South Bend news-times. (South Bend, Ind.) 1913-1938, 1920-08-13
PONZI GIVES
SELF UP TO
FEDERAL MEN
Financial Wizard Tells Au-
thorities He is Unable 10
Meet Obligations.


estimated at from $4,000 900 TO F..
$4,000. 900 TO Charles Ponzi in
money making schemes which pos 4
1al officials Thursday declared 70 be
absolutely INK ossible OF fulhllment- T
PorE surrendered % the federal
authorities Thursday afternoon. eX-
planning that ne was unable TO meet /
his obligations because Of the clos I
inZ "Wednesday OF the Hanover /
Trust company, where the bulk OF
his funds We're deposited. He was
arrested charged with having used
the mails 90 derraud. arraigned and /
held In bonds Of $4,000 for a hear |
ing August 10.
Furnishes Bond.
Morris Rudnick. a real estate
dealer OF the Roxbury district, FUN
fshed the securities. Meanwhile a
warrant charging the Italian with
larceny had been obtained by the
state police in the municipal court
and Upon leaving the federal build
ing PonZi was rearrested and held
by the city court in 10000 bail for
appearance Aug. %. Rudnick again
went on POnzis bond and the lat
Her was released.
Developments followed thick and
fast Thursday AS Ponzi was being
arraigned before United States Com
missioner Hayes. Edward l. Pride,
who is examining the books Of the
SECURITIES Exchange company for
the federal authorities announced
that IL already had been shown that
Ponzi owed 100000.
Millions I'm Liabilities.
State Attorney General J. Weston
ALLEN. who IS conducting a separate
Investigation. made known his opin-
don that POnzi's liabilities would run
into the millions. State Bank exam
1ner Joseph Q. Allen issued state
1nent declaring that the capital of
1he Hanover Trust comTauy. of
which POnzi until Wednesday was a
director. was seriously impaired and
sprOba bly, wiped out. State Treasur-
Ter Fred J. Burrell attacked the
bank commissioner for not having
given him opportunity TO withdraw
state funds before the Hanover was
CLOSED and Gov. 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 S12o, 600.
Ponzfs field appears TO have in
Cluded New England and New Jer-
sey. This line that formed daily
an ri alley at the rear of Ponzis
School street office appears TO have
been far from representative OF his
clients. This was made up largely
of foreigners who were more inter
ested in getting their money than in
protecting their regulations as wise
81 eculators.
Many Accept Bait.
Anxious inquiries at the newspa-
per offices and feverish CONVERSE
tons In downtown restaurants in
dicated that the proprietors OF small
businesses, professional men and
women, clerks and stenographers by
the thousands accepted the bait of
fifty percent profit in 45 days"
Agents working I'm offices and fac
tories interested large numbers.
particularly among the Italians The
mystery OF Ponzis methods added
10 the attra ctfveness Of his promises.
1t Is said that in many cases the
possibilities OF prohtably exchanging
American dollars for French francs
and francs for italian lire and the
latter for something else seemed
plausible enough without a clear
COMP rehension or just how the thing
worked ont
Among the amazing disclosures
was that the bulk OF Ponzi's mill
lions were gathered I'm after the
postoffice department had begun its
investigation last February Tn dis
cussing the Ponzi case Thursday
Chief OstofIiCe Inspector Hal e
Ncstigations had shown. Ponzi had
never done any business i'm iuterna-
1lOnal reply coupons. He said that
he had warned hundreds of people
against PonZi when Inquiries began
10 come I'm last February chat no
man or set of men could mauipu-
late or speculate i'm International re-
ply coupons iu any such manner as
they alleged Ponzi had explained 10
them.
inspectors Reply.
Earlier In reply 90 81 cciic inQuir-
ies. Inspector Moseby said
"Our attention was first called to
Pouzis operates last February
when Inquiries began coming I'm to
The Office from investors and pros
pcctive investors. and an iuvostiEa-
ton was Immediately undertaken.
Since that time we have been work
ing In Europe and elsewhere
As a result Of this investigation
we have obtained conclusive evil
dence that there has been no alb
normal issue or redemption of the
international reply coupons. while
on the other hand in some countries
zhe use OF coupons has been greatly
Curtailed 90 prevent this very
scheme which no doubt has reached
the ears OF postal officers in many
foreign countries There Is no
means by which man can uanipu-
late international reply coupon y
POnzrs claim thal he has made mill
lions IN this way is simply stu
pendous fraud with nothing upon
which e. can be based
Could Handle Millions.
The entire issue and redemption
n international reply coupons
throughout the postal union for the
past six years would not aggregate
$500. coo. Ponzi could not have
handled the millions OF the coupons
that would have been necessary 10
make the fortune he claimed 20 have
amassed in the past few months
without the knowledge Of officials OF
The governments and Of the postal
union
"It would be foolish for Italy 20
redeem coupons at the great differ
ence IN the rate 81 exchange for she
would stand 20 lose the difference
when the time came 70 settle the
accounts
The most amazing thing. and the
thing which 7 am not able 20 under
stand IS why people invested their