Prince of Fraud: The Rise and Fall of a Master Con Man
Prince of Fraud: The Incredible True Story of Leo Koretz, Master of the Ponzi Scheme, and the Great Chicago Oil Swindle
A riveting story of greed, glamour and gullibility set in 1920s Chicago – with a Canadian connection
(My new book – Coming soon from New York-based Algonquin Books, a division of Workman Publishing)
Read the announcement in the Canadian book trade magazine Quill & Quire.
Leo Koretz
He ran one of the longest, most elaborate and most successful swindles in history. For more than fifteen years, a charming, smooth-talking Chicago lawyer enticed hundreds of people to invest as much as $20 million – about $200 million today – in the Bayano River Trust. The trust, he claimed, controlled millions of acres of land in Panama, including oilfields that produced vast amounts of oil – and generated an astounding sixty-per-cent return. Even John D. Rockefeller’s Standard Oil conglomerate, he assured his grateful investors, was desperate to buy into the Bayano windfall.
His name? Leo Koretz, the Bernie Madoff of the 1920s, a con man extraordinaire posing as a financial genius. The New York Times considered him “the most resourceful confidence man in the United States.” The Chicago Daily Tribune agreed, describing him as “the most boldfaced swindler” of his time. And to Pulitzer Prize-winning author W.A. Swanberg, one of the few writers to chronicle his exploits, Koretz was “the swindler of the century,” winning his victims’ trust through “a personal magnetism that was well-nigh hypnotic.” And when his scheme collapsed in 1923, under the weight of his own dazzling success in reeling in the suckers, he almost made a clean getaway to a life of luxury in Nova Scotia, on Canada’s east coast.
His method was simple: Promise high returns and, when the money rolls in, use some to pay fat dividends to keep the stockholders happy while skimming off the rest. It’s the formula Madoff used to rake in billions of dollars, a financial sleight of hand known as a Ponzi scheme. Charles Ponzi, a contemporary of Koretz, used it in 1920 to fleece unsuspecting immigrants, promising huge profits from the resale of postal-reply coupons.
If not for the fact Ponzi’s short-lived fraud was exposed first, the financial press and Wall Street regulators might be warning today’s investors to beware of Koretz schemes. Koretz mastered the investment scam long before Ponzi stole a dime and it took his imagination, bravado, and charm to raise the pyramid swindle to an art form. Koretz was so slick and so convincing, nothing could shake investors’ faith in the man they hailed as “The New Rockefeller,” not even the exposure of Ponzi’s fraud in the midst of his own. They simply gave Koretz a new nickname: “Our Ponzi.”
Bayano River Trust stock certificate
Koretz lived well on the backs of his Bayano investors, splurging on a twenty-room mansion overlooking Lake Michigan, a Rolls Royce limousine, suites at the finest hotels in Chicago and New York, a cache of bootlegged booze, and a string of mistresses. “I don’t see why these women won’t leave me alone,” he once complained in jest, knowing full well the answer was the charm and money he used to win their affections.
The house of cards came crashing down in December 1923, when a group of investors boarded a steamer and headed to Panama to tour their lucrative holdings. Koretz stood on a New York pier to see them off, then scraped together as much cash as he could. By the time the investors discovered the truth – their bonanza was a swath of worthless jungle and swamp – Koretz had abandoned his wife and two children and disappeared. After laying low for a few months in New York, he made his way east to Nova Scotia. He grew a beard to mask his identity, adopted the alias Lou Keyte, and posed as a wealthy literary critic. He converted a secluded hunting lodge on the province’s South Shore into a posh estate and soon attracted a new circle of friends, including the young women whose company he preferred. Author and adventurer Zane Grey, who fished for tuna off Nova Scotia during the summer of 1924, was rumoured to have been one of his many guests.
Koretz after his arrest in Halifax
Prince of Fraud: The Incredible True Story of Leo Koretz, Master of the Ponzi Scheme, and the Great Chicago Oil Swindle is the first book to chronicle the exploits of one of the slickest con men in history. It will capture the intrigue and drama of Koretz’s stranger-than-fiction story while recreating an era when it seemed everyone was entitled to easy riches. The Dot-Com bubble, the collapse of Enron and WorldCom, the implosion of asset-backed commercial paper and the stock market meltdown of 2008 are reminders those heady times were not so different from our own. The book will establish Koretz, not Charles Ponzi, as the first to master the pyramid stock scheme. It will dissect how con men and stock swindles operate. It will compare the overheated economy of the 1920s to the risky investments that created the financial turmoil of our time. Most of all it will expose the pitfalls, then and now, of too much trust, too much greed, and too little common sense.
Inside Detective magazine from 1938, with cover story on "lover boy" Leo Koretz
Koretz’s brazen swindle is a compelling story that combines drama and humour. It is a cautionary tale that will resonate with readers who are curious about how con men such as Bernie Madoff operate and everyone who has watched their investments and retirement savings shrink and rebound in the Great Recession. It is a rollicking tale of greed and gullibility, lies and betrayal, and grandeur and delusion that could have been ripped from today’s headlines. It is a story played out against a Jazz Age backdrop that reaches from the tough streets of Chicago to the remote jungles of Panama, from the glitter of Manhattan’s finest hotels to the backwoods of Nova Scotia.
This story sounds like a wonderful tale of wealth and naivety; a perfect combination for a talented con-man. What a great storyline for a movie!