Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1920-10-16
Ponzi Bankrupt
Declares Referee
Not a Burglar"

Boston, Oct- lo-Charles po,.
whose international postal cora.
scheme and offers of 30 per cent ~.
fits in As days collapsed two nor,v' Nv
ago with millions of public jnv.s.
ments tied up in it, was declared :.
solvent today by James D. Olms,,.,
referee in bankruptcy. In rsna4
submitted to the Federal dis, 10y
court, the referee found that po,r
had no partners
while Mr.. Ponzi is not n /.
classed in the same category viii :
robber and a burglar" the decisi.a
said. he was undoubtedly a cley..
manipulator who took advantase :,
the credulity of the investing nnh,,"
which in this instance, is the usnr..
The investors who loaned ,,.,.
money for a return Of the prjncin.,
and 80 per cent interest would sssn
themselves to be guilty of usurv i
such existed"
That Mr.. Ponzi took advan,,s y,
the weakness of the community ia \.
victimized is apparent, and is srs
cient to condemn his acts. So Inv,
as the current of money flowed in h.
could pay his first investors with p.
ceipts from the last. 1t was ano,b,.
instance of robbing Peter to nav
Paul"
The finding of the referee cam,
after five weeks Of hearings in ma
ceedings independent of the recsre,.
ship"
Referee Olmstead added IN hi,
finding a statement that there Wa,
no evidence adduced before me ,o,,
Mr.. Ponzi ever conducted his bus.
ness by use of the mails"
PonZi, who has been in the East
Cambridge Jail for two months IS
now under Indictment by the Federal
grand jury on Sc counts for using n,
mails in scheme to defraud.
On the question of Ponzls SOL.
vency, the referee said that both
Federal accountants who testIsed
had said that The had issued notes in
excess of $14,OOO.OOO; that his out. !
standing liabilities at or about The
time of filing the petition were s..
94S, 267. To meet this liability NJ
Rittenhouse submitted list of assets
showing the grand total of 221956S
MIR. Ponzi in a statement in court
tried to meet this situation by claim.
ing that he had paid nine and half
millions instead of about millions
as stated by Mr.. Pride, but Their
should be added to the two millions
assets reported by Rittenhouse about
a million or more, derivabe Sargey.
from refunds of agents commissions
Il am inclined TO play more relianN
on the report of the accountants that
the liabilities were nearer seven NIL
lions than three millions. which Mr.
Ponzi claimed he owed. In a state.
ment to Mr.. Pride, Mr.. Ponzi hm
said that he could not raise more
than three millions, and that he
could not raise more than four nil
lions, and that he was insolvent
I'm the receivers examination M
Ponzi testified:
"I never knew at anytime how
much l had taken in the banks er. /
actiy'
During the month of July bis
funds in various banks were under
attachment and his conditions was
growing desperate. The evidence a.
so showed that he had deposits in |
other peoples names.
Il therefore conclude that he was |
not only insolvent when he made
these transfers or payments referring |
to transactions prior TO the CLOSING |
of Ponsi's business in August, but |
he also knew that he was insolven |
and that the intent TO proger as r.
quired by the State to constitute an
act of bankruptcy is inferrable from
his act