Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1920-08-12
FINANCIAL WIZARD
IS FORMER CONVICT
Chas. POnzi Admits Serving Two
Prison Observation-Disclosures
His Innocence of Cri m s
Charged-Says He Is Solvent

Rostcn, Aug 11.-Charles Ponzi who has
handled millions Of dollars of other peo-
Pies money in the last few months con-
fessed In formal statement to-day that
he was a former convict. While he was
making this statement. the Hanover
Trust company. in which Ponz! was a
director and SHIRE holder and through
which he had done large checking bus
lness, was closed by order of Bank Com
missioner Joseph c. Allen. Ponzi at the
Same time announced his resig nation from
the banks directorate
Commissioner Allen said that he had
taken action because hi. examiners had
found that tho bank had made loans
which "wore excessive and beyond the
legal limit" and many loans that are
either -eed or are of very doubtful val
ue." He expressed the fear that the
banks capital had been impaired.
The executive committee OF the Han
over Trust company In a statement late
to-day said the committee believed thar
thorc were few poor loans on the banks
books, that there WAS no reason to believe
that the bank would not continue to meet
It's obligations and that it had cash re-
serve of three times the amount that the
law requires. William S. McMary. treas
urer 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 Ponz had paid out six
million dollars through the bank.
Ponzi's confession followed the publca-
ton in morning newspapers of stories of
the career of Charles Ponsi' In Montreal.
Confronted with these stories, Ponzi con-
ferred with his attorneys and then gave
to newspapermen a lengthy statement In
which he admitted that he and "Ponsi"
hn ttot h, l,I
90 months in prison In Montreal for forg-
cry. and that subsequently he had served
two years in the federal pententiary at
Atlanta, Ga. for smuggling Italians into
this country. He asserted that his sem
tence for forgery resulted from his as
suming the blame for n crime committed
by banker in Montreal by whom he had
been employed and who had fled to Mex
leo.
II am not trying to pose as a hero" he
added.
AS to the smuggling incident. Ponzi de-
clared that he did not smuggle Italians
into this country.
within ten days of my release (from
the Montreal prison) he said. II was asked
to escort five Italians into the United
States I did not smuggle them in.
crossed the border on the train openly and
was Immediately placed under arrest"
He said he had not previously made
known these incidents In his career be-
cause he felt that The past had very
little bearing on the present situation"
IF I made mistake, I paid for it," he
said, Il had every reason to believe that
society owed me another chance"
Ponzi, In later statement. reiterated
previous assertions that he was solvent
and could pay all notes outstanding
against him as a result of his operation
of the Securities Exchange company 1t
was the large business done by this COM
pany. which offered to pay so per cent in
terest In 30 days on all loans and which
in fact redeemed many notes with that
interest in 45 days, that resulted in the
investigation now in progress by federal
and State authorities, Ponzi claimed that
through his manipulation Of International
postal reply coupons in various European
countries he was able not only to pay the
large interest rate to investors. but in
addition to make huge profits for him
self.
When an auditor was employed by fed
eral authorities to go over his books and
determine his liabilities, Ponzi announced
that he would accept no more loans until
the investigation was completed. but that
he would honor all outstanding 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 was redeemed, those which
had reached maturity drawing 80 per cent
interest Similar action was taken at
his branch Offices in several New Eng
land 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 few note holders pre-
sented themselves at Ponzis office each
day
On Monday last the bank commissioner
ordered the Hanover Trust company to
honor no more checks drawn by Ponzi
or his agents. announcing that II had been
discovered that PonZi's account entered
In the name Of a trustee. had been over
drawn. Porzi then discontinued the pay
| ment of notes.
Three creditors. with total claims of
$3.50. filed petition In bankruptcy against
Ponzi on the same day. They allege that
he had made preferential payments to
| other creditors.
On Monday, also. Attorney General ].
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 Ponzis claims of extensive
dealings in international reply coupons.
| The report Of the federal auditor has not
yet been filed. subpoenae issued in the
bankruptcy proceedings Is returnable on
August 16.