Pine Bluff daily graphic., 1920-08-12
PONzI ADMITS HE IS FORMER CONv|CT; BANK'SDOORS CLOSE Institution Thru Which He Did Business Shut by
 State OFFICIALS DECLARE ACTION UNJUSTIFIED Ponzi Has Paid Out Six Millions Thru the Bank But Owes Nothing
 Bank Officials
 State

oNdIC
 Boston, Aug. 11.-Charles Ponzi, who has handled millions of dollars of other peoples money in the last few months, confessed in formal statement today that he was former convict. While he was making this statement the Hanover Trust con- |pany, in which Ponzi was a director and a shareholder and through which he had done large checking business was closed by order of Bank Com missioner Joseph c. Allen. Ponzi at the same time announced his res ignation from the bank directorate
 Commissioner Allen said that he had taken action because his exam
 ners had found that the bank had made loans which "were excessive and beyond the legal limit" and "many loans that are either bad or are of very doubtful value" He expressed the fear that the banks capital had been impaired.
 The executive committee of the Hanover Trust company in a state ment late today said the committee believed that there were few poor loans on the banks books, and that there was no reason to believe that the bank would not continue to meet its obligations and that it had cash reserve of three times the amount that the law requires. William s. McMary, treasurer of the bank, said that Ponzi did not owe the bank a cent, that any bank in the country would have been glad of his account and that Ponzi had paid out six mil lion dollars through the bank. Ponzi's confession followed the pub lication in morning newspapers of stories of the career of Charles Pon- zi" in Montreal Confronted with these stories, Ponzi conferred with his attorneys and then gave to newspa- per men a lengthy statement in which he admitted that he and "Pon- zi" were the same man, that he had served twenty months in prison in Montreal for forgery, and that sub- |sequently he had served two years in the federal penitentiary at Atlanta for smuggling Italians into this coun- try.
 Tells of Troubles.
 He asserted that his sentence for forgery resulted from his assuming the blame for a crime committed by a banker in Montreal, by whom he had been employed and who had fled to Mexico
 q am rot trying to pose as hero' he added. l.
 As to the smuggling incident, Ponzi declared that he did not smuggle Ital- ians into this country.
 "Within ten days of my release (from the Montreal prison)," he said "I was asked to escort five Italians into the United States. I did not smuggle them in. I crossed the bor- der on the trains openly and was placed immediately under arrest"
 He said he had not previously made known these incidents in his career because he felt that "the past had very little bearing on the present situation"
 eff made a mistake, paid for it," he said. q had every reason to believe that society owed me anoth- CT chance"
 Ponzi, in later statement, reiter- ated previous assertions that he was solvent and could pay all notes out standing against him as a result o1 his operation of the Securities Ex- change company. It was the large business done by this company which offered to pay fifty per cent interest in ninety days on all loans and which in fact, redeemed many notes at that interest in 45 days, that resulted ir the investigation now in progress by federal and state authorities. Pong claimed that through his manipula tion of international postal reply cou pons in various European countries he was not only able to pay the large interest rate to investors, but in addi tion to make huge profits for him self.
 l Hear Bankrupt Plea. l When an auditor was employed by federal authorities to go over hi' books and determine his liabilities Ponzi announced that he would ac cept no more loans until the investi gation was completed, but that h. would honor all outstanding notes For several days last week his of fices were besieged by men, womel and boys who had entrusted thei savings to him. Every note present ed was redeemed, those which ha, reached maturity also drawing 30 pc cent.
 Payments were at first made il cash and later by checks on the Han over Trust company. By the last O the week the run had subsided an, only few note holders presente, themselves at Ponzi's office eacl day. s''sx
 On Monday last the bank commits |sioner ordered the Hanover Trus company to honor no more check drawn by Ponzi or his agents, an nouncing that it had been discovere, lthat Ponzi's account, entered in tn, tx fContinued on Page 0l