Scams, swindles and schemes litter American history

If you love history and these articles, we are seeking sponsors to support the work. Contact Rob at the Globe, 417-334-9100 for details or donate via Venmo@ bobfordshistory

In life, if your name is given to anything including a crime, you’ve left a mark on society, like Charles Ponzi.

Charles Ponzi (Photo submitted)

The aptly named Ponzi Scheme promised a 50% return on investments within 45 days and 100% return in 100. Come on people; too good to be true, don’t you think!

It was the roaring ‘20s and America was the place to be. Post World War I where the United States came out of the times as a new leader on the world stage. European nations were reeling from the war with millions killed and economies flattened as countries struggled to provide an existence for their survivors.

Ponzi relied on one of humanity's most negative traits: greed.

In a Ponzi Scheme the conductor is the hub, collecting money from early investors repaying them with money raised from later chumps. Most of the time the business pitched as the opportunity never existed or investments in land, mines or stocks never made.

A Pyramid Scheme is where the recruited investor is rewarded from bringing in new participants and their money into the opportunity; as always the last one in is the ultimate sucker.

Charles Ponzi received plenty of publicity. His scheme involved reduced postal coupons that could be redeemed for a much higher return. Of course, as time runs on, investors get nervous or wise up and demand their cash back. Again sadly, the last money in, is left holding the empty bag.

Deception and betrayal are as old as mankind itself. Cain and Abel, Jacob disguising himself as Esau, his older brother, to fool their father and receive the birthright promised to the elder brother, on and on throughout history.

Fast forward to the man that came close to causing the fall of an Empire, John Law.

John Law (Photo submitted)

You can find a striking portrait of John Law in the Albrecht-Kemper Museum of Art in St Joseph. What is this charlatan doing having his stately portrait there? It was donated interestingly enough by famed Kansas City banker R. Crosby Kemper. I would like to know the attraction Mr. Kemper had to the man that caused the Bank of France to nearly collapse.

When he passed, King Louis the XIV left France in dire straits with his spending, a couple wars and that Palace of Versailles with 700 rooms, wasn’t cheap to build. John Law had become friends with the new man in charge, the Duke of Orleans. Law’s 1720 intriguing plan to bolster the economy was to introduce paper money into the federal system backed by gold and silver held in state vaults, sound thinking. The problem was Law didn’t know when to stop printing money.

A few worried citizens started to demand coins in return for their paper money but the Bank of France was running out of hard currency. Law needed new reassurance or promise for his paper holders. France had enormous claims in the New World. Law received the exclusive trading contract for the land known as “La Louisiane.”

The banker hinted that there were vast gold and silver finds in the territory, and the nation would reap huge rewards once mined. Influential friends listened. Law paraded 6,000 peasants through the streets of Paris stating they were on their way to mine the promised deposits. His scheme was later dubbed the “Mississippi Bubble.”

Currency holders believed him, but only for a while. Most peasants never sailed to the New World and minerals were not found. A bank run for the ages was on. Once it started, thousands lost their life savings and lives, troops were called in as riots ensued.

The Duke died shortly thereafter in 1723. John Law received the blame from the French Parliament and fled to Vienna, where he died in 1729 leaving a legacy and lesson that many in power today have not learned.

Being a Missouri Supreme Court Appointee, (OCDC), hearing cases against attorneys for 12 years, I have listened to some doozie schemes.

One of my favorites was with a named partner from a major Kansas City Law firm who was executor of a moderate size trust. The trust received a $90,000 refund one year from the IRS. The lawyer then endorsed the check and wrote “payable to the IRS,” with his name and social security number written on the reverse side, mailing it back to the IRS. In other words, he used the trust’s refund to pay his own personal income tax! We found him guilty and suspended his license before he hit the elevator, all while he protested vehemently. The accused could not believe he was even being questioned—how dare us!

These people who think the rules don’t apply to them, get me. Politicians, athletes, lawyers and other self-absorbed narcissists seem to adhere to the Richard Petty creed, “if you're not cheat’en, you're not trying.”

Then there's Bernie Madoff: He took the art of the scam to another level. His claim to infamy status is the $65 billion Ponzi Scheme he ran for years, conning friends and institutions with incredible returns. Again, relying on man’s continued quest for more money and status.

Someone told me if you cheat on your wife the first time you beat yourself up, but the more indiscretions you have the easier they are to get over. I think that applies to con artists too.

Once discovered, Madoff had ruined thousands of friends and others' economic lives through his greed and attempt to preserve his perceived geniuses. The Madoff family was in on the scam, most went to prison, one committed suicide while his wife, I remember, complained about the style in which she now had to live. Reminded me of my favorite KC attorney – ”how dare you!”

John Law, Bernie Madoff, Jacob and that Kansas City lawyer are examples; throughout history people remained fixated on wealth and social position, trading in a principled upbringing and accepted morals.

Many of these people considered themselves religious, but it's innate to strive to better oneself. Where these scammers went off the rail was when their financial and social climbing came at the devastating expense of the innocent.

------------

You can find more of Bob’s work on his website bobfordshistory.com and on YouTube, TikTok or Clapper.