The con man who in­vented the pyra­mid scam.

The Washington Post Sunday - - OUTLOOK - Art Tay­lor is an as­sis­tant pro­fes­sor of English at Ge­orge Ma­son Univer­sity and a prize-win­ning short-story writer. book­world@wash­ RE­VIEW BY ART TAY­LOR

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

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