notes four days." later as this far en mention of the district attorney but that ce to suspend 9, was had as concerned, decided the payments company e temporarily on advice of its attorney. loud er The announcement brought le cries from the waiting crowd. of "We want our money," several of them demanded. was a rush toward the inner Guards struggled to Threats were office. them There back. made keep against Brightwell. e "I'll break his neck." one man shouted. the guards cleared the ofthe doors were dfices Finally and locked. and The is crowd remained in the hall surgas ed against the doors until the glass was broken. e e Through the broken doors some one il announced that the company would of begin making payments at another office. il"It's a lie," a man shouted. "We d were there and they locked the of le fices up. We want our money." te An hour later the Devonshire street d of the company were re-opened of principal on g was resumed. and office ed notes payment The unmatur- notice vacate came and again the offices A notice on said further payments were doors to closed. posted would Mon- the be made at another office beginning h day but no payments would be made tomorrow. Ponzi's Debt Grows it. amount of Ponzi's liabiliy, undertermined. aties The is total still Edwin L. Pride, the auditor engaged by federal

11. August 15, 1920 Pine Bluff Daily Graphic Pine Bluff, AR
Article from Pine Bluff Daily Graphic, August 15, 1920

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PONZI'S VICTIMS CROWD OFFICES OF ATTORNEY-GENERAL Holders of Notes for More Than Two Millions Seek Aid ONLY TWO BANKS ARE INVOLVED IN SCHEME Ponzi and Others Arrested in Collapse of Banks Unable to Furnish Bonds Boston, Aug. 14. Assurances that no further bank closings are likely as a result of the collapse of the financial dealings of Charles Ponzi was given tonight by Joseph C.'A1len, state bank examiner. "The Hanover Trust company and the Polish Industrial association are in the only banking institutions New England known to be in any way affected by the Ponzi failure," Mr. Allen said. No bondsmen were fforthcoming today for Ponzi or for three officers of the Old Colony Exchange company, the "100 per cent in six month' concern, who were arrested yesterday. Samuel Zorn an agent, off the foreign exchange company, was released in $2,000 bonds. 7 Bankruptcy petitions were filed against the Old Colony Foreign Exchange company today. Branch offices in several New England cities were closed by county authorities. S The officers of Attorney General J. Weston Allen at the state house were crowded throughout the day with note holders of the Securities Exchange company and the Ild Colony Foreign Exchange company. Presentation of these notes already has disclosed liabilities on Ponzi's company to the extent of $2,000,000. The possibility of a shake-up in the police department as a result of the bursting of the Ponzi financial bubble was seen in a statement issued by Police Commissioner Edwin U. Curtis. The commissioner said it had been called to the attention of departofficials that members of the department including superior officers had invested with Ponzzi, and that it was reported that some policemen had even acted as agents and received commissions. Work of Salvage Begins. The financial ship that has been piloted by Charles Ponzi was high and dry on the rocks today and federal and state officials made determined efforts to salvage the cargo of millions of dollars entrusted to Ponzi by thousands of investors in his "50 per cent in three months." This morning Ponzi ate his breakfast in the Middlesex county jail in East Cambridge, a prisoner of the United States government, in default of $25,000 bond. Three officers of the Old Colony Foreign Exchange company, a rival concern of Ponzi's Securities Exchange company, had their morning meal in the Charles Street jail, prisers of the commonwealth in default of $50,000 bonds each. Samuel Zorn. said to be an employe of the Old Colony Foreign Exchange company, was at headquarters awaiting a hearing on a charge of larceny of $500, also from persons unknown. He had spent the night in jail. The three officers of the company who were held are Charles M. Brightwell, president and treasurer of the concern; Raymond Meyers, office manager, and Fred Meyers, sales agent. The Meyers are brothers. The men were held on technical charges of larceny of $500 from persons unknown. Upon representation of Albert Hurwitz, assistant attorney general, that the company's be transactions probably would shown to have amounted to hundreds of thousands of dollars; the bonds were set at a high figure. Edwin L. Pride, federal auditor of Ponzi's accounts, has placed the latter's known liabilities at $8,000,000 and Ponzi claimed assets of about $4,000,000. In this connection Mr. Pride said: a "I am inclined to believe that great deal of money collected by Ponzi and his agents has been deposited in the names of others." Wife is Loyal. Ponzi withheld from his wife the news of his surrenderer by his bondsmen. He telegraphed to her before going to jail that he was remaining in Boston during the night to go over his books with an auditor. Mrs. Ponzi reasserted her faith in her husband. "He is honest," she said, "and I will stay by him to the end." The second of the two petitions that have been filed to have Pong zi adjudged bankrupt was pending in the federal court today. The three latest petitions, holders of Pond zi's notes for a total of $2,625, asked that two partners of Ponzi, John S. Dondero of Medford and Guglielmo Bertollotti of Parma, Italy, also be adjudged bankrupt. A petition for a receiver to administer Ponzi's affairs also has been filed by creditors. Examination of the books of the Hanover Trust company, Ponzi's chief depositary and in which he was h a stockholder and director, was continued today by members of Bank Continued on page Six

12. August 17, 1920 The Washington Times Washington, DC
Article from The Washington Times, August 17, 1920

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PONZI'SMONEY MAY BE BOGUS Federal Authorities Have Theory "Wizard" Used Counterfeit Exchange. BOSTON, Aug. 17.-Federal authorities, it became known here today, are working on the theory that there may have been counterfeiting ramifications of Charles Ponzi's "get-rich quick" scheme, either here or abroad. Attempts are being made both here and in Europe, the authorities say, to determine whether there has been any wholesale counterfeiting of marks. lire and other foreign money which might account for the vast sums Ponzi claims to have received from his agents overseas. Investigators declare Ponzi hoped to break the plan fostered by President Henry M. Chmielinski. of the wrecked Hanover Trust Company. to establish trust companies all over the country and to have affiliated with them a chain of automobile repair shops where parts of popular makes of cars could be had quicky at standard prices. Chmielinski, still under forty, one of the young American bank presidents. came here as an immigrant from Poland only a few years ago, and has had a meteoric rise. Besides the Hanover Trust Company he organized the local Polish bank, closed here Saturday by" State Bank Examiner Allen. He has successfully backed a number of such Polish financial associations in different sections of the cast. Chimelinski is American representative of the Polish Bank of Warsaw, according to local Polish bankers. Advices today from the West contain proof of Chmielinski's dream of a chain of trust companies across the continent. Receivership proceedings against Charles Ponzi and his $15,000,000 getrich-quick company began in United States District Court today before Judge Morton. The appointment of a temporary receiver is sought by Attorney John Crowley, chairman of the committee named by State Attorney General Allen to look after the interests of the thousands of speculators in Ponzi's notes. Investigation by State authorities today revealed that Ponzi has been defrauded of a large sum, running into the thousands, through the raising and counterfeiting of his notes. It was also learned that the authorities are seeking $250,000 worth of negotiable liberty bonds bought by Ponzi two weeks ago and of which no trace has been found. Mrs. Ponzi reiterated today her intention to surrender her palatial Lexington home, automobile, and everything in her possession which the authorities believes rightfully to belong to her husband's creditors.

13. August 18, 1920 The Washington Herald Washington, DC
Article from The Washington Herald, August 18, 1920

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PONZI RECEIVERSHIP UP IN FEDERAL COURT Boston, Aug. 17.-Judge James Morton in the United States District Court today took under advisement the petition of the State and of creditors for the appointment of a receiver for Charles Ponzi, the "mushroom millionaire." The arguments of the Commonwealth of Massachusetts for appointment of a receiver were presented by Attorney General John E. Crowley. The attorney general argued that inasmuch as Ponzi had done business through the Hanover Trust Company, the State had special cause for wishing appointment of a receiver.

14. August 18, 1920 Alexandria Gazette Alexandria, VA
Article from Alexandria Gazette, August 18, 1920

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DELAYS NAMING RECEIVERS Belief Growing That Ponzi Is Actually Insane on Money Making Boston. Aug. 18.-Judge James Mor ton, in the United States District Court today, took under advisement the petition of the State and of creditors for the appointment of a receiver for Charles Ponzi, the "bushel basket millionsire." The arguments of the Commonwealth of Massachusetts for appointment of a receiver were presented by Attorney General John E. Crowley. The Attorney-General argued that inasmuch as Ponzi had done business through the Hanover Trust Company, the State had special cause for wishing the appointment of a receiver. When special attorneys were about to make suggestions as regards the receiver, Judge Morton cut short their arguments by stating that he would not allow any names to be mentioned at present. Daniel V. McIsaac, counsel for Ponzi, did not take a prominent part in the proceedings. He told Judge Morton that he would neither argue for or against the bankruptcy proceedings at present. In the meantime Ponzi was still in jail, and there was no indication that his release would be secured today. --- in the Co

15. August 20, 1920 New-York Tribune New York, NY
Article from New-York Tribune, August 20, 1920

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Court Will Name Receiver to Guard Ponzi's Interests Financier Asks Sixty Days' Freedom to Prove He Can Meet Obligations; Gets More Cash Through Mail BOSTON, Aug. Charles Ponzi said to-night he was content to remain in jail, after being arraigned in Federal court to-day on a charge of using the mails to defraud in connection with his plan to pay 50 per cent in forty-five days on all investments. He waived examination and was held in $25,000 bail for the September session of the court. Federal Judge Morton announced tonight that he would appoint a receiver to-morrow to conserve Ponzi's interests. Crowds in the court room gathered around Ponzi in an exort to grasp his hand, and he smiled broadly in appreciation. "All that I ask," he said, "is that I be given sixty days in the custody of two guards, and I will be able to meet all of my obligations. This morning I received $5,500through the mails, which shows the confidence the public still reposes in me." He added that he had turned the money over to a sheriff. Ponzi's liabilities, as uncovered by the state Attorney General, totalled $4,308,874, representing the claims of 10,200 investors, plus the 50 per cent interest promised. The Attorney General said his investigation showed the liabilities of the Old Colony Foreign Exchange Company, a concern which ran as a rival to Ponzi's Securities Exchange Company, to be $300,000, with available assets of $150,000. John S. Dondero, described as a partner of Ponzi in his Securities Exchange Company and named with him as a joint defendant in a bankruptcy proceeding brought by creditors several days ago, was served with a subpΕ“na to-day. He surrendered to local police and was arraigned in the District Court charged with larceny of $600 on three counts. He pleaded not guilty and was ordered held for a hearing on September 10. Bonds were set at $5,000. There was no indication of any attempt by Ponzi or his counsel to obtain his freedom on bail. With $25,000 again set as the amount required by Federal officials, and the Attorney General willing to accept $100,000 to cover all state warrants to date, the aggregate of $125,000 was apparently beyond the means of the man of recently reputed millions. A run on the First State Bank, a private institution in the North End, doing business principally with mem'bers of the Italian colony, appeared to have ended to-day. Depositors were said to be alarmed by indefinite reports that the bank was going to close and that President Thomas Nutile had suffered losses in the closing of the Hanover Trust Company, which was involved in the collapse of Ponzi.

16. August 25, 1920 Arizona Republican Phoenix, AZ
Article from Arizona Republican, August 25, 1920

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PONZI HEARING IS STORMY: CREDITORS DUE FOR BIG LOSS BOSTON, Aug. 24.-A payment of less than 50 cents on the dollar to the creditors of Charles Ponzi, if official estimates of his liabilities are correct, was indicated by his statement of assets at the receivers hearing today. Assuring the federal receivers that he had disclosed all he knew, Ponzi told of assets which Robert G. Dodge, counsel for the receivers, declared "were not worth anywhere near $3,000,000." The official estimate of his liabilities stands at $7,000,000. Ponzi claimed that he was solvent and had nearly four million of assets to meet his liabilities, which he set at $3,000,000. The hearing was stormy at times. Daniel H. Coakley, counsel for Ponzi. surrendered to the receivers, to assist in meeting creditors' claims, checks for $25,000 each, which had been given him and an associate counsel, as retaining fees. He said that when he took the money he thought Ponzi was a millionaire. He called upon the receivers and their counsel to join with him in working without fee, but his challenge was not accepted. Edward A. Thurston, one of the receivers, remarked: "If you thought this man had a million dollars left, do you suppose anybody thinks you would have got only $25,000?" "You are a liar when you suggest anything like that," exclaimed Mr. Coakley, jumping to his feet. Ponzi told of loans of $20,000 each to Henry Chminielinski, president, and William S. McNary, treasurer of the Hanover Trust company, which was Ponzi's principal depositary and which went to the wall with his collapse. His announcement that he had loaned $10,000 to Daniel P. Demond, treasurer of the Lawrence Trust company of Lawrence, was followed by Demond's resignation later in the day.

17. August 25, 1920 Great Falls Daily Tribune Great Falls, MT
Article from Great Falls Daily Tribune, August 25, 1920

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PONZI'S ASSETS NOT ONE HALF OF LIABILITIES Italian Made Loans to Officers of Banks Closed Down. Boston. Aug. 24.-A payment of less than 50 cents on the dollar to the creditors of Charles Ponzi, if official estimates of his liabilities are correct. was indicated by his statement of assets at the receiver's hearing Sunday. Assuring the federal receivers that he had disclosed all he knew. Ponzi told of assets which Robert G. Dodge, counsel for the receivers declared were "not worth anywhere near $3.000.000." The official estimate of his liabilities stands at $7,000,000. Ponzi claimed that he was solvent and had nearly $4,000,000 assets to meet his liabilities. which he set at $3,000,000. The hearing was stormy At times. Daniel H. Coakley, counsel for Ponzi, surrendered to the receivers to assist in meeting creditors' claim checks for $25.000 each, which had been given him and to an associate counsel as retaining fees. He said that when he took the money he thought Ponzi was a millionaire. He called the receivers and their counsel to join with him in working without fee but his challenge was not accepted. Edward A. Thurston, one of the receivers, remarked: "If you thought this man had a million dollars left. do you suppose anybody thinks you would have got only $25.000. "You are a liar when you suggest anything like that," exclaimed Mr. Coakley, jumping to his feet. Ponzi told of loans of $20,000 each to Henry Chmielski, president, and William S. McNary. treasurer, of the Hanover Trust company, which was Ponzi's principal depositary and which went to the wall with his collapse. He announced that he had loaned $10,000 to Daniel P. Demond, treasurer of the Lawrence Trust company of Lawrence, and this was followed by Demond's resignation later in the day.

18. September 1, 1920 The Washington Times Washington, DC
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PONZI BANKED $2,700,000 A DAY, SAYS FINANCIER "Wizard" Attempted to Buy Hanover Trust. Company, Officials Tell Federal Investigators. BOSTON. Sept. 1.-The Federal receivers of Charles Ponzi, attempting to run down the assets of his broken business yesterday examined Henry A. Chmielinski and William S. McNary. president and treasurer, respectively. of the Hanover Trust Company, the bank which was closed when the Ponzi bubble burst. McNary testified that Ponzi's maximum deposit on any day was $2,700.000. instead of the six or eight millions which Ponzi had claimed. The bank paid out $5,900,000 on Ponzi checks during the run. Ponzi attempted at one time to buy out control of the bank. and was stopped, Mr. McNary testified. by a vote that he be forced to withdraw his account of $2,7000,000 unleas he ceased the attempt at control. Asked about the payments of $50,000 to coun. sel for Ponzi. of which the latter denied knowledge, McNary said they were made from a check for that amount, which Ponzi drew payable to "cash."

19. September 6, 1920 Grand Forks Herald Grand Forks, ND
Article from Grand Forks Herald, September 6, 1920

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BANK HEADS TELL OF PONZI AFFAIRS Boston, Sept. 6.-The federal receivers of Charles Ponzi, attempting to run down the assets of his broken business, examined Henry A. Chmielinski and William S. McNary, president and treasurer, respectively, of the Hanover Trust company, the bank which was closed when the Ponzi quick rich bΕ―bble was burst. It was testified by Treasurer McNary that Ponzi's maximum deposit for any one day was $2,700,000, instead of the six or eight millions which Ponzi had claimed in public statements, while the run on his Securities Exchange company was on. The bank paid out $5,900,000 on Ponzi checks during this run, Mr. McNary said, Ponzi bringing in new money daily to meet / the demands, The bank now has $1,058,000 of his money in its vaults, for which the receivers. hold a certificate of deposit, and Treasurer McNary said additional assets. were available in Ponzi's holdings of stock in the bank, which, he predicted, will pay dollar for dollar. Ponzi attempted at one time to buy out control of the bank, but was stopped, Mr. McNary testified, by a vote that he be forced to withdraw his account of $2.700,000 unless he ceased the attempt at control. The notes for $20,000 each which Ponzi testified he held for money due him from the two bank officials were disclaimed as obligations by each. They said they were personal notes given by an official of the North End branch of the bank who had received an offer from Ponzi to enter business, Ponzi agreeing to take his notes if they were indorsed by Chmielinski and McNary. Ponzi had assured them, they said, that he would be responsible for the notes, and at his direction, they were charged to his account.

20. September 28, 1920 The Brattleboro Daily Reformer Brattleboro, VT
Article from The Brattleboro Daily Reformer, September 28, 1920

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FIDELITY TRUST STOPS BUSINESS Bank Commissioner Allen Takes Charge of Institution DECLINING DEPOSITS AND SLOW LOANS They Are Responsible for Commissioner's Action - Its Officials Affiliated With Other Financial and Industrial Concerns. BOSTON, Sept. 28.-Bank Commissioner Joseph Allen took over the affairs of the Fidelity Trust Co. here today. His action marked the closing of the sixth banking institution in this city= within two months. The others were the Hanover Trust Co., of which Charles Ponzi was a director and largest individual depositor, the Prudential and Cosmopolitan Trust companies and two private banks. The canital of the Fidelity was $3,000,000 and according to the latest available statement the company had a surplus of $700,000. Its deposits totalled about $18,000,000. James G. Ferguson, its president, is affiliated with several other financial and industrial institutions, as is Edwin T. McKnight, the vice president. The Fidelity Trust Co. was one of three banks which yesterday invoked the 90-day law for withdrawal of deposits. The reasons for the closing of the bank, Commissioner Allen said, are the steady withdrawal of deposits and slow and doubtful loans. 'Only a few persons were on hand when the formal notice announcing the closing was posted on the door of the Fidelity Trust Co. at 9 a. m. A squad of policement were on duty and extra officers patrolled the financial district but there was no excitement. At the offices of the Tremont Trust Co. a small crowd gathered before the opening hour but police had nothing to do. The bank continued to do business as usual in its commercial department but depositors in the savings department were required to file 90 days' notice of intention to withdraw. The same sitnation existed at. the Dorchester Trust Co.

21. October 5, 1920 The Barre Daily Times Barre, VT
Article from The Barre Daily Times, October 5, 1920

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PONZI ABLE TO PAY ONE DOLLAR IN THREE Definite Statement of High Finance Man's Resources Announced To-day. Boston, Oct. 5. -Charles Ponzi can pay less than one dollarsin three on the claims of creditors of his shattered scheme of high finance. Instead of the 50 per ceni profits which he promised, those who expected Ponzi to lead them to "quick riches" will lose more than 50 per cent on their investments. The extent to which the millions entrusted to him had been reduced became known definitely to-day for the first time when C.N. Rittenhouse, auditor for the federal receivers of Ponzi, made his report at a hearing on a bankruptcy petition against Ponzi in the federal court. To meet liabilities which he set at $7,500,000, the and itor said Ponzi had total assets of only $2,195,685. This aggregate of assets included as principal items a certificate of deposit for $1,058,221. cash in banks amounting to $150,076, Ponzi's home in Lexington estimated at $110,000 and 1,590 shares of the Hanover Trust Co., which he tried to control and which failed when he fell, estimated at $200, 000.

22. October 6, 1920 Daily Kennebec Journal Augusta, ME
Article from Daily Kennebec Journal, October 6, 1920

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Ponzi Speculators to Lose More Than Expected Gains Boston Oct. S.-Charles Ponzi can pay less than one dollar in three on the claims of creditors of his shattered scheme of high finance. Instead of the fifty per cent profits which he promised. those who expected Ponzi to lead them to quick riches will lose more than 50 per cent on their investments. The extent to which the millions entrusted to him had been reduced became known definitely today for the first time when C. W. Rittenhouse. auditor for the Federal receivers of Ponzi, made his report at a hearing on a bankruptcy petition against Ponzi in the Federal court. To meet liabilities which he set at $7,500,000 the auditor said Ponzi had total assets of only $2,195,685. This aggregate of assets included as principal items a certificate of deposit for $1,058,221. cash in banks amounting to $150,076. Ponzi's house in Lexington estimated at $110.000 and 1590 shares of the Hanover Trust Company which he tried to control and which failed when he fell. estimated at $200.000.