by Dean Jobb
Believing a legal training would help him keep what his financial genius enabled him to get, he became a lawyer. … With insatiable hunger for new worlds to conquer, our Ponzi next cast his eyes upon the rich timber forests of Central America and soon we find him dominant in the field.
“Our Ponzi”—the diners roared with laughter at that one. Charles Ponzi was a notorious swindler who had claimed he could generate enormous profits by buying and selling international postal-reply coupons—vouchers redeemable in stamps—and profiting from exchange rates. He had set up shop in Boston in 1920, promising to double investors’ money in just ninety days. But there was no postal-coupon bonanza. Every dollar in profit Ponzi paid out came from the money invested by latecomers, creating a giant pyramid that collapsed the moment the pool of suckers dried up.
Leo a Ponzi? Bayano’s riches nothing more than an elaborate fraud created years before Ponzi ever heard of postal-reply coupons? Preposterous. Leo’s friends were kidding when they called him a Ponzi, and they thought they were being clever when they went on to call him a Wallingford—the con man Get-Rich-Quick Wallingford was the title character of a silent film released at the end of 1921. Bayano’s investors had seen with their own eyes the contracts to buy oil tankers and build pipelines; they had huddled with Leo to pore over blueprints of the impressive facilities in Panama.
Leo transacted his Bayano business upstairs, in suite 629 of the Drake, away from his downtown law office. Each of the diners had been granted the privilege of visiting this inner sanctum, with its fine antiques and large windows overlooking Lake Michigan. There they had toasted their good fortune with Hennessy Three Star cognac, White Horse scotch, and Gordon’s gin, liberated from the $5,000 liquor cache that Leo—a man who was always thinking ahead—had prudently assembled before the Eighteenth Amendment cut off the supply of booze.
This Ponzi, this Wallingford, had never asked any of them to hand over a penny. The men gathered at the Drake had begged for the chance to invest. Leo had been reluctant to let his friends and relatives buy Bayano shares. One businessman spoke for many when he grumbled that he had tried to buy Bayano stock but “Koretz would not take my money.” Some well-heeled Chicagoans were astonished when he returned their five-figure checks. “I tried to dissuade people, objected at times,” Leo later claimed, sounding as surprised as anyone at the gold rush he had created. “It was awfully hard to keep them from buying stock.” His approach was low key, “a sort of negative salesmanship which had very positive results,” noted one admirer of his talents as a promoter. “It was what he didn’t say. … He always had an air of secrecy, a knowing air of withholding valuable information.” Leo dropped hints to create excitement about Bayano’s prospects, then inflated demand by making the shares hard to get. Greed and the marketplace did the rest.
“I mentioned to a friend that oil had been discovered on the land,” he once explained. “The news spread rapidly. They began to besiege me with money.” Stock certificates with a face value of $1,000 resold for up to $5,000 each.
The sketch of Leo’s ascent to the pinnacle of high finance was getting to the best part, the discovery of oil at Bayano. The diners read on:
While searching for legal precedents in a habeas corpus case the thought suddenly came to him that at the present rate of consumption the oil supply of the world would be exhausted in the year 2017.
Being desirous of perpetuating the oil supply, our wizard took his pick and shovel and flew to Panama. At a depth of 2,204 feet his pick struck a solid substance and a few more blows turned up a can of oil.
He promptly wired John D. Rockefeller and asked him what to do with the can, and John met him at the border and offered him 2,000,000 yen for his holdings, which we are happy to say he promptly declined.
Our intrepid explorer has now returned to Chicago to report to the minority shareholders, his friends, and relatives here gathered.
The lights dimmed for the highlight of the evening, a slide-show tribute. A stereopticon projector flashed cartoon images onto a screen, and bursts of laughter greeted the appearance of each new panel. One depicted Leo as a scowling pirate, complete with saber and skull-and-crossbones hat, beside the caption “In his former existence, he probably was a buccaneer on the Spanish main.” In the panel labeled “He ropes his friends in,” investors waved wads of bills as he doled out stock certificates. In the final slide, “Leo Koretz, Oil King,” Leo sat on a throne of cash, looking a bit bored, a crown perched on his oversize head. A figure identified as Sam Cohen bowed before him, saying, “Yes, my lord, what is your pleasure?” The hapless Cohen was the target of jibes and elbows as the room filled with laughter.
Sam Cohen was the butt of the joke, but every Bayano investor was as grateful to the Oil King as he was—and just as subservient. “Everybody had confidence in him and just seemed to take his word, and never worried about the details,” explained a lawyer who had known Leo for years. He was “the very soul of honor,” chimed in another close friend. “His followers were devout; it was a religious devotion,” insisted Charles Cohn. “I had every confidence in the world.” It was as if money grew on the mahogany trees that had launched the Bayano Syndicate on the road to financial success.
Leo’s shareholders, friends, and relatives laughed and talked into the night, eating their Bayano duckling and perhaps calculating in their heads how much their stock would be worth in five or ten years. None suspected that the man whose generosity and business acumen they were celebrating was also a man with many secrets.
Had one of them, by chance, shown the photograph of the Man of Today to the staff at the Shirley Apartments on the other side of town, the janitor would have instantly identified Leo as Al Bronson, a traveling salesman. Within a couple of years, a lot of people in Canada’s seaside province of Nova Scotia, some twelve hundred miles east of Chicago, would have remarked on how much Leo resembled their new American friend, the writer and literary critic Lou Keyte. A thick reddish beard obscured Keyte’s face, but he was about the same age, and like Leo, he was rich, charming, and generous, and a dapper dresser.
Strangely, it would have been impossible to find anyone in Panama who recognized the man in the photograph or had ever heard of Leo Koretz.
2
AMBITIONS
ROBERT CROWE WOULD have recognized the Man of Today from the photograph distributed at the Drake Hotel that night. Leo and the Cook County state’s attorney had started their careers together, as rookie lawyers at the Moran, Mayer, and Meyer law firm. That was twenty years before Bayano investors gathered to honor their benefactor, and long before Crowe discovered the truth about the syndicate. Perhaps it was a lucky break, he later joked, that he had never spoken to Leo about his Panamanian oil fields. He might have been tempted to buy some shares for himself.
Leo and Crowe were almost the same age, born just six months apart, and had graduated from law school in the same month of the same year, June 1901. They had probably discovered, at some point during the two years they worked at Moran, Mayer, and Meyer, that they shared a passion for detective stories. And both were the golden boys of their families, ambitious young men destined for great things.
There were differences, of course. Leo was foreign born and Jewish, the son of an insurance agent. Crowe had been born in Illinois but was the son of Irish immigrants, and his father had the connections needed to land a secure job as a court official. Leo had struggled to earn his law degree, taking night courses while holding down a job. Crowe’s family had enough money to send Robert to Yale Law School.
Leo had a thin face back then, with hooded eyes and a wide smile. His hair was combed into a pompadour but was already beginning to recede at the temples; the broad starched collars of the time made his long neck look a bit longer. Easygoing and easy to be around, Leo was full of fun and one-liners. The office joker. Not Crowe—he was serious, almost humorless, sizing up the world with close-set, accusing eyes. He was short and stocky, but a sharp mind and forceful personal
ity made him loom larger in person. He was combative, all business. His chin jutted from his crescent-shaped face, and he led with it. A hard man to like, but a hard one to resist. He was as aggressive as Leo was outgoing.
There was another difference between them, one that, many years later, put them on a collision course. It was not their methods—both would prove to be devious men who were willing to do what had to be done to get ahead. It was what drove their ambitions. Robert Crowe was determined to wield great power. Leo Koretz yearned for great wealth. And the excesses and corruption of the twenties, the era of wonderful nonsense, would help each man to get what he wanted.
LEO’S FIRST GLIMPSE OF America was from the liner SS Werra as it steamed into New York Harbor on a September day in 1887. The Statue of Liberty, newly dedicated and clad in a skin still fresh and coppery brown, glinted in the sunlight. Buildings rose in a saw-toothed line along the tip of Manhattan Island. A massive circle of brown sandstone squatted at the water’s edge—Castle Garden, a former fortress pressed into service as the entry point for a steady stream of immigrants to America.
Leo and his family were among more than four hundred thousand newcomers processed that year at Castle Garden, the predecessor of Ellis Island. They waited patiently on rows of wooden benches inside the rotunda, enduring cold and filth and a stench only a good cigar could conquer. Leo’s father did his best to outwit the ticket agents who overcharged for train fares, the money changers who cheated on exchange rates, the baggage handlers who forced immigrants to pay twice. It was, said one observer, “a system of wholesale robbery,” and the lesson for eight-year-old Leo, perhaps, was how easily a shrewd operator could relieve people of their money. After the private sector took its cut, each new arrival paid a government levy of fifty cents a head before immigration officials sent them on their way.
Leopold Koretz had been born on July 30, 1879, in Bohemia, a western province of Austria-Hungary. His father, Heinrich, was a merchant in Rokycany, a metalworking town of a few thousand about forty miles southwest of Prague. Heinrich had married Marie Eisner in 1866, and Leo was the seventh of their nine children.
Bohemia was a region of rugged mountains and dense forests at the heart of Europe, its western border cutting a deep wedge into the underside of neighboring Germany. It was also a troubled land, rife with ethnic tension. Over the centuries, Germans had migrated eastward and become the dominant culture, overshadowing the native Czechs: Bohemia’s official language was German, confirming the Czechs’ second-class status. Caught in the middle was a small German-speaking Jewish minority, accounting for less than 2 percent of the population. Rokycany—the Koretzes and other Germans called it Rokitzan—was predominantly Czech and awash in Catholic churches and Christian monuments. There were fewer than fifty German residents in the 1880s, by one estimate, and the Koretzes may have been the only Jews in town.
As the nineteenth century waned, Czech nationalism was on the rise. An anti-German backlash and a wave of anti-Semitism made it a good time for Jews to leave, and America promised a fresh start. The oldest of the Koretz boys—Max, Ferdinand, and Adolph—left first, while still teenagers. The rest of the family—Leo, his parents, and the five remaining siblings—received permission to emigrate in July 1887. Even with eight tickets to buy, Heinrich could afford a second-class cabin on the Norddeutscher Lloyd steamer Werra, sparing the family the cramped quarters, poor food, and foul air usually found in steerage.
The Koretzes sailed from Bremen in late August. Werra was one of a new class of liners that were among the largest, fastest, and most luxurious of their time, able to cross the Atlantic in little more than eight days. Mark Twain sailed on one of the vessels and declared it “the delightfulest ship I ever saw.” There were smoking rooms and saloons for the men, drawing rooms for the women, and wide decks for everyone to stroll. On this trip, Werra also carried a consignment of gold and silver worth more than $700,000, a fitting cargo to accompany Leo Koretz to America.
Leo, right, as a boy in Bohemia with his younger brother, Julius.
After a rough crossing—Werra plowed through a pair of powerful hurricanes—the liner arrived on September 6. When the Koretzes emerged from Castle Garden, Heinrich piled his family onto a train. They were headed west, like so many others, to the city Leo’s father had chosen as the place to make a fresh start. It was a name railroad ticket agents heard over and over, day after day, in German accents as heavy as Heinrich’s.
Chicago.
A BAND OF HAZE hovering above the flat horizon announced Chicago’s sprawling presence long before trains arrived from the east. Mills and factories and the chimneys of countless houses spewed clouds of coal smoke that “settle in a black mass,” a visitor noted in 1889, creating a gloomy world where “one can scarcely see across the streets in a damp day.” It was as if the smoke had never cleared from the Great Fire of 1871, which had killed hundreds, left tens of thousands homeless, and reduced much of the city to hollowed-out ruins. A new Chicago had risen from the ashes. By the time Leo arrived, just sixteen years after the disaster, it was a booming railroad and industrial center and the second most populous city in America.
“No city in the world grew faster in the 1880s or was more chaotically alive,” remarked the historian Donald Miller. People made pilgrimages to Chicago “to see the shape of the future.” Chicago boasted some of the highest office towers in the world by the 1880s, monuments to progress in brick and stone. Many stood ten stories or more, so tall that a new word, skyscraper, was coined to describe them.
The city’s ambitions knew no bounds. “Sir,” a railroad brakeman assured a visitor in 1881, “Chicago is the boss city of the universe.” The poet Carl Sandburg extolled it in verse as the “Stormy, husky, brawling, / City of the Big Shoulders,” an unstoppable economic force. The city’s stockyards and slaughterhouses were both a wonder and a blight—so vast and efficient that they became a macabre must-see for visitors, so exploitive and horrific to work in that they became fodder for Upton Sinclair’s muckraking novel, The Jungle. With the phenomenal growth that followed the fire came a host of problems: poor sanitation, crowded slums, rampant crime, labor unrest, official corruption. A year before Leo’s arrival, a bomb thrown in Haymarket Square during a rally demanding an eight-hour workday killed seven policemen. Raw sewage dumped into Lake Michigan, the source of the city’s drinking water, caused deadly outbreaks of typhus; among the many victims was Leo’s oldest brother, Max, who succumbed to typhus in 1889 at twenty-two.
A section of the city’s waterfront, known as the Levee, was a cesspool of saloons, brothels, and gambling dens of such “unbelievable depravity,” wrote Herbert Asbury, an early chronicler of America’s underworld, that “the most disreputable superlative that could be imagined would fail to do it justice.” The area was so dangerous that one judge suggested anyone who ventured there deserved to be robbed. Chicago became notorious as a place of wickedness and a hotbed of crime. The British writer Rudyard Kipling visited, shook his head in disgust, and vowed never to return to a city “inhabited by savages.” The police were too overwhelmed to bring criminals to justice, or too crooked to care, and the biggest crooks were too well connected to politicians to worry about facing prosecution. Robert Crowe would immerse himself in this shadowy, corrupt world and claim to be a politician and a crime fighter; it was almost impossible, however, to be both.
And yet, for many, Chicago’s extremes—the rapid and relentless growth, the chasm between rich and poor, the skyscraper temples standing like bulwarks against the sin of the Levee—conspired to create a place bursting with promise and excitement. To Mark Twain it was “astonishing Chicago—a city where they are always rubbing the lamp, and fetching up the genii, and contriving and achieving new impossibilities.”
Leo and his family were newcomers in a city of newcomers. Chicago’s population doubled to more than one million during the 1880s, and more than a third of the population was foreign born, injecting the city with a globe-spanning array
of cultures and languages. The “first and only veritable Babel of the age,” a visiting English journalist said of the city. “Not if I had a hundred tongues, every one shouting a different language in a different key, could I do justice to her splendid chaos.” Almost a half-million people of German descent were adding their voices to the splendid chaos of Chicago by 1890, making them by far the city’s largest ethnic group.
The Koretzes joined a Jewish community growing in number and influence; by the turn of the century, one of every twenty Chicagoans was Jewish. There were almost a half-million Jews in the United States by the late 1880s, and their presence, in the words of one observer, had become “an accepted part of American life.” Most were German speaking, allowing them to find a place in established German communities, and most were adherents of Reform Judaism, which relaxed or eliminated the traditions and cultural trappings that made Orthodox Jews stand out. Prayers were read in a language the congregation understood, not Hebrew; men and women sat side by side in the synagogue and could stray from a kosher diet. Reformers even changed the observance of the Sabbath from Saturday to Sunday, to ensure that Jewish shopkeepers and their employees did not have to choose between their faith and losing business.