Baker, George (AKA: Father Divine)
, c.1882-1965, U.S., fraud. George Baker's origins are hazy but it is fairly certain that he was not, as he once claimed, "combusted one day in 1900 on the corner of Seventh Avenue and 134th Street in Harlem." He was born about 1882 in the South, most probably Georgia, where he worked on a plantation as a young man. He later worked as a gardener for $3 a week. He met a traveling preacher named Samuel Harris and learned the art of addressing crowds, particularly at black hallelujah gatherings. Shrewd and cunning far beyond the gullible nature of his own people, Baker soon realized that he could manipulate audiences better than his employer. In 1914, he struck out on his own, appearing in backwater Georgia counties where he boomed: "I be God, you be God, drop your yoke of bondage." He announced that he was The Messenger, or John Doe, alias God, or God in the Sunship Degree. This gobbledygook went over well with his naive followers whose deep poverty and lack of education caused them to rush to his side, embracing whatever philosophy he cared to spew forth.
Baker, who was now called Father Divine, appealed mostly to female blacks whose "yoke of bondage" consisted of cooking and cleaning for their husbands, a burden they wished to abandon. Scores of husbands quickly filed complaints against Father Divine for fraud and, in 1915, ironically coinciding with the rebirth of the Ku Klux Klan in Georgia, a Georgia court convicted him. Rather than imprison and make a local martyr out of him, the court ordered Father Divine to leave the state. He departed with a number of followers, mostly female, including a new and personable wife named Peninah. The cult arrived in New York and settled in Sayville, Long Island, where he established a rollicking commune. Every Sunday his wife, an excellent cook, prepared a sumptuous feast of fried chicken, ribs, stew, mashed potatoes, vegetables of all varieties, and mountains of homemade ice cream. The Sunday meetings conducted by Father Divine were half lecture and half feast, and soon scores of blacks from the depressed areas of the Bronx and Brooklyn flocked to Long Island to see the new preacher.
Father Divine's message to them was simple. If they did exactly as he told them, they would live forever, never die, and have eternal happiness and wealth beyond their wildest imaginations. He established dormitories for men and women and sent them out to work as cheap labor gangs. In return for their keep and Peninah's cooking, the followers gave almost all their income to Father Divine. He grew rich and his cult expanded to the point where local residents began to complain about his revival meetings and general operations, charging fraud and disturbing the peace. Official charges were finally brought against Father Divine who faced trial on May 24, 1932, standing before Judge Lewis J. Smith. The defendant and his followers promised terrible retribution if the Messenger was punished, but Judge Smith ignored these threats and, after conviction, sentenced Father Divine to a year in jail and fined him $500. Four days later, although he was in good health, 50-year-old Judge Smith died. Father Divine seized upon this happenstance and said loudly in his cell: "I hated to do it," clearly implying that, as God, he had been instrumental in Judge Smith's departure from this world. This "miracle" caused hundreds of disbelievers to embrace Father Divine's patchy religion. When he moved to Harlem in 1933, he was overwhelmed with
destitute followers. Already wealthy from his Long Island operation, Father Divine purchased several run-down boarding houses, calling these "Heavens," and moved his flock into them. His organization grew over the years until Father Divine was one of the most powerful and influential residents of Harlem, a man who decided elections and decreed how much money each follower had to tithe to his church each year. He was many times a millionaire before he died but he had, according to many of his followers, betrayed the cult and his people in his absolute greed for money. Moreover, Father Divine abandoned his first black wife and two more before marrying a white Canadian blonde, Edna Rose Ritchings, whom he renamed Sweet Angel.
Father Divine kept from his people the fact that his first wife, Peninah, died of cancer. Mortal death had been banished by Father Divine and to admit its reality was to destroy his ministry. He explained to his disgruntled followers that his wife, Sweet Angel, was the reincarnation of his first spouse, Peninah. Though he claimed he owned nothing, that everything was owned by the ministry (this, of course, to avoid IRS problems), Father Divine lived like a king while his followers continued to wear threadbare clothing and feast only at his Sunday banquets. He and Sweet Angel traveled about in Rolls Royce limousines, living in luxury suites of hotels in New York and Philadelphia owned by the ministry. They wore fur coats and were waited upon by a thirty-person staff.
Father Divine claimed to have millions of followers but there were apparently never more than 50,000 believers at a given time. Their utter devotion to him as God, however, assured him with a life of ease and comfort. He died, contrary to his own supernatural dictates, in 1965, as he lay in his four -poster bed, pink silk sheets about his corpulent body. Following his death, the ministry fell off considerably to a handful of diehard believers.
Baker, Mary (Mary Wilcox, AKA: Caraboo)
, 1795-1865, Brit., fraud. Eighteen-year-old Wilcox ran away from her Devon home searching for the good life. While in London, working as a maid, she met her husband, who later left her to travel to the Orient. Before he went away, he explained to Mary what the Orient was like--its various cultures, customary dress, and many languages. Mary later used this knowledge to acquire fare for travel to the U.S. by defrauding Samuel Worrall of several pounds.
Mary passed herself off to Worrall as an Oriental princess named Caraboo, from the land of Javasu. She said she had arrived in London after being kidnapped by pirates and had escaped by jumping from their ship while it was anchored in the English Channel. Worrall found her story so fascinating that he related her tragedy to a friend who used her as a subject for an article which gave the Javasu princess national notoriety.
Soon a woman from Bristol contacted Worrall to say that she had also been duped by Caraboo. Baker was set up by Worrall with the woman's help. Once her ruse was exposed, she gave a full confession, explaining that she was trying to secure £5 to travel to America. The wealthy Worrall paid her fare to the U.S., but she returned to England in 1824. Mary Baker died in 1865 at the age of seventy.
Baker Estate Swindle
, 1866-1936, Can.-U.S., fraud. The Baker Estate Swindle centered about a fabulous inheritance for almost anyone named Baker who might have been related to Jacob Baker, a wealthy Philadelphia landowner who died in 1839. According to this scheme, anyone named Baker, Becker, or Barker were entitled to land that occupied the center of Philadelphia and was worth between $1 billion and $3 billion. This incredibly wealthy area, the con men who operated this scheme pointed out, included Independence Hall, the Pennsylvania Railroad Station, Benjamin Franklin's grave, and the Liberty Bell--some of America's most hallowed and historical sites. The scheme was begun as early as 1866 in Ontario, Can., where sharpers gleaned a fortune from suckers named Baker who contributed vast sums for legal fees in the battle to free the real estate from local and state control. The scheme was reborn in the late 1880s and at the turn of the century.
The most flagrant operator of the Baker Estate Swindle was William Cameron Morrow Smith, who took in millions of dollars from gullible investors named Baker. These investors received monthly reports on bogus legal battles in Philadelphia and throughout Pennsylvania as valiant attorneys (who never existed) took on the state legislature in their incessant war to win back for everyone named Baker, Becker, or Barker that which was rightfully theirs. The scheme was particularly effective in the towns of Altoona, Johnstown, and Pittsburgh, Pa., where Smith and his many agents were most active. Alfred T. Hawksworth, an intrepid postal inspector who spent twenty years gathering evidence on the Smith clan, finally had Smith and twenty-eight of his confederates brought to trial in 1936. The 70-year-old Smith, it was proved, had mulcted more than 3,000 people named Baker, Barker, and Becker (even a few named Beck) into contributing more than $4 million to his heroic legal fight. He was given a long prison term and died later in his cell, still writing letters to gullible marks to contribute to his legal battle to win a pardon and go on with his crusade to free the property of Jacob Baker from a dogged and
nameless probate court.
Balfour, Jabez Spencer
, 1843-1912, Brit., fraud. Balfour's parents were moderately successful people who provided an above-average education for their son and a way of life that was at the edge of the upper crust, one that gave him a sense of superiority and opulence. His father was a minor official for the Ways and Means Office of the House of Commons and his mother was an author of some repute, writing two popular purple-prosed works entitled Women of Scripture and Moral Heroism. She was able, from the sales of these works, to give her son an education in France and Germany. While in his early twenties, Balfour became a member of parliamentary agents and soon rose to become the director of Lands Allotment Ltd., an appointment, which he later admitted "took me quite by surprise."
Mouthing idealism, Balfour became a self-appointed champion of the little man in England, vowing that he would bring financially depressed people better housing and a brighter future. These lofty promises got him elected as a Liberal representative to Parliament. This occurred during a period when the small property owner made advances in acquisitions and, as head of the Balfour Group, the enterprising Balfour encouraged investments in Lands Allotment Ltd. and the Liberator Building Society which, under his leadership, increased its holdings from £15,000 in 1867 to £750,000 in 1888. Hotels and homes were built by the firm but profits were largely on paper only and few dividends ever declared, most of the money going into Balfour's own pockets. Balfour showed profits through the sale of land and buildings from one company to another, all of which he controlled or owned, a sort of Peter-to-Paul swindle which was made
complicated and almost impenetrable through a labyrinth of documents and deeds.
A financial panic in 1892 caused investors to make universal withdrawals against the Liberator Building Society, demands the firm could not meet since it held mostly paper assets. The Society collapsed and more than 25,000 people were financially ruined, the very constituents Balfour represented in Parliament. Instead of attempting to explain his position, Balfour fled to Argentina and successfully avoided extradition for three years. During this period, the government assigned a small army of accountants and land experts to examine the miasmic records of the Balfour Group, and by the time Balfour was returned to England in 1895, enough evidence was at hand to convict him of fraud on Nov. 28, 1895. He was sentenced to fourteen years in prison and there drew upon his family talent of writing, producing an excellent record of his incarceration entitled My Prison Life, which produced enough sales to make
Balfour somewhat comfortable in his old age.
Ballard, Guy, d.1939
, U.S., fraud. Ballard and his wife engineered one of the largest swindles of the 1930s when they promoted themselves as the earthly missionaries of St. Germain during the whirlwind "Great I Am" tour then crisscrossing the nation. Ballard claimed that he had met St. Germain at the top of California's Mt. Shasta, and that this patron saint of the occult instructed him to spread his gospel of immortal life throughout the U.S.Ballard added that all believers, in return for "love gifts," would win immortality upon their death. "Love gifts" were to be presented to St. Germain through the Ballards--his sole human disciples--and the gifts were to include anything of value, especially U.S. currency. Believers in the "Great I Am" were also forbidden to own pets, eat meat, or touch onions, and they were instructed by St. Germain to remain clean and never wear soiled underwear or have body odor.
After five years of preaching the gospel according to St. Germain, the Ballards had acquired over three million followers and amassed huge sums of money from "love gifts" and a complete line of St. Germain souvenirs, inspirational items, and books from the St. Germain Press which published the teachings of their patron saint.
Guy Ballard died in 1939, but failed to reappear and prove his immortality as St. Germain had promised. His wife continued the charade for six months until she was arrested and sentenced to one year in prison for mail fraud. She was also indicted on charges of tax evasion, and eventually paid the U.S. Internal Revenue Service a total of $104,943.63 in back taxes.
Balsamo, Joseph, See: Cagliostro, Count Alessandro di
Banuolo, Donna, and Woodfield, Lawrence
, prom. 1981, U.S., fraud. Banuolo and
her boyfriend, Woodfield, were charged with fraud in 1980 when a Circuit Court judge in Chicago ruled that the couple had bilked a senile widow out of her $100,000 life savings which the woman had received after the death of her husband in 1977.
During their trial, Banuolo explained that she was using the money to help Mrs. Timo Joutsen secure legal counsel to handle her financial affairs following the sudden death of her 75-year-old husband. Mrs. Joutsen, suffering from senility since 1971, willingly gave the money to Banuolo who first deposited it into a joint savings account and later transferred it into Woodfield's personal checking account. The judge found them Guilty and ordered the couple to repay the entire $100,000.
, prom. 1930s-40s, Mex., fraud. Juan Barrena was an expert practitioner of the Spanish Prisoner con game. He would rope a wealthy American tourist traveling in Mexico, and, after ingratiating himself, would sorrowfully explain that his sister (sometimes it would be a cousin), a woman of incredible wealth, had been wrongly imprisoned and if she could only be released she would gladly turn over half her fortune to any benefactor bringing about her freedom. Barrena came equipped with all the convincing tools of this ancient and successful con game, providing cleverly faked documents to support the prisoner's identity and bank account statements that would stun any stock broker. The sucker would then begin to pay out sums to Barrena in exchange for the prisoner's fortune, a bleeding process that usually went on for a few weeks (thus making this game one of the Big Cons, in that it took considerable time to mulct the victim, as compared with the short con such as the pigeon-drop where the mark is taken within a few hours).
Barrena was usually assisted by towering, hatchet-faced Camilo Vasquez, who enacted the part of the head jailer in charge of the lady Barrena was trying to free, a greedy penologist who kept insisting that more and more money be paid by the mark. When the sucker appeared to grow suspicious or believe he was overextending himself, the two con men would promise to deliver the prisoner the next night. Invariably, the sucker would be waiting in his car to spirit the beautiful and grateful prisoner away but, of course, she would never appear and Barrena and Vasquez would disappear. So flagrantly tireless were these two con men in the working of the Spanish Prisoner game that they were eventually identified by Mexican police in 1941 and, were delivered to San Francisco authorities by two cooperative Mexican detectives without the benefit of a then existing extradition treaty between the U.S. and Mexico. Both men were tried
in San Francisco and given long prison sentences for bilking one embarrassed American businessman out of thousands of dollars. The Mexican press, however, roared its indignation at the human hijacking of Barrena and Vasquez; one newspaper, Excelsior, indicting American authorities for its part in the extralegal abduction of the two con men, which had been labeled out and out kidnapping. Moreover, this publication applauded the con men by stating they had been correcting an uneven balance of money between the U.S. and Mexico and had exposed greedy Americans willing to break the law for a cut of an illegal pie. "If you study the problem purely and strictly from the point of view of justice," editorialized Excelsior, "Vasquez and Barrena are nothing more than two patriots--two ingenious helpers of morality...They worked to level the balance of exchange so perniciously weighted in favor of the powerful speakers of English.
They are helpers of morality because they dedicated themselves to the noble task of punishing all secretly immoral persons --defaulters without courage." This high-minded bombast, of course, has been the historic defense of all confidence men everywhere whenever their frauds have been exposed. It did Barrena and Vasquez little good as they were ushered away to serve their time in San Quentin.
Barrie, Peter C.. (AKA: Paddie Barrie), prom. 1930s, U.S., fraud. Of the many race track frauds involving doctored thoroughbreds over the years, Barrie stands out as one of the most ingenious of all turf swindlers.
Though his parents were Irish, Peter Barrie was born in Edinburgh, Scotland. He went to work at the stables of Lady Mary Cameron, a wealthy woman who lived outside Edinburgh. At the time, a spotted gray mare with no racing value took up valuable space in the stable, and Lady Cameron was anxious to unload it for whatever she could get. Barrie offered her $85, which she accepted. A few days later Barrie returned with a splendid-looking race horse which he offered to Cameron for $1,400. The bay-colored steed was feisty and ready to run, according to its trainer. The deal was consummated and Barrie left with his money. A few days later colored dye began to run off the horse. The $85 purchase had been made up to look like a prize race horse through narcotics and cheap dye.
Barrie moved to the U.S. where his talents were recognized by the gambling syndicates who paid him $5,000 each time he "doped" a mount that successfully won or lost, depending on the gangsters' strategy at the moment. Pinkerton detectives arrested him at Hialeah and tried to have him deported. However, he jumped bail and remained at large for two years, during which time he perpetrated his greatest swindle.
At Havre de Grace on Oct. 3, 1931, Barrie bought a prized three-year old stallion named Aknahton for $4,300. From a nearby stable he bought a sorrel named Shem who had yet to enter the winner's circle. With the time-tested methods used on Lady Cameron, Barrie made up Aknahton to look like Shem and entered the horse in the first race on the last day, at 52-1 odds. Needless to say, the horse won the event by a commanding four lengths. The heavy wagering returned Barrie and his bookie friends an estimated $1 million. As a result, the Jockey Club asked the Pinkerton Agency to devise a foolproof system of horse identification to prevent a similar deception. Each new horse now receives a number tattoo on the inner upper lip.
Barrie was apprehended by the Pinkertons--two years after he jumped bail—and deported.
Beall, Edward (AKA: The Black Prince)
, prom. 1895-1900, Brit., fraud. A solicitor who became part of a banking scheme that defrauded the public out of more than £30,000, Beall claimed he was merely a conduit for the cash. Known as The Black Prince, he rode in a fancy coach with four black horses, Edward Beall, a solicitor for twenty years, was arrested along with cohorts William James Carruthers Wain, a civil engineer, Thomas Lambert, a director, and Charles Singleton, a financial agent, in June 1899. The charges were issuing a false prospectus, conspiracy to fraud, making false returns, and obtaining money and securities under false pretenses. In 1893 the four men had opened The London and Scottish Banking and Discount Corporation, Ltd., a supposedly international firm that existed mostly on paper. Claiming a capitalization of £102,000, the company advertised a prospectus offering founders' shares for sale, and placed ads in prestigious financial magazines. Describing themselves as a bank of good position and standing, offering a variety of appealing investments and guarantees, the company circulated pamphlets and faked profits to declare dividends, ultimately bilking investors of more than £30,000. Their subsidiary companies included the British Steam and the London Refuse Steam companies, and part of their assets consisted of a patented dust destruction process which purported to turn household and street garbage into electricity without burning a pound of coal. When civil suits against them reached huge proportions, they were finally arrested and tried.
In the fifteen-day trial that took place at the Old Bailey before Mr. Justice Channel and a jury, Beall said he was only the "conduit pipe" for the passage of money. Channel said he was the brains of the operation and Singleton's work amounted to "frequently signing his name." Only Lambert was acquitted. Beall's solicitor's license was revoked when he was found Guilty, along with Singleton and Wain. Beall disappeared from business dealings for several years, resurfacing again in 1904 to be prosecuted for inciting a clerk to steal papers from a city solicitor's office, papers he intended to use for a blackmailing scheme. In 1914 Beall again was arrested for conspiracy to extort money--with four other men, he had blackmailed directors and company promoters into paying him for not publishing defamatory articles in a financial journal he controlled. Justice Darling sentenced Beall to five years of penal servitude.
, b.1850, U.S., fraud. Sophie Beck was a small-time confidence trickster in New York who finally hit upon a swindle that netted her a fortune. She moved to Philadelphia and there founded a hollow company she called The Story Cotton Company. Beck advertised widely for investors in a get-rich-quick firm that would somehow corner the cotton market; she promised a fifty percent return on any investor's funds within a short period of time. Within a few months, Beck had taken in more than $1 million. She closed her posh offices, fired her large staff, hired as a front, or, in the parlance of con men, a big store, then sailed for Europe where she changed her name and lived out a long, luxurious life as a grande dame.
, prom. 1780, Brit., fraud. A clever and eccentric art student wrote a book when he was twenty that purported to be about famous painters but was really a fraud.
In 1780 William Beckford, who would later author a famous gothic novel, Vathek, wrote Biographical Memoirs of Extraordinary Painters, a witty satire inspired by facetious remarks a housekeeper at Fonthill Abbey would make as she led visitors on a tour of paintings by Murillo, Rubens, and other artists. Theoretically to assist her, and more practically to express his negative opinions about various Dutch and Flemish schools of art, Beckford wrote the Biographical Memoirs to serve as the housekeeper's guide. Attributing many of the classic masters' works to painters with names like Og of Bason and Blunderbussian of Venice, Beckford created lives as well as names for these
nonexistent painters. His hoax was so effective that it fooled many readers, including his housekeeper.
, d. 1680, Brit., fraud. Attractive and well-dressed, William Bedloe was popular with women and lived in style, supported by the young wife of an old, very wealthy merchant. When the woman became pregnant, Bedloe sold his coach and valuables and traveled from place to place, avoiding rent payments as he went. His comfortable state was restored by a woman he rescued from debtor's prison by paying her debts. She in turn shared her love and money after she became the mistress of Spain's ambassador to England. Bedloe specialized in providing distinguished family trees for those newly named to a peerage, information which he then used in order to deceive them. Another swindle found him posing as the steward of the just-deceased master of a great house, collecting rents and selling off his property. Bedloe also gambled extensively, often playing with loaded or weighted dice and liked to leave clever poems behind to further insult his victims after he had bilked them.
Joining ranks with the famous impostor Titus Oates, the two concocted evidence against the English Catholics and informed on the alleged conspirators of the Popish Plot, a frame-up based on political rivalries and national hysteria. Eleven innocent men were executed as a result of this scandal, and Bedloe became a hero in the Protestant party. The fraud finally revealed, the public demanded vengeance against the libelous informers. Bedloe, however, while riding on his horse on a hot day, ruptured his gallbladder and died a few days later.
, 1932- , U.S., fraud. A native of Pittsburgh, Pa., the 26-year-old, baby-faced Belle was considered at one time the boy wonder of high finance. After establishing his Cornucopia Gold Mines company, Belle's profits soared out of sight, and he was briefly hailed as one of the most brilliant young businessmen in America. He was interviewed by Mike Wallace and spewed forth a credo worthy of Horatio Alger: "If you claw your way up to success you never have to ask anyone for anything." Belle's clawing, it was later revealed, consisted of taking out one enormous bank loan after another, the last to cover the first and so on, and then, with the participation of a partner, draining the assets of the company. With more than $2 million thus stolen from his own firm, Earl Belle, wizard of American finance, then beat a hasty departure for Rio de Janeiro, Braz. There he resided, successfully resisting all attempts at extradition. Belle later confessed from his posh living quarters in Rio that the records of his firm, Cornucopia Gold Mines, were "falsified and quite incomplete." He added that he was "deeply sorry for all the people who have been misled and all the wrongs done." When asked whether or not he deserved to be punished for his swindle,Belle shrugged, smiled and said: "I imagine a permanent exile is punishment enough."
, prom. 1910, Ger., hoax. A letter purporting to chronicle the life of Jesus was exposed as a hoax in Germany by two University of Berlin professors.
Published in 1910 in Berlin, the Benan Letter supposedly was found near Cairo in 1860. Based on a Greek text that reportedly had been lost, it was discovered by scholar Freiherr von Rabenau, a historian who died in 1879 in Munich. The Benan Letter had been edited by Edler von der Planitz, who said he received the manuscript from von Rabenau. The writer, Benan, is supposed to have been converted by Jesus to the Hebrew God, and the letter was said to have been sent to Strato, a private secretary of the Emperor Tiberius.
The letter starts with the discovery of the Christ child by an astronomer, Putiphra, who was later given permission by Joseph and Mary to take Jesus back to Egypt to educate him in philosophy and religion. At twelve, Jesus astounded the best Hebrew scholars with his knowledge. Later, as a young man, he supposedly studied medicine, earning a reputation as a healer. At twenty-six, the letter explains, he had a romantic courtship with the daughter of a rich grain dealer, returned to Palestine just before he turned thirty, and began his missionary work. When Benan returned three years later to find out what had happened to Jesus, he reached Jerusalem on the day of the crucifixion, observing the rising of Christ on Easter Sunday.
The letter was exposed by Dr. Carl Schmidt and Dr. Herman Grapow, both of the University of Berlin, who revealed that all the names and dates were taken from the works of a Munich professor, J.F. Lauth, who died in 1865. They also proved that Rabenau was a fictitious character.
, 1866-1917, Brit., fraud. Harry Benson spent a lifetime working confidence games, but not until the sunset of his life did he hit upon a scheme that enriched him beyond his wildest machinations. Released from Parkhurst Prison in March 1914 after having served five years for fraud, Benson had but thirty shillings in his pocket. He was nevertheless an enterprising swindler, and only six weeks later he convinced a naive motor engineer in London to turn his tiny company into a limited firm, wherein Benson began to dupe investors into funding huge engineering projects which never existed. Moreover, Benson began a phony bank, and then a bogus association, The Prisoners' Aid Society, which ostensibly worked for the benefit of wrongly convicted prison inmates. The association, of course, did no such thing. Benson merely took as many donations as he could collect from liberal and conscientious citizens, pocketed the money, and lived the high life.
As a prison inmate in Parkhurst Prison, Benson had met and talked with the infamous killer Steinie Morrison, slayer of Leon Beron in 1911. There were a number of influential persons who believed Morrison was innocent, and Benson capitalized on this conviction by claiming to begin a fund to set Morrison free. One wealthy socialite was approached by Benson, who stated that he intended to publish a weekly newspaper which would crusade for Morrison's freedom. The gullible woman gave Benson £5,000 to begin his paper and he continued to mulct this naive investor, buying a small farm and hiring ex-convicts to tend to a few sheep. Benson took his investor to this place often to show her how his Prisoners' Aid Society was helping to rehabilitate ex-convicts. He did publish a newspaper of slender volume in which he raved about Morrison's innocence.
Morrison reportedly knew of Benson's crusade on his behalf and sent him messages of encouragement through the prison grapevine, but the celebrated prisoner had no idea that Benson was using him as a gimmick to bilk suckers out of substantial cash. The scheme went on for several years, with Benson taking more than £35,000 from his socialite lady friend for Morrison's release, as well as several times that amount from lawyers, businessmen, and even government officials. He lived in a lavishly decorated apartment, had a country place, and ate in the best restaurants while employing a few hack writers to gush out their diatribes about Morrison and attack the government for all manner of wrongs. Suddenly, when Scotland Yard was completing its investigation of Benson's fraudulent operations and had just obtained warrants for his arrest, the con man fell seriously ill and was taken to a West End clinic. On Oct. 22, 1917, detectives from Scotland Yard visited the clinic to arrest the con man. When they entered his private room they were greeted by a doctor who pointed to a bed containing Harry Benson, con man. He had died only a few minutes earlier.
Benson, Henry (Harry, AKA: Comte de Montagu, G.H. Yonge, Count Yonge, J.H. Yonge, Hugh Montgomery, George Washington Morton)
, b.1848, Brit., fraud. Born of respectable Jewish parents in London, Henry Benson was partly educated in Paris and was a cultured and clever confidence man who began bilking on a high level following the Franco-Prussian War of 1870. He called himself the Count de Montagu when he met the Lord Mayor of London, saying that he was the mayor of the small French town of Chateaudun, which had been nearly demolished in the recent war and he was collecting funds for the poor and needy of his town. The Lord Mayor of London gave him £1,000 but the swindle was soon exposed and, days later, Benson was tried and convicted of fraud and sent to Newgate Prison for a year. He tried to commit suicide in his cell by setting his bed on fire but he only succeeded in burning himself horribly, so much so that he was a cripple for some years afterwards, having to spend most of his time in a wheelchair.
Released in July 1873, Benson immediately changed his name to J.H. Yonge and used variations on this name while conducting new swindles, chiefly with 23-year-old William Kurr, a clever, young con man who was in the business of setting up dummy companies that dealt in turf betting. Benson enacted the role of a celebrated horse race gambler who claimed he was so successful that whenever he bet on a race the odds dropped on his favorite. In this way, Kurr claimed, they could manipulate odds and produce enormous profits for investors. Thousands of gullible racetrack goers poured money into the fake firms, enriching Benson and Kurr but producing little profit. The swindlers would fold one firm after having sold off its paper assets to another and continue this process so that their gambling company schemes presented an incredible labyrinth of legal documents. To prevent the police from probing too deeply into their affairs, the con men paid off Scotland Yard detectives John Meiklejohn, Nathaniel Druscovitch, William Palmer, and Chief Inspector George Clarke.
These officers came into the bribery circle of Benson and Kurr as early as 1872, when Kurr had cultivated Meiklejohn, who then brought in Druscovitch, who brought in the next officer in need of money. All of these Scotland Yard detectives were in charge of the Continental Branch of Investigation, which dealt with violations of the Betting Act. When warrants for either Kurr or Benson were issued by their irate victims, the officers warned their criminal associates or buried the warrants, receiving considerable payoffs for these efforts. Benson, who had recovered from his crippling wounds and was now walking about with the aid of a cane, set up his next victim in Paris—the wealthy Comtesse de Goncourt--who was inveigled into a betting scheme where she expected to make amazing profits. The Comtesse gave Benson and Kurr £1,000 and then another £10,000, believing she would soon be realizing ten times that amount through the bets placed for her by Benson and Kurr.
Instead of being content with this amount, the con men asked the Comtesse for another £30,000, but she told them that she would have to consult her lawyer for such a large amount. The lawyer, hearing what his client had been up to, contacted the authorities in England. Scotland Yard assigned Druscovitch to run down the con men and he went to Kurr, telling him: "I must arrest somebody." Kurr shrugged and told him to arrest him, believing he could bluff his way out of any charge. Druscovitch refused, believing he and the other Scotland Yard officers would be exposed. But Scotland Yard superiors sent others to arrest Kurr in his pub at Islington. Benson had fled to Rotterdam and Druscovitch was sent after him with orders to arrange extradition of Benson back to England. Ironically, the detective, himself involved in the entire swindling empire of Benson and Kurr, was arresting his criminal boss. Benson and Kurr were placed on trial at the Old Bailey in April 1877 and charged with fraud and forgery. Their bold trail had left considerable evidence which convicted them. Benson was given a fifteen-year prison term, and Kurr, his brother Frederick Kurr, and a man named Bale were given ten-year terms. Others in their elaborate swindling ring also received long sentences.
Following their convictions, as the Scotland Yard detectives feared, both Benson and Kurr turned informers, hoping to lessen their sentences by exposing the police officers who had been on their payroll. Meiklejohn, Druscovitch, and Palmer were all tried in a police court and found Guilty. Clarke, defended brilliantly by Edward Clarke (not related), was acquitted. An attorney named Froggatt was also found Guilty, and the guilty men were sentenced to two years in prison, mild terms compared to that meted out to Benson and Kurr. These convictions represented the worst scandal to ever invade the otherwise sacrosanct Scotland Yard. Kurr was released a few years later and faded into oblivion, but, when released in 1887, Henry Benson went on to more spectacular swindles, mostly in America.
Benson managed to meet the celebrated Spanish-born coloratura Adelina Patti on board a ship taking her to New York, bowing to her as she was about to disembark. She thought him to be one of the delegation meeting her at the Manhattan dock and allowed him to take her arm, escorting her down the gangplank. To the New York officials greeting the famous singer, Benson appeared to be one of the prima donna's entourage. This, of course, was Benson's intent. He quickly set himself up as Patti's New York agent and he collected a $20,000 advance from Mexican officials who thought they were booking Patti for a concert in Mexico City. Before he could flee, Benson was arrested and thrown into the Tombs. Realizing that he would spend the rest of his life in prison, Henry Benson climbed to the top tier of the Tombs and threw himself downward to his death, finally completing the suicide he had begun almost two decades earlier in Newgate Prison.
Bermondt-Avalov, Pavel Mihailovich
, prom. 1919, Rus., fraud. A thief credited with stealing an entire country, Pavel Bermondt-Avalov conceived of fraud on a grand scale. Bermondt-Avalov was spying for Germany against the Russians in 1917 when, on his way through a forest, he came across a big ammunition depot. Walking over to the Russian sentry, he was challenged and threatened with a rifle. The spy responded by saying, "Idiot, put that down! Get out of my way, you ignorant peasant!" When his fury convinced the sentry that he was a Russian officer, Bermondt-Avalov marched into the camp, banging on the doors and demanding to see the officer in charge. Followed by a line of corporals, he then proceeded to make a tour of inspection of the camp. Once inside a shed full of artillery shells, he hid himself and used a wrench to set off the timing fuse of the shells, then marched out towards the camp entrance. As he passed the sentry again, the ammunition started exploding, and the entire camp was soon destroyed. Bermondt-Avalov's next move was to lead a group of mercenaries into the town of Jelgava, in Latvia, destroying many of its Russian defenders in a ruthless charge of his cavalry. Calling on the commander of the remaining German army faction, Captain Von der Goltz, he offered him his three hundred soldiers. When Goltz said it was money he needed, and that he already had 30,000 men of his own, Bermondt-Avalov promised to get it.
He left for Berlin and there convinced various banks that had mortgages in Latvian territory that it would be to their advantage to invest in keeping Latvia from the Russians to protect their investments. He returned to Goltz in 1919 with a million marks, and a plan to defraud him. In Vienna the Allies were considering how to partition postwar Europe. Bermondt-Avalov, hoping to alarm French premier Georges Clemenceau and U.S. President Woodrow Wilson into removing Goltz, sent a cable to the British telling them that German bankers had sent a million marks to Goltz, who had plans to take over Latvia. On his return to Latvia, Bermondt-Avalov informed Goltz that he had raised a quarter of a million marks, and that the remaining money would soon follow. Goltz, suspicious, sent a letter of inquiry to the Berlin banks. When he received a cable from the banks explaining the fraud, he ordered Bermondt-Avalov tortured. But when a telegram from Allied Headquarters arrived to inform Goltz that he was relieved of his command, and Bermondt-Avalov offered the beaten leader a quarter of a million marks for his army of mercenaries, Goltz signed the soldiers over to him. The new leader marched into Riga, Latvia's capital, and took the city in October 1919, effectively stealing the country from the Bolsheviks, and hoping not to be dislodged by the Allies. But when the French navy shelled Riga and Allied troops overwhelmed the city, he fled, living out the rest of his life as a celebrity for his proficient and grand-scale thievery.
Bernard, Henry Peter (AKA: Gyde, Henry Warwick), and Bernard, Marcus Edward Septimus, and Darby, Walter (AKA: Mr. Scott)
, prom. 1900s, Brit., fraud. To invest one's money in the City of London Investment Corporation in 1904 was not necessarily a sound proposition, for the company's sole purpose was to collect money for the personal use of Henry Peter Bernard, Marcus Edward Septimus Bernard, and Walter Darby.
Despite having only £70 among them, Darby and the Bernard brothers started up the corporation, which soon had capital amounting to £100,000, of which roughly only £11 would be paid back to investors. These three bankrupt men also encouraged investments in the Welsh Slate Quarries and the North Wales Quarries Ltd., both existing only on paper and producing only £25 worth of slate for billiard tables and tombstones, yet yielding Gyde and Darby £12,000.
The authorities finally caught up with the con artists, though Darby escaped for a year before his arrest in Liverpool. It took two trials at the Old Bailey to convict the Bernards, the first ending in a hung jury, the second, in November 1908, finding the two Guilty after just fifteen minutes of deliberation, for which Marcus Bernard received a year in prison, and his brother five years penal servitude. Both collected about £55,000 in four years of swindles.
Darby was also found Guilty at his trial in March 1909 at the Old Bailey. He, too, was involved in prior swindles, making £60,000 over a two-year period in a debt-collecting scheme. At Darby's trial it was learned that Henry Bernard was the same Bernard in an earlier scheme known as the Brinsmead case.
Bernhardt, R. Jack
, 1940- , U.S., fraud. After only seventeen days on the job, stockbroker R. Jack Bernhardt caused the bankruptcy of a 51-year-old brokerage firm and landed himself a ten-year prison sentence.
The Securities and Exchange Commission charged Bernhardt with manipulating stocks, practicing unauthorized trade of his clients' stock, and lying to his clients in an $8 million fraud from June 1976 to February 1977. The Chicago broker had purchased and sold more than 1.3 million shares of Olympia Brewing Company and Stange Company stock without the permission of his customers, while inducing others to buy the stock because of possible takeovers which never happened. He was found Guilty by a jury on twelve counts of securities fraud and nine counts of mail fraud in October 1982.
U.S. District Court judge, Charles P. Kocoras sentenced Bernhardt to ten years' imprisonment, berating the defendant for twenty minutes, saying, "Your weapon in this case was a simple trust, and you abused that trust."
Berry, John, prom. 1756, and Egan, James, d.1756, and Macdaniel, Stephen, prom. 1756, and Salmon, James, prom. 1756, and Blee, Mr.
, prom. 1756, Brit., fraud-consp. The profession of thief-taker was like that of a bounty hunter. It often attracted savage, burly men who were themselves on the fringes of the law. John Berry of Hatton Garden was such a man. In 1749 he assembled a gang of thief-takers who, if business was slow, would entice honest men into committing crimes and then have them arrested for the reward money. Berry's fellow thief-takers included Stephen Macdaniel, who kept an inn at Holborn; James Egan, a shoemaker; and James Salmon, who made leather breeches. His other accomplice was a man named Blee, a servant hired to procure likely victims.
The inhabitants of Islington, near London, had posted a reward of £20 for the apprehension of any highwayman perpetrating a crime in the region. Blee located two easy marks for their thief-taking scheme: John Ellis and Peter Kelly, two local pickpockets. Blee induced the two to join a robbery attempt of Salmon. Their resistance was broken down by liquor and the promises of greater rewards to come.
In a planned scene, Blee and his two young friends watched their ostensible victim, John Salmon, drinking in a public house. They followed the drunk Salmon, confronted him at gun point, took his breeches, and told Kelly and Ellis that they could sell the breeches to James Egan, who would pay a princely sum for such an item. Egan and Macdaniel then finished the ruse by getting a warrant for the two men's arrest.
When Kelly's things were searched a knife was found. Satisfied that the evidence was convincing, a magistrate committed the two thieves to a jail in Maidstone. While in transit to that city, the prisoners told the sheriff how they had been tricked. Knowing that Blee and Macdaniel were connected in some way, he ordered their arrest. During the hearing, Blee confessed the whole story, supplying minute details that implicated the others.
An indictment was brought against all four, and a verdict of Guilty was passed at the Old Bailey sessions. Since no one in the affair was truly innocent, the judge spared their lives. The men were sentenced to stand in pillories at various locations throughout London. Afterward, all the prisoners were to be locked up inside Newgate for seven years, but Egan never made it.
On Mar. 5, 1756, Salmon and Egan were brought into the open and their heads and arms were locked into the wooden devices. No one, including the constable, hadanticipated the anger of the townspeople toward these men. Egan and Salmon were pelted with stones, dead dogs, potatoes, and other items as they stood helpless in the stocks. The authorities tried to intervene but, fearing injury, stood aside and let the crowd have its way with the malefactors. A sharp stone struck Egan on the head, killing him instantly. At this point, the sheriff canceled the pillory for the other men and jailed them, extending their sentences to compensate for the time they would not be spending on public display. All of them died while in prison.
Bertram, Charles Julius
, 1723-65, Den., fraud. As an English teacher at the Danish Royal Naval Academy in Copenhagen, Charles Julius Bertram reputedly discovered a genuine Fourteenth Century manuscript in 1747. The manuscript, De Situ Britanniae, gave a description of Britain during the Roman Empire and included an ancient map, all of which mislead historians for 119 years.
Dr. William Stukeley, the London Society of Antiquaries' first secretary, espoused the authenticity of the document Bertram claimed was written by Richard of Cirencester and that he discovered in an archive. Belief in the hoax greatly affected historical writing--various maps were altered and a work by Ber-Bertramstram supplanted the Itinerarium by Antonus--and it was not until 1866 that exposure of the fake was revealed.
Binder, Aaron M., 1928- , and Celani, Frederick George
, 1949- , U.S., fraud-rack. A high-tech engineering firm appeared to be a wise investment for a number of television stars, but when profits came to a standstill, investors were told to write off the investment as a loss on their tax returns, losses which took almost $7 million in taxes from the U.S. government.
The fraudulent firm was run by Aaron M. Binder and Frederick George Celani, both from California, who bilked $14 million from investors, claiming that the money would be spent on research and development. In reality, no research was done and the con artists spent more than $1 million of the investment money. Binder and Celani created tax shelters for their clients, who could claim losses when actually the only loss that took place was their initial investment. Both men were indicted on numerous charges and found Guilty in July 1985 of racketeering, mail and wire fraud, and related charges. Binder was sentenced to ten years in prison and Celani, fifteen.
Birrell, Lowell McAfee
, prom. 1950s, U.S., fraud. Poor from his birth in Wilson, N.Y., on Feb. 5, 1907, Lowell McAfee
Birrell possessed a brilliant mind that saw him at the head of his class at Syracuse University and the University of Michigan Law School. He obtained his doctorate of law at the unheard of age of twenty-one, and went on to become the most successful lawyer at the esteemed firm of Cadwalader, Wickersham and Taft. During the 1930s, Birrell became one of New York's most celebrated lawyers and businessmen. After Prohibition's repeal he put together a chain of small breweries into one firm, the Greater New York Breweries, and made a fortune. He appeared to have everything, lavish living quarters, a burgeoning bank account, the high regard of his peers. Yet, lurking deep in Lowell Birrell was the desire to acquire more. His insatiable greed led him into white collar fraud on a giant scale.
Cecil B. Stewart, millionaire broker and insurance underwriter, thought he was about to die in 1944. Birrell, who had met Stewart at a social gathering, told him to consult one of his own doctors who could "shrivel up" Stewart's cancer. Following some consultations, Stewart became convinced that Birrell's physician had eliminated the cancer and gratefully named Birrell as head of his many far-flung companies. A few months later, Stewart promptly died of cancer and Birrell went on a swindling rampage. Using the sound Stewart companies as collateral, Birrell engineered huge loans to buy other firms and then gutted the coffers of those firms, later merging them with healthy companies to hide their hollow shells. Birrell created a fantastic corporate maze that utterly confounded investigators of the Securities and Exchange Commission. The corporate con man established interlocking directorates, foreign agents as company registrants, and these led to even more foreign agents who, in Birrell's name, set up anonymous bank accounts in foreign countries, all of them controlled by Birrell.
A typical Birrell operation was the acquisition of Swan-Finch Oil, a much-respected firm. After Birrell got control of this company he increased its shares from 43,000 to three million, moving its assets to other firms he directed that were about to collapse, thus shoring up his shaky empire. Birrell would boost his stock in the weaker companies by having agents buy up shares of these failing firms near the close of the day, creating a small upward trend the following day. When the stock of one of these empty firms rose to the breaking point, Birrell would quickly sell his stock, reap great profits, and leave his investors taking the loss. With his profits, Birrell lived like a rajah. He never seemed to sleep, giving round-the-clock parties on a lavish scale in his Manhattan apartments or at his palatial Bucks County, Pa., estate. The cream of New York society attended these extravagant fetes, including such fellow stock swindlers as Serge Rubinstein, who would be mysteriously murdered in his own posh Manhattan apartment in 1955. Birrell was also a notorious womanizer, patronizing high-class prostitutes, including the notorious call girl, Pat Ward, at $500 a night, this expensive flesh supplied by socialite whoremaster Mickey Jelke.
Birrell's illicit success attracted other slick sharpers to his side, including Virgil Dardi and Alexander Guterma who became directors of one of Birrell's once-healthy firms, United Dye and Chemical Corporation. They looted this firm on behalf of Birrell, and Dardi later went to jail for his illegal efforts. Birrell, however, always seemed to escape indictment since he made sure there was no direct trail of documents that would lead to him and provide evidence to convict him. He swaggered about New York nightclubs actually bragging that he was one of the most astute swindlers of his era. One evening a wealthy attorney meeting Birrell in a night spot informed him that he had just invested large sums into one of his firms. Birrell, tipsy on champagne, a blonde under each arm, laughed uproariously and boomed: "You put money into one of my companies? That was a mistake, sir! Nobody makes any money in any of my companies except me!"
New York District Attorney Frank Hogan worked long years assembling enough evidence to convict the bold swindler, and Birrell finally received a subpoena to answer questions about one of his bogus firms in October 1957. He hurriedly packed $3 million in cash (out of the $14 million Hogan later estimated he looted from his firms) and fled to Rio de Janeiro, Brazil. Birrell's records were seized, such as they were, and government accountants spent years trying to figure them out. Meanwhile, the high-living Birrell basked in the warm sun of Rio from a mountain top retreat, vowing never to return to the U.S. But, inexplicably, he returned in 1963 to face charges of swindling upward of $25 million from gullible investors. Birrell was confident, however, that he would be exonerated, and his subsequent trial soon revealed why he had returned without fear of punishment for his flagrant acts. Judge Inzer B. Wyatt ruled that all the Birrell records that had been taken by government agents had been illegally seized and were therefore inadmissible. The original search warrant issued for these records was so ambiguous as to be meaningless in a court of law, according to Judge Wyatt, a conclusion Birrell's lawyers had already reached when they urged their client to return to the U.S. without fear of conviction.
Birrell smiled broadly through pudgy cheeks as he walked from court, exclaiming to reporters: "The Constitution still prevails!" But government agents did not give up on the super con man and continued their investigations, dragging Birrell through a seven-year nightmare of interrogations, depositions, and court appearances, until they had proved he had illegally used some stock certificates in obtaining a paltry $5,000 loan from the First National Bank of Cincinnati. He was convicted and given a two-year sentence. His many appeals failed, including that with the U.S. Supreme Court, and Birrell went behind bars on Jan. 11, 1972. It took fifteen years of dedicated work on the part of government officials, not to mention millions of dollars in costs, to finally take Lowell McAfee
Birrell out of the American business community where he had wreaked financial havoc and wrecked the fortunes of countless investors.
Blee, Mr. See: Berry, John
Blonger, Louis (Lou)
, prom. 1890s-1920s, U.S., fraud. A French-Canadian, Louis Blonger migrated to Denver, Colo., where he and his brother Sam opened a rowdy saloon in 1880. Blonger offered gambling of all sorts and platoons of strumpets to service customers. When Denver cleaned up its gambling dens and bordellos, Blonger concentrated on confidence games of all kinds, becoming the bunco king of the Rocky Mountain states. He was assisted by Adolph W. Duff, a wily sharper known as Kid Duffy. Blonger made substantial payoffs to the infant, corrupt Denver Police Department (DPD) and, by the turn of the century, most of the force, including the chief of police, was on his payroll. He was the most powerful man in the city, king of the Denver underworld, with direct phone lines from his office to that of the mayor and the chief of police. There was nothing Blonger could not fix in the city. If any con man in his phalanx of swindlers was caught red-handed, Blonger would simply make a call and the man would be put on a train, returning to Denver when it was safe to do so.
Rules established by Blonger were strictly obeyed by his men. No swindler could pull a "Big Store" game unless Blonger gave his approval and no violence was tolerated. Prominent Denver citizens were to be left alone and visitors to the city were the only suckers his men were allowed to victimize, and these marks could be chosen only after they had been cleared with Blonger and the police department. Blonger spent a good deal of time on the phone with DPD Police Chief Mike Delaney, discussing what victims were or were not suitable to be fleeced. Whenever one of Blonger's men violated any of his dictates, he was fined or even banished from the city. After Dick Turner, a deputy sheriff from a small town near Denver, was fleeced in a short con while visiting the city, Blonger upbraided the con man for not getting approval to "take the mark." Then the con man was banished forever from the precincts of Denver.
Blonger's reputation as the top con man of the West was known nationwide in the underworld and hundreds of the most daring and notorious con men in the country flocked to his banners, including the celebrated Joe Furey, Reno Hamlin, Charles Gerber. Furey, who ran a gang of con men of his own, made the mistake in 1920 of fleecing a Texas cattleman and one-time sheriff, J. Frank Norfleet, bilking $45,000 from Norfleet in an investment scheme. When Norfleet discovered that he had been mulcted, he exploded and tracked down every member of the con ring. The classic manhunt eventually caused Blonger's downfall. Because of Norfleet's persistent campaign against the Denver Ring, Blonger, Duff, and dozens of their top con men were rounded up, tried, and sent to prison.
Blount, John. See: South Sea Bubble, The
, prom. 1890s-1930s, U.S., fraud. A contemporary of the fabulous Joseph "Yellow Kid" Weil, Buck Boatright was a one-time train conductor who turned to confidence games to make his fortune. He was the inventor of a "short" con called The Smack--a short con being a confidence game which took only a short period of time to accomplish. Boatright centered his activities in Kansas and Missouri train depots where he would spot a wealthy sucker and befriend him. He would then appear to inveigle a confederate into a harmless game of matching coins, roping the sucker into the game by whispering to him: "You call heads and I'll call tails. Whichever way, we'll both win and split the take later."
Then Boatright would toss a coin and smack it down hard on top of his hand (thus the name of the game). The three men would then call out their choices of either heads or tails. Within no more than fifteen or twenty minutes, Boatright, who had been collecting all the winnings, would then announce that he had a train to catch and, ostensibly paying off the confederate, would walk off with the sucker to a nearby restaurant to divide their winnings. Just as they were sitting down, the confederate would appear and demand to know if Boatright and the sucker were in league to fleece him. The sucker would grow nervous and deny any collusion, invariably stating that he had just met Boatright.
The confederate, suspicious and irate, would then demand that they prove it by going off in different directions. Boatright would promise to meet the sucker later to split the take but, to mollify the suspicious confederate, he suggested they had best appear to go their separate ways. The sucker would go to the rendezvous suggested by Boatright and, of course, the con man would never appear, joining up with the confederate to split the sucker's winnings.
Boesky, F. Ivan
, 1936- , U.S., fraud. For Ivan Boesky, the "king" of Wall Street arbitrage and one of the richest men in the U.S., the price of greed was three years in jail plus $100 million in fines. "He can't earn a living. He is on the verge of bankruptcy," complained Boesky's attorney, Leon Silverman. But some said the fines barely dented Boesky's vast "junk bond" empire. Boesky was one of those who, like characters in Tom Wolfe's novel Bonfire Of the Vanities, could control high-yield junk bonds and could consider himself one of the "masters of the universe."
In 1977 Drexel Burnham Lambert, a New York-based investment banking firm, introduced a new generation of high-yield bond funds which paid investors substantial returns to finance risky business ventures. The "junk bond," as it came to be known, catapulted Drexel, a minor player in the late 1970s, to the forefront of the Wall Street community a decade later. The rise of Drexel was fueled by Michael R. Milken, who took a summer job with the firm in 1969 while attending the University of Pennsylvania's Wharton School of Business. In 1978, Milken, a self-made entrepreneur at the age of thirty-one, moved the junk bond business to southern California. He analyzed companies considered "non-investment grade" by the bond rating houses of Wall Street, determined each company's real value, and then carefully reviewed its prospects. Junk bonds, he said, allow "entrepreneurs outside the system to get capital to realize their dreams." His method enabled corporate "raiders" like Ivan Boesky to finance hostile takeovers of large companies. Drexel had revolutionized the marketplace.
At first, other investment firms were suspicious of Drexel's methods. But, within a few years, a merger-and-acquisition frenzy gripped Wall Street, which culminated in the 1988 buyout of RJR Nabisco for $25 billion. Drexel's competitors marveled at the simplicity of the junk bond concept, and soon realized the potential of underwriting and selling these bonds. By 1986, Ivan Boesky, a high-profile Wall Street speculator who specialized in takeover stocks, had siphoned an estimated $400 million from his arbitrage firm, according to his former partners. Of greater concern to the government, who began investigating corrupt practices on Wall Street in 1986, was Boesky's relationship to Drexel. The firm admitted receiving $5.3 million for "advisory services" from Boesky in that year alone. This led to speculation that Milken and his associates were given Boesky advance information about takeover plans before the information was made public.
With this knowledge, Boesky could buy the target firm's stock, and hold it until the takeover announcement. When the price of the stock jumped at the news of an impending takeover, Boesky could sell it at the inflated price. He then could share the profits with Drexel.
Government investigators discovered the insider-trading ring in 1986 when they received an anonymous tip from South America that Boesky and others were making vast illegal fortunes. The investigation led to Drexel investment banker Dennis Levine, whom the Securities and Exchange Commission (SEC) charged with making $12.6 million on illegal stock trades between 1980 and May 12, 1986, when an indictment against him was handed down. Levine was charged with obstructing justice and attempting to destroy records. On June 5, he implicated Ivan Boesky.
Boesky, the government charged, had entered into a two-year conspiracy with Milken to exchange information about impending takeovers. Boesky secretly agreed to record telephone calls and wear concealed listening devices as a part of a plea-bargaining agreement with government prosecutors, led by U.S. Attorney Rudolph Giuliani.
The undercover surveillance helped catch another big fish: 38-year-old John Mulheren Jr., head of a $25-million-a-year arbitrage firm. After realizing he was caught, Mulheren began acting irrationally. He left his Rumson, N.J., mansion one night in February 1988 armed with a semiautomatic rifle, but was intercepted by police on a tip from his wife. His intention, it seemed, was to kill Boesky.
Meanwhile, Giuliani's office announced a full-scale investigation of Drexel. On Nov. 14, 1986, Boesky agreed to plead guilty to one felony count, and to pay $100 million in penalties. He was formally sentenced to three years in prison on Dec. 18, 1987, by U.S. District Judge Morris E. Lasker, and was ordered to serve his time at a minimum security facility in Lompoc, Calif. The 689-inmate prison was derisively referred to as "Club Fed," because of the comforts provided its well-heeled tenants. At his sentencing, Boesky was contrite. "I am deeply ashamed," he said. "I have spent the last year trying to understand how I veered off course." U.S. Attorney John Carroll praised Boesky for his cooperation and the spirit in which it was given. But critics maintained that the Boesky had made few sacrifices. He still maintained his lavish Manhattan apartment and his Fifth Avenue office, which he used as a "command post" for his lawyers.
The insider trading probe continued, even after Boesky began serving his sentence on Mar. 24, 1988. Michael Milken was forced to resign from Drexel Burnham Lambert after twenty years with the firm. He has since formed his own consulting firm in Los Angeles and awaits trial. On Feb. 20, 1987, Dennis Levine was sentenced to two years in prison and ordered to pay $362,000 in damages. But Giuliani's biggest coup of all was the six-count felony indictment against Drexel charging the firm with mail, wire, and securities fraud, insider trading, and "parking" stocks to hide their true ownership. The SEC said this scheme helped Boesky avoid disclosure requirements on his various stock holdings. The integrity of Drexel, the fifth largest investment firm in the U.S., was further undermined by startling revelations that it had cheated its most valued clients. On Dec. 21, 1988, Drexel agreed to a $650 million out-of-court settlement, of which more than half was to be returned to stockholders and clients. "They've thrown the book at them, almost every violation of the 1934 Securities and Exchange Act," commented Edward Brodsky, a former U.S. Attorney.
The two-and-a-half-year investigation of Wall Street was the most significant since the stock market crash of October 1929, when the nation was plunged into the Great Depression. In the aftermath of that crash, Ferdinand Pecora's independent investigation led to the creation of the SEC, a regulatory agency designed to prevent unethical practices on Wall Street. But the Boesky scandal illustrated that the system was still vulnerable.
Bonner, Antoinette (AKA: The Diamond Queen)
, 1892-1920, U.S., fraud. Along Jeweler's Row in mid-town Manhattan, Bonner, a poor Romanian immigrant, earned a reputation for having a sharp eye and a sixth sense about the clarity and purity of uncut diamonds. The merchants who bought and sold the precious stones trusted her with portions of their inventory which she personally delivered to clients for their perusal. Bonner always returned the unsold
In 1914 she finally gave in to temptation. With a large quantity of diamonds, Antoinette Bonner absconded to Paris where police arrested her and returned her to New York. She claimed at her trial she had gone to Paris to find buyers for her diamonds. There were wealthy clients, she said, who lived in Paris. No one could prove or disprove this contention so she was freed by the court.
In 1920 the Diamond Queen secretly disposed of uncut stones obtained from several prominent jewelers. But now the police were keeping a close eye on her. A second complaint was filed, and not long afterward the police found Bonner in her office. She looked at the officers coolly before swallowing a lethal dose of poison. The pretty young Romanian dropped dead.
Boston Globe Hoax
, prom. 1883, U.S., fraud. In a curious case of synchronicity, a journalistic hoax turned out to be a portent of a volcanic eruption.
An assistant telegraph editor of the Boston Globe invented an interview with an elderly South Seas ship captain and obtained wide circulation of his story on both sides of the Atlantic. In this fraud, the editor told of an island blown into the sky by the sudden eruption of a dormant volcano. The yarn was based on accounts from encyclopedias, with vivid descriptions of the ocean bubbling with heat, showers of ashes darkening the sun, blocks of ice floating in streams of molten lava, and the ocean surface clotted with dead fish. Critics of the young writer, named Soames, were distressed and appalled when, a short time later, the biggest volcanic explosion of modern times occurred on the Indonesian island of Krakatoa, almost totally obliterating the island.
Bottomley, Horatio William, 1860-1933, Brit., fraud. One of England's most colossal frauds, Horatio Bottomley, was clever enough to avoid being ruined by his own fast-crumbling confidence games for almost forty years. And when it all caught up to him in old age, the wily sharper, acting as his own lawyer, called on the jury's patriotism and God to prevent his imprisonment, a plea that was properly answered with a stiff jail sentence. Before that career-ending time, Bottomley had made millions, lived like a king, and even got himself elected to Parliament. From the beginning, Bottomley thought of himself as larger than life or, at least, equal to the tremendous financial schemes he enacted. He came to believe that he was a brilliant lawyer, a financial genius, and a national hero. That was his public pose. In private, Bottomley was a flagrant spendthrift, a libertine, an alcoholic, and an unconscionable flimflammer who gutted the savings of hundreds of thousands of gullible investors.
Bottomley's background was as empty as any worthless share of stock he ever peddled. His father, William King Bottomley, was a tailor's assistant, although Bottomley, no doubt hating his father for the poverty that placed the boy in an orphanage, later insisted that he was the illegitimate son of the famous atheist, Charles Bradlaugh, whom he came to amazingly resemble in later years. The idea for this claim may have come to Bottomley after discovering that his mother, Elizabeth Holyoake, was the sister of Jacob Holyoake, investment broker and also a pronounced atheist like Bradlaugh. The boy's parents lived so mean a life that they could not afford to keep their son, and placed him in an orphanage at age five. William Bottomley would shortly thereafter commit suicide. Young Bottomley lived for a while with an uncle, George Holyoake, but the uncle put the boy back into the orphanage at age ten. Four years later, Bottomley escaped the Sir Joseph Mason Orphanage at Edgbaston, fleeing to London.
A fast learner, Bottomley got a job as an errand boy, and while making deliveries, he studied the offices of solicitors and lawyers, realizing that good money could be made in these occupations. He applied for a job as a lawyer's clerk and got it. Bottomley befriended a female legal reporter and, mixing romance with ambition, dated her and induced her to teach him legal shorthand. Within a few years the industrious youth was earning his living as a legal reporter with a reputation for his lightning ability to capture words on paper. It was a short step for Bottomley to start his own small newspaper in 1884, the Hackney Hansard, which reported political activities in Parliament. For a short time Bottomley prospered, mostly from advertisements for companies with whom Bottomley was familiar. As a court reporter, he had learned much inside information about these firms and their dubious practices. He now solicited advertising from these firms; their managers felt compelled to advertise lest Bottomley publish details about their less than honest operations. To some this was journalistic blackmail, but to Bottomley it was just another way of making a good living.
From the newspaper, Bottomley expanded into printing, establishing two companies--one a publishing operation, the other a printing firm--going to his newspaper advertisers first, then the public, to sell stock in these shaky ventures. He pocketed most of the money and began to live high, returning nothing to his investors. In 1893, the shallow companies went into receivership and Bottomley was charged with conspiracy to defraud. His ego (not to mention the money he would save by not hiring a lawyer) demanded that he defend himself. During his defense, Bottomley proved that he was a brilliant orator, one who could move a jury to his side as easily as he had convinced investors to give him money for useless stock. He won his own acquittal. Inflated with confidence, Bottomley felt he could sell anything to anyone, regardless of its worth, and never face legal consequences.
In the following year, Bottomley capitalized on the public craze to invest in newly discovered Australian gold deposits. He set up public meetings in town halls, church basements, and the backs of pubs, exhorting those who flocked to his meetings to buy his gold certificates in Australian firms, and convincing thousands to hand over lifetime savings. He made an estimated £3 million without ever returning one pound to his investors. Whenever investors complained about not receiving any return on their money, Bottomley merely shrugged and reported that the gold mine had not panned out. Those who were angry enough to file complaint found Bottomley defending himself vigorously in court and with such eloquence (as well as well-placed bribes to jurors) that the con man escaped conviction time and again.
Bottomley was now fabulously rich and he purchased a huge country estate in Sussex, a luxury flat in London, and a villa on the French Riviera. Further, his love of horses caused him to buy a sprawling horse stable in Ostend, Belg. He began a lifelong habit of drinking champagne for breakfast, and drinking glass after glass until retiring each night. He bought the best champagne available, hundreds of cases every few months, storing these in his Sussex estate where he gave lavish parties. In London, Bottomley also ingratiated himself with high society by giving sumptuous fetes. With phenomenal ease, Bottomley began one new company after another, selling stock in the almost nonexistent firm (usually a secretary in a single office and a set of books that would confuse the most astute accountant) and then collapsing the company a short time later. Dozens of these shell companies were started and went nowhere. Before stunned investors learned of these failed companies, Bottomley filed bankruptcy. Dozens of complaints and charges of fraud were filed against him, but he evaded conviction year after year. Nothing could be made of his books and no concrete evidence proving fraud could be found.
Fame as well as fortune beckoned to Bottomley, and he soon sought public recognition to go hand-in-hand with his personal fortune. He ran for Parliament in 1905 and was elected as Liberal MP from South Hackey. Now, Horatio William Bottomley had truly arrived. He glad-handed his fellow members in Parliament who thought him an affable fellow, although a few refused to shake his hand, knowing of his unsavory reputation. To further ingratiate himself with his peers, Bottomley posed as a wealthy philanthropist, giving money to various charities, especially to orphanages, and making sure that he received heavy newspaper coverage in his newly established weekly, John Bull.
Juggling his many firms became confusing even for Bottomley, and he fell behind in organizing their planned collapses. Too many of these firms shattered in one year, 1909, and his entire fortune was depleted. Bottomley declared personal bankruptcy for the second time and was compelled to resign his seat in Parliament. He soon created a new fortune by organizing sweepstakes and lotteries which brought more charges of fraud, but Bottomley managed to escape conviction once again. His name was becoming synonymous with stock swindles
but, astoundingly enough, there never ceased to be a supply of suckers who raced to his town-hall type meetings to be mesmerized by his oratory and invest in his schemes.
When WWI began, Bottomley seemed to have a change of heart, suddenly instilled with patriotic fever. He announced to his friends that he was going to overcome his "sordid past" by helping England in her time of need. Bottomley volunteered to recruit men for the services and was suddenly seen everywhere--at public rallies, church meetings, recruiting stations, and particularly at bond rallies, where he bounced across stages, waving his arms, smashing a fist into the palm of his hand, and shouting to the enthralled crowds that England needed men and money to destroy the Kaiser's legions. He was well paid for his patriotic efforts, receiving £50 to £100 every time he opened his mouth for England. Bottomley howled his patriotic propaganda in the pages of John Bull, which became immensely popular during the war. His speeches were so popular that large dailies paid him a great deal of money to reprint them. This led to a series of long articles by Bottomley which appeared regularly in such publications as the Sunday Pictorial. For more than four years, the hustler financed himself with his war propaganda, earning almost £30,000.
So popular had Bottomley become that he was able to run for Parliament once again in 1918, winning back his old South Hackney seat but as an Independent. Shortly after his election, Bottomley developed his all-time money-making scheme, an idea that he borrowed from the British government. When the government announced the sale of Victory Bonds in 1918, Bottomley seized upon the gigantic scam that would eventually land him in prison. Victory Bonds were sold at less than £5 per bond, but could be redeemed later for larger amounts. Bottomley announced that he would buy these bonds in large numbers and allow the "little people," as he called his suckers, the opportunity of purchasing these bonds for even less than purchase price, promising that he would return top value on the bonds. Tens of thousands of patriotic citizens bought these Victory Bonds through Bottomley, or at least they thought they were buying bonds. They sent their money directly to Bottomley, who had established the Victory Bond Club which ostensibly bought the government bonds in large quantities and received additional interest because of such huge purchases. These revenues were later to be disbursed to the club members.
Of course, Bottomley bought no bonds and pocketed almost every pound he received, living higher than ever before. He did make some token bond payments to the Treasury. It appeared that the great stock swindler had invented yet another scheme that would make him unlimited millions. Yet Bottomley's own tight-wad mentality was to be his undoing. He had never paid his associates much beyond an initial retainer and they, like his investors, were usually left holding the bag. One of these, Reuben Bigland, who was involved in Bottomley's Victory Bond Club, went public when Bottomley reneged on paying Bigland his fees. Bigland published a pamphlet exposing how Bottomley fleeced the public, stating that the Victory Bond Club was the con man's "latest and greatest swindle," and that Bottomley never had any intention of returning profits on the investments, let alone return the original investments.
Bottomley immediately denounced the pamphlet as defamatory and filed a suit of criminal libel against Bigland. Realizing that his appearance in court could open his muddled books to public inspection, Bottomley reconsidered and then dropped his suit against Bigland. The government, however, was urged to act by a public aroused by Bigland's widely read expose. At first the courts were disinclined to go after Bottomley, who was still an MP, but public pressure soon compelled the government to bring fraud charges against the great swindler.
Mindful that their quarry was still a respected member of Parliament, the government of David Lloyd George dragged its feet, having the distinguished Horace Avory and Richard Muir prosecute, but not until the redoubtable criminal counsel, Sir Travers Humphreys, who declined to prosecute, went over the swindler's labyrinthine books. Using a bevy of accountants, Humphreys and his people spent months sifting through every shady, complicated transaction dealing with the Victory Bond Club. They finally emerged, like lost travelers out of the swamps, with what they felt would be enough evidence to convict the grand con man. Bottomley was brought to trial in 1922, acting, as usual, in his own defense. The prosecution did not minimize its opponent's ability to act as his own counsel, knowing full well how Bottomley's brilliant orations had convinced hardhearted juries in the past, and how he had escaped conviction time and time again. He was a spellbinder and could confuse any logical facts, reasonable conclusions, and sound arguments against him.
Before Bottomley went to trial, however, he gave indications that his days as a shrewd legal opponent were over. He asked the court if he could take an early lunch break, at 11:30 a.m. each day, since he was "required" to have his daily portion of champagne (he referred to the bubbly as his "medicine") at that time lest he go into convulsions. He was, as his opponents then described him, "a champagne addict," drinking as much as three or four bottles during the day and an equal number at night before retiring. His appearance bespoke his alcoholic addiction. His face was puffy, sagging everywhere. Bags of flesh squeezed his eyes into slits. Heavy jowls sagged over Bottomley's high, starched collar. He was a physical, besotted wreck at sixty-two. He was also concerned about a female friend whose name appeared in one of the accounts Humphreys was inspecting. He practically begged Humphreys and the court not to mention the lady's name, admitting that he had deposited large amounts of money in her name and did not wish to "compromise" her in any way. He insisted that this obvious paramour knew nothing of his business operations and was perfectly innocent of any wrong doings the court might determine.
The age of chivalry had not yet died in England. The court agreed to keep the woman's name out of the proceedings if Bottomley would admit that the account in her name was his own. Bottomley grinned and said he would claim the account. Then he added: "And what about my medicine?" The court understood that problem and informed the anxious drunk that the presiding judge would recess the court early and allow Bottomley to get to his bottle before noon. Pleased, the old sharper girded his considerable loins for battle. Humphreys took on the burden of attack just before the trial, agreeing to represent the government. The trial took place at the Old Bailey before Justice Salter. Humphreys' opening address to the jury detailed how Bottomley juggled and doubled his books to funnel huge amounts from the Victory Bond Club into his personal accounts. In one instance it was shown how the club paid a company £20,000 for services that really did not exist, that the firm was really Horatio Bottomley under a different name. In another instance, it was shown how the sharper paid out enormous sums from club funds for the upkeep of his Belgium racing stables.
Bit by accounting bit, the prosecution mounted a damning case against the swindler who sat glum at the defense table, slumped forward, staring straight ahead as if in a daze (or alcoholic stupor, some who were present later claimed). The prosecution brought some witnesses to the stand who claimed that Bottomley had not returned profits or even their original investments when requested by them to do so. This brought the old man jumping to his feet. He asked Judge Salter if he could bring 100,000 witnesses--all of those who had purchased bonds through his club--to refute such claims. All of these 100,000, thundered Bottomley, had not only received a return on their money but hadenjoyed profits galore. The judge declined to allow a parade of 100,000 witnesses to the stand which would have taken, certainly, several decades to cross-examination. He set aside his ruling on the matter and told Bottomley that the court would consider any reasonable evidence he could provide. It was obvious that Bottomley was bluffing; he did not have a single satisfied customer to bolster his fast-fading, self-projected image of honest businessman, the working man's friend, the ally of the "little fellow," as
Bottomley was forever calling his victims.
What undoubtedly hurt Bottomley more than any of the exacting paper-chase details which pinned him down as a fraud was the prosecution's questioning of his patriotic image. It was shown that he had been paid handsomely for his war lectures and bond rally appearances, so much so that he appeared to be earning money from the boys who did the fighting and dying for England in the trenches of France. This hard evidence was obviously much on his mind when he burst forth with his histrionic summation, an explosive fight for his public life as well as his private business transactions. Bottomley stormed about the courtroom, his massive body seeming to tilt treacherously forward as if he were about to topple onto his face. He raised his arms akimbo, as if asking for divine intervention, and the flab of his face turned bright crimson in anger at being portrayed as one who exploited the heroic dead and the heroic veterans
who had given him the wages of their bloody battles.
To the jury Bottomley fulminated: "You may have entertained a great opinion of me and thought that, whatever my faults in days gone by, I have endeavored to do my duty to my king and country. Now you are asked to change your opinion, and to say that all the time I was an arrant humbug and scoundrel." He reminded the jury that his patriotic honor was not on trial and that his peers must only decide whether or not he had defrauded the members of the Victory Bond Club. "You have got to find that I had the intention to steal the money of poor devils such as ex-soldiers who subscribed to the Club. You have got to find that Horatio Bottomley, editor of John Bull, member of Parliament, the man who wrote and spoke throughout the war with the sole object of inspiring the troops and keeping up the morale of the country, who went out to the front to do his best to cheer the lads--you have got to find that that man intended to steal their money! God forbid! I swear before God that I have never fraudulently converted a penny of the club's money."
His anger gushed through a torrent of words, mounting in volume until Bottomley was delivering a cannonade. He charged about the courtroom as if he were a national legend unfairly defiled, posturing shock at the mere suggestion that he, Horatio Bottomley, England's greatest hero, no doubt, since Wellington and Nelson, could be profiled as a villain. His summation to the jury was almost a threat. Should his peers find him guilty of fraud they would face God's own wrath: "You will not convict me! The jury is not yet born that would convict
me on these charges. It is unthinkable!" There was a long sword hanging on a wall behind the judge's bench and Bottomley, who had been studying thisgleaming blade for days as he heard his sins recited, suddenly wheeled about and pointed to it, saying: "That sword of justice will drop from its scabbard if you give a verdict of guilty against me. I say it with a clean conscience. I say it without one thought of fear or misgiving. I know my country and my country's people, and knowing you, and knowing myself, and knowing the truth about this matter, without one atom of hesitation, one atom of fear...I know by the mercy of God and the spirit of justice you will liberate me from this ordeal!" With that, the heavy-breathing Bottomley buried his head in large, hoary hands and openly wept, his sobs sent directly toward the jury.
In the end, the jury disbelieved the fiery orator who relied upon a style of delivery that had long gone out of fashion. He was a man of bombast and hortatory exclamations. His rhetoric creaked of ancient ploys and devices that were all too obvious, even to the most unsophisticated. He tried, as in his court appearances of decades earlier, to shape the jury, to bend its collective will to his own. His roaring rage against the attacks on his image, his dignity, rang hollow and untrue. In the end, the prosecution ground the old campaigner down with the overwhelming weight of its evidence and even he, at his nadir, had to admit that he had falsely advertised his club when claiming that it possessed £500,000. In a half hour's deliberation, the jury returned to find the defendant Guilty on all counts but one. The sword on the wall behind Judge Salter never moved an inch.
Bottomley stood mute in the dock as the court handed down its sentence. The judge delivered an unusually scathing summary to the jury's conclusions: "Horatio Bottomley, you have been rightly convicted by the jury of a long series of heartless frauds. These poor people trusted you and you robbed them of £150,000 in ten months. The crime is aggravated by your high position, by the number and poverty of your victims, by the trust which they reposed in you. It is aggravated by the magnitude of your frauds and by the callous effrontery by which your frauds were committed." The arch swindler was given, despite the rancor from the bench, a fairly light sentence--seven years in prison.
Bottomley could only scowl and frown, indignant to the last for being put upon by what he thought to be the judge's gratuitous remarks. He asked if it were not customary for a convicted person to render some remarks before being sentenced. Judge Salter reminded him that that was the case only for capital offenses. Sneered Bottomley: "Had it been so, my Lord, I should have had something rather offensive to say about your summing up!" A short time laterthe great fraud was shown to his cell at Wormwood Scrubs Prison. He was formally expelled from the House of Commons a few days later.
Five years later, in 1927, Bottomley was released, broken in health, ignominious, a pauper--but not for long. If he could no longer sell bogus stock, Horatio Bottomley could at least sell the story of the man who sold the bogus stock. He arranged to write a series of articles about his prison days, for which a daily newspaper paid him the then-staggering sum of £12,500. Bottomley showed himself unrepentant in the series of articles which was entitled "I Have Paid...But I Did Not Owe the Debt." He contacted old partners, loan sharks for the most part, and persuaded them to invest in another newspaper he established overnight, a publication he called John Blunt. (Some claimed that these investors willingly came to Bottomley's financial rescue rather than risk exposure of their past sins by Bottomley, a man who knew well their dark deeds.)
There would be no meteoric rise from the ashes this time. The new publicationquickly failed and Bottomley now lost everything. His wife died and he was compelled to sell his country estate, his racing stables, even the furnishings of his London apartment. Flat broke in 1930, he applied for an old-age pension but this was denied him. The old sharper grew ill and was taken in by a one-time musical comedy star, Peggy Primrose; he had backed several of her hit shows during his palmy days. Some of Ms. Primrose's friends thought to put Bottomley to work exploiting himself and they arranged for him to make stage appearances. Half tipsy with cheap champagne and dressed in soiled evening clothes, the old fraud shuffled before the footlights to talk about his sinful past. He would pathetically blather about how he was pilloried and imprisoned for trying to make money for the "little people." The "little people" in the audience only hooted and jeered in response.
Some days later, in May 1933, Horatio Bottomley was leaving the stage, the roaring ridicule of the audience in his ears. He stopped, heaved a great sigh, and his heavy body crashed to the floor. He died on May 26, 1933 in Middlesex Hospital and was placed in a common grave, an end that the determined orphan boy of the previous century could never have envisioned.
, prom. 1925, Brit., Case of, fraud. In a complicated case in England in 1925, involving fine points of banking and partnership law, Robert Boulton was charged, along with a Mr. Moncrieff and a third partner, of converting shares valued at £250,000 entrusted by the Alliance Bank of Simla in India to Boulton's Bank, Alliance's London agents. Boulton was the senior partner and had been a director as well as the chairman of the Alliance at the Simla Bank for three years. Moncrieff, away on vacation in India when the majority of the transactions occurred, protested immediately when he learned of the conversion. The third partner, a peer's son who took care of the Boulton Bank's Russian business, a minor concern, spent as little time as possible doing any kind of business, being more interested in his social life. The main prosecutor was an attorney named Mr. Curtiss-Bennett, and defense lawyers included Roland Oliver for Moncrieff and Henry Maddocks and Walter Frampton for Boulton. Tried before a jury in the court of Judge Rigby Swift, the prosecution had no sooner completed giving its evidence when Swift withdrew the case against Moncrieff and the Russian partner and instructed the jury to bring in a verdict of Not Guilty, explaining, "In my view there is no reflection whatever upon the character of either (of the accused)."
The case against Boulton went on for several more days. Although by Boulton's action the Bank of Simla had lost more than £250,000, the jury, angered by the prosecution's attempt to implicate Moncrieff and the Russian partner, acquitted Boulton as well, despite the fact that Boulton maintained the responsibility was his. The attorney who represented Moncrieff and Boulton's other partner felt that all three men had been innocent and that justice was served.
Brandl, John H.
, prom. 1982, U.S., fraud. Indicted by a federal grand jury for knowingly accepting worthless collateral in a fraudulent loan scheme that allegedly cost a bank $7 million dollars, a former suburban bank executive drew a jail term and was ordered to make restitution of $447,000.
On Nov. 29, 1982, 43-year-old former Glenview, Ill., bank president John H. Brandl was indicted on 11 counts of making false entries on bank records, mail fraud, and misapplying bank funds from the First Trust & Savings Bank of Glenview. Also charged was Chicago businessman Michael A. Poley, thirty-seven, who operated a holding company out of two penthouse apartments, the company serving as a corporate umbrella for real estate and security guard companies he ran. Allegedly collecting cash for a variety of schemes, including fraudulent condominium conversions, Poley fled from Chicago in 1980 when his businesses began to fall apart, but returned and was kept in custody by federal agents who wanted him to testify against leading crime syndicate figures. Poley fled again before testifying and is believed to be living in Paris.
In the complex scheme, Brandl accepted worthless collateral, including bogus land trusts, for loans to Poley and companies controlled by him. Pleading guilty to two counts of misapplying bank funds, Brandt was sentenced by U.S. District Court Judge Nicholas J. Bua on Mar. 23, 1983, to a six-month prison work-release program and ordered to pay the bank $447,000. As of this writing, Poley has not resurfaced.
Brinkley, Dr. John Romulus (AKA: Goat Gland Brinkley)
, 1885-1942, U.S., boot.-forg.-fraud. Radio station KFKB ("Kansas First, Kansas Best") first signed on in 1923, programming country music, farm reports, and revivalist sermons. A frequent advertiser was Dr. John R. Brinkley, a shifty salesman who first received a medical degree from a diploma mill in Kansas City, and after that school was discredited, bribed authorities at Italy's University of Pavia for another degree. Brinkley used the radio to pitch his amazing Compound Operation, a goat gland implant procedure supposed to rejuvenate elderly men and the sexually impotent.
Trading on superstitions about goats, Brinkley, of Milford, Kan., implanted goat gonads into the scrotums of hundreds of men during the 1920s. The price of the operation ranged from $750 to $1,500. Patients were permitted to select their own goat from the herd Brinkley kept in his backyard. With the profits from the operations, Brinkley bought four cars, a private plane, and several luxurious yachts. In 1930, the Federal Radio Commission revoked his license, but Brinkley simply phoned in his reports to a station in Mexico that then rebroadcasted his message.
Brinkley ran for governor of Kansas three times, and once nearly defeated Alfred Landon. He was a popular grassroots figure, despite his shady medical practice and his well-publicized association with William Dudley Pelley, leader of the Silver Shirts, an American fascist organization. Before his death on May 26, 1942, the thoroughly discredited Dr. Brinkley had committed a fortune to Pelley's movement.
Buckminster, Fred (AKA: The Deacon), 1864-1943, U.S., fraud. Fred Buckminster began as a Chicago police officer and worked himself onto the bunco squad by the 1890s. He arrested a dapper little man called Joseph Weil for pulling the pigeon drop con game sometime in the late 1890s. Weil, who was known as The Yellow Kid, and considered the most fabulous confidence man of his day, turned over his bankroll to Buckminster while the two walked toward the station house. The bunco detective was aghast at the thick wad of bills. "Where did a grifter like you get this kind of money?" Buckminster asked Weil.
The Kid smiled and told him: "That? That's just walkabout money. It's nothing. I made that in the last two hours. Keep it."
Buckminster counted the money, hundreds of dollars, then slowly pocketed the bribe and shook the Kid's hand. "It looks like I'm off the force and into a new business," he said. For the next forty years, Weil and Buckminster proved to be the most successful team of high-class swindlers in the Midwest. The two con men, often with the help of dozens of other con men when working a "big store" swindle, concentrated on greedy financiers and crooked bankers, enticing them into what appeared to be crooked land grabbing schemes or mining swindles in which they took the suckers for hundreds of thousands of dollars. Before he died in 1943, Buckminster claimed he had swindled $3 million from gullible marks. Buckminster spent more than ten years in prison (Weil about eight), and a few years before he died he wrote a series of articles in which he stated that no matter how smart the con man was, "the law is smarter and the con man will eventually be caught."
Buckley, Sheila, See: Stonehouse, John Thomas
Byron, George de Luna
, prom. 1830s-50s, Brit., fraud. Appearing in London in the 1830s, Major George de Luna Byron claimed to be the illegitimate son of the famous poet, Lord Byron, and a Spanish aristocrat, the Countess de Luna. He made claims against Byron's publisher, John Murray, but these were rejected by the publisher. He then wrote to Byron's friends, saying that he was preparing a biography of his father, and would they be so kind as to loan him some of his father's letters. These were forwarded to him. In the same manner, he obtained original letters written by two other great British poets, Keats and Shelley. The major carefully made copies of these letters. Then, after being able to imitate the handwriting of the great poets, he began to create fake letters which were so good that they were sold for considerable cash, through agents to Byron's own publisher, John Murray, and to Mary Shelley, the wife of the dead poet. For almost a decade, the clever Major Byron supported himself on his excellent forgeries. Most of these were eventually exposed as fakes and were sent to the British Museum for exhibit, but others still remain in the possession of collectors who believe they own genuine belles lettres of England's finest poets.
From the World Encyclopedia of Con Artists and Confidence Games