The con man who invented the pyramid scam.
The first chapter of Dean Jobb’s comprehensively researched and enthralling account of the life, times and crimes of Leo Koretz begins in June 1922 at Chicago’s posh Drake Hotel. An elegant banquet celebrates “Oil King” Koretz, the “New Rockefeller” whose Bayano Syndicate, a timber business turned oil empire, has made many of his friends and associates filthy rich. A “fine vellum” booklet at each place setting offers a satirical bio of the man of the hour, including a jesting reference to “Our Ponzi,” such a ludicrous comparison to the inventor of the infamous Ponzi method of defraudig investors that “the diners roared with laughter.” By the end of a chapter that also sketches Chicago as a capital of both business and crime, and evokes the roaring, booming 1920s, Jobb unpacks the first irony of “Our Ponzi,” unmasking the master swindler and revealing the author as an equally masterful storyteller.
Koretz’s story proves to be high-stakes drama of the first order. After his family immigrated to the United States from Bohemia when Koretz was 8, he quickly set out on a path to a good education and American success. A superior student and gifted debater, the boy became his high school’s leading fundraiser for good causes. After graduating, he clerked at a law firm and took evening courses to earn his degree. It was as a young lawyer that Koretz took what he called his first “dip into dishonesty,” offering a fake mortgage to a client with money to invest. From there he went on to invent increasingly elaborate confidence schemes, including a slew of fictitious claims on Arkansas rice farms.
After Koretz made his own “fool mistake” in 1908, investing in a bogus land deal in Panama, he came up with a “big idea” about that faraway country’s Bayano region, and then bigger ideas after that, until his syndicate had 5,000 employees, plans for a pipeline spanning Panama, orders for a dozen tankers to transport oil to the States and increasingly generous buyout offers from Standard Oil — each declined in turn, or so Koretz said. Along the way, he honed his strategy of “negative salesmanship,” building on what one duped client called “the principle that a person will literally fight for something that is most difficult to get.” The more Koretz discouraged investors, the more he insisted that no stock was available, the more those wealthy friends wanted in: “They camped at the curb outside my home, and at my doorstep,” he recalled.
The ultimate irony of Koretz’s career is that he was performing the Ponzi maneuver — misusing contributions from newinvestors to pay dividends to earlier ones — before Charles Ponzi himself. (As Jobb notes, it could have been called the Koretz scheme, except that Ponzi got caught first.) And while Ponzi’s scheme fell apart within a single year (1920), Koretz’s persisted for nearly two decades. Even when the fictional syndicate began to dismantle in 1923, Koretz still enjoyed everyone’s confidence. Sending off a batch of freshly hired executives to Panama to inspect operations, and using the trip’s length to buy time for his escape, he was handed a literal blank check for yet another deal, to be filled out “once he knew exactly how much money was needed.”
And that’s not even the halfway point of an audacious story that also features secret love nests and affairs with many women; multiple identities, rough disguises and a stint of hiding in plain sight; an international manhunt, a fateful knock at the door and a gripping court drama; and so many of Koretz’s shenanigans in chapter after chapter that the margins of my copy of the book are now punctuated with strings of red exclamation points. Even when he lands in prison, his plotting’s not done; an “escape plan” is still ahead.
High-stakes hijinks give the story a rollicking feel, but Jobb manages great poignancy, too, from his portrait of Koretz’s wife, Mae, stung by her husband’s betrayal and committed to making amends to his victims, to brief anecdotes about those victims, such as the dining-car steward who invested his life savings and then quit his job “to live off the profits he was certain were headed his way.”
Koretz’s life parallels that of his prosecutor, state’s attorney Robert Crowe, best known for convicting the thrill killers Leopold and Loeb. Crowe and Koretz both graduated from Chicago high schools in 1898, a year Jobb calls “a pivotal one for the United States, marking its transformation from young nation to global superpower.” The two men began legal careers in the same firm, and despite their different paths, Jobb notes that “both would prove . . . willing to do what had to be done to get ahead.” That Crowe ends up pursuing and prosecuting Leo would be inevitable in fiction; here, it’s just another of the story’s dense ironies. More than backdrop, Chicago’s corrupt political scene and gangland violence spur Crowe’s intense focus on indictments and prosecution. His ambitions need a win.
After peaking in true-crime magazines and criminology textbooks of the 1930s, ’40s and ’50s, Koretz’s fame waned. While Ponzi’s name lives on in such venues as the Encyclopedia Brittanica and the Oxford English Dictionary, Koretz didn’t even rate a Wikipedia entry until just after this book was published. This lively and sweeping account seems to have already given a master con artist his due, putting him in the “pantheon of pyramid-building swindlers.”
Leo Koretz was pulling off Ponzi tricks — paying new investors on contributions from old ones — before Charles Ponzi himself.
In addition to his fake business, Leo Koretz had affairs with many women in secret love nests, multiple identities, rough disguises and a stint of hiding in plain sight.
A Bayano River Syndicate stock certificate. Koretz stimulated investors’ demand for shares in the phony syndicate by limiting their supply.
By Dean Jobb Algonquin. 336 pp. $27.95 EMPIRE OF DECEPTION The Incredible Story of a Master Swindler Who Seduced a City and Captivated the Nation