Norwich bulletin., 1920-08-12

Boston, Aug. 11.-Charles Ponzi, whoo has handled millions of dollars of other peoples money in the last few months, confessed in a formal statement today that he was a former convict. While he was making tbis statement the Hanover Trust Company, in which Ponzi was a director and a shareholder and through which he had done a large checking bus mess, was closed by order of Bank Commissioner Joseph c. Allen. Ponzi at the same time announced his resignation from the banks directorate.
 Commissioner Allen said that he had taken action because his examiners 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 Han over Trust Company in a statement late today said the committee believed that there were few poor loans on the banks books, that there was no reason to be- liepe that the bank would not continue to meet it's obligations and that it had a cash reserve of three times the amount that the law, requres William s. McNary, treasurer of the bank. said that -Ponzi did not owe the bank cent, that any bank in the country would have been glad of his account and that Ponzi had paid out six million dollars through the bank.
 Ponzis confession followed the pub lication in morning newspapers of stor- ies of the career of Charles Ponsi'' in Montreal. Confronted with these stor- ies. Ponzi conferred with his attorneys and then gave to newspaper men lengthy statement in which he admitted that he and "Ponsi'' were the same man, that he had served twenty months in prison in Montreal for forgery, and that subsequently, he had served two years in the federal penitentiary at Atlanta, Ga, for smuggling Italians into this country.
 Claims Innocence.
 He asserted that his sentence for for gery resulted from his assuming the blame for crime committed by ban lker in Montreal by whom he had been employed and who had fled to Mexico
 T am not trying to pose as a hero" he added.
 As to the smuggling incident. Ponsi declared that he did not smuggle Ital- ians into this country
 Within ten days. of my release (from the Montreal prison)". he said T was asked to escort five Italians into the United States. I did not smuggle them in. I crossed the border on the train openly and was placed immediately un- der arrest"
 He said he had not previously made known these incidents in a. career be- cause he felt that the past had very little bearing on the present situation D
 If I made a mistake l paid for it," he said. T had every reason to believe that society owed me another chance"
 Maintains He Is Solvent.
 Ponz, in a later statement, reiterated previous assertions that he was solvent and could pay all notes outstanding against him as result of his operation of the Securities Exchange Company. It was the large business done by this company which offered to pay 50 per cent. interest in ninety days on all loans and which in fact redeemed many notes with that interest in A days, that re- suited in the investigation now in prog ress by federal and state authorities. Ponzi claimed that through his manpu- lation of international postal reply cou- pons in various European countries he was able not only to pay the large in terest rate to investors but in addition to make huge profits for himself.
 When an auditor was employed by federal authorities to go over his books and determine his liabilities, Ponzi an nounced that he would accept no more loans until the investigation was com pleted, but that he would honor all out standing notes. For several days last week his offices were besieged by men, women and boys who had entrusted their savings to him. Every note presented T.-l ,.ol.a maturity also drawing 50 per cent. in terest Similar action was taken at his branch offices in several New England cities.
 Payments were made at first in cash and toward the end of the run in checks on the Hanover Trust Company. By the last of the week the run had subsided and only Q few note holders presented themselves at Ponzi's office each day.
 Account Overdrawn.
 On Monday last the bank commission CT ordered the Hanover Trust Company to honor no more checks drawn by Ponzi or his agents announcing that it had been discovered that Ponzi's account en- tered in the name of a trustee had been overdrawn. Ponzi then discontinued the payment of notes.
 Three creditors, with total claims of $F5O filed petition in bankruptcy, against Ponzi on the same day. They alleged that he had made preferential payments to other creditors.
 On Monday, also, Attorney General J. Weston Allen, gave out a statement of some of the results of his investigation on behalf of the state. He said that so far he had been unable to find anything to verify Ponzi's claims of extensive dealings in international reply coupons.
 The report of the federal auditor has not yet been filed. A subpoena issued in the bankruptcy proceedings is return able on August Is.