by Dean Jobb
The Goodman twins were in their teens when their parents told them a bare-bones version of the swindle, how Leo had sent investors to Panama and had been tracked down in Canada through an item of clothing. Chats with relatives and a little research over the years filled in some of the blanks, and the passage of time has made Leo more of a black sheep than a pariah. “I’m not ashamed,” says Bill. “Everyone has a degree of fame, so I can brag that my great-uncle was this great shyster.” His only worry is that the story is almost too unbelievable to be true. “Most of the time,” he adds, “people think I’m just making it up.”
Andrew often regales acquaintances with what he knows of the tale, using Leo’s chocolate-induced death as the punch line. It is, he says, “a great story to tell.”
ACKNOWLEDGMENTS
LEO KORETZ WORKED alone when he pulled off one of the longest, most elaborate, and most audacious confidence games in history. Telling his story was another matter, and would have been impossible without the assistance and generosity of many people.
I am grateful to family members who shared stories about Leo—Andrew Goodman, Bill and Mary Goodman, Carol Stelzer, Ellen Cooler, Jane Siegel, and Mari Kaye Kearns Bayes—and to Alan Steinfeld for providing his genealogical work on the Koretz family.
Archivists and librarians in the United States and Canada joined my search for information about Leo, and I cannot thank them enough for their patience and assistance. In Chicago, Scott Forsythe and Ray Johnson identified records at the National Archives and Records Administration (NARA), Great Lakes Region, while Phil Costello and Julius Machnikowski located court files in the archives of the Clerk of the Circuit Court of Cook County. Karen Siciliano at Lake View High School and Julie Lynch and Chris Scanlon at Chicago’s Sulzer Regional Library made it possible to re-create Leo’s high school days, while librarian Jona Whipple at the Chicago-Kent College of Law was as determined as I was to confirm the year of Leo’s graduation. Staff at the Illinois State Archives in Springfield, the library of the University of Illinois at Urbana-Champaigne, the Chicago History Museum, and Chicago’s Newberry library provided archival material and access to newspapers on microfilm. Thanks as well to Mary Beth Perros of the Will County Clerk’s Office, Beatriz Ulloa-Mireles of the Will County Coroner’s Office, and Januari Smith and Stacey Solano of the Illinois Department of Corrections for their help in searching for records of Leo’s death in Joliet prison.
In New York, Eric Robinson of the New-York Historical Society library helped trace Leo’s movements in the city. Olivia Wall took me on a tour of the St. Regis Hotel, which remains as grand as it was when Leo stayed there in the 1920s. Jennifer Lee of the Rare Book and Manuscript Library at Columbia University provided W. A. Swanberg’s invaluable research notes.
Linda Aylward of Peoria’s Bradley University Library, Deb Bier at the Peoria Public Library, and Robert Killion of the Peoria Historical Society uncovered details of Robert Crowe’s early life. NARA archivists William Creech in Washington and Tab Lewis in College Park, Maryland, tracked down investigative files on the Koretz case. Thanks as well to Salesa Richards of the Ohio Historical Society in Columbus for access to Zane Grey’s diaries.
In Halifax, John MacLeod, Garry Shutlak, Gail Judge, Philip Hartling, and many others at Nova Scotia Archives and Records Management provided advice and located records. Karen Smith and Tina Usmiani of Dalhousie University’s Archives and Special Collections guided me through Thomas Raddall’s papers. Patricia Chalmers, Tasya Tymczyszyn, and Elaine MacInnis of the University of King’s College Library fielded what must have seemed like an endless stream of interlibrary loan requests.
Others were instrumental in tracking down records in Nova Scotia. Rebecca Foley, curator of the North Queens Heritage House Museum and Archives in Caledonia, answered my queries about people and places. Linda Rafuse and Kathy Stitt helped me navigate the collections of the Queens County Museum in Liverpool. Cathy LeBlanc of Kejimkujik National Park and community volunteer Norm Green located a recording of Maurice Scott’s recollections of Leo’s time in Nova Scotia. I would never have found it, though, without the help of Dr. James Morrison of the Department of History at Saint Mary’s University in Halifax, who conducted the interview in 1977. Staff of the Queens County Land Registration office in Liverpool located deeds to Pinehurst and other properties. In Bridgewater, Linda Bedford, Barb Thompson, and Kendra Power of the DesBrisay Museum also fielded requests for information.
Martin Lanthier of the National Archives of Canada in Ottawa and Anne Dondertman of the Thomas Fisher Rare Book Library in Toronto helped me identify archival records. Genealogist Sarka Kocarikova combed archives in the Czech Republic for details of Leo’s family background and early life.
Jaclyn Greenberg, one of my journalism students, researched archival and court records in Chicago, and another former student, J. Matthew Gillis, tracked down references to Leo’s alter ego, Lou Keyte, in the Nova Scotia press. I am grateful to Chicago researcher Mark Mandle for compiling the Daily Journal’s coverage of the Bayano swindle on short notice. The staff of Waldheim Cemetery kindly kept the gates open a few minutes past closing time one summer’s day to ensure that a visitor from Canada was able to locate Leo’s final resting place, and Waldheim’s Stephen Ginsberg fielded follow-up questions.
Halifax-based legal historian Barry Cahill shared information about Leo’s lawyer, Joseph Connolly. Thomas Raddall’s son, Dr. Thomas Raddall of Liverpool, and former Liverpool mayor John Leefe shared stories they were told about Leo’s time in Nova Scotia. Toronto journalist Matthew McClearn helped me track down information on his great-grandfather, who was one of the guests Leo entertained at Pinehurst. In a strange coincidence, Matt is a former student and newsroom colleague, and a good friend.
Blair Douglas of Caledonia, whose family used Pinehurst as a summer retreat for many years, showed me around the lodge back in 1992 and shared the local lore about Leo. Renowned photographer Sherman Hines offered a tour of his Museum of Photography in Liverpool, located in the former town hall where Leo catered dances and charmed the community. Claudine LeBlanc and David White, who teach at Liverpool Regional High School, directed me to information on tuna fishing in the area and Zane Grey’s 1924 visit.
Evanston resident Tom Clancy helped me locate the former site of Leo’s lakeside mansion. Eminent Canadian historian Michael Bliss shared his knowledge of the early insulin treatment of diabetics, while Bill Zimmerman of Wolfville, who once owned the site of Laurie Mitchell’s Tuna Inn, offered insights into the man who brought Leo to Nova Scotia.
Hilary McMahon of Westwood Creative Artists in Toronto shared my passion for Leo’s story and made sure this book became a reality. I would like to express my gratitude to Linda McKnight of Westwood for her early support of my work and to Naomi Wittes Reichstein for believing in this project. A writer could not ask for a better or more insightful editor than Amy Gash at Algonquin, who sharpened the book’s focus and recognized the parallels between Leo’s story and the rise and fall of his nemesis, Cook County State’s Attorney Robert Crowe. Thanks, too, to Rachel Careau for her thorough copyediting.
To say that Kerry Oliver has heard a lot about Leo’s exploits over the years is an understatement. She has listened, encouraged, suggested, and advised for so long that I cannot begin to list the many ways she has contributed to this book. It is to her that I am the most grateful, for her love and support.
A NOTE ON SOURCES
NOTHING WAS AS it seemed in Leo Koretz’s make-believe world of mysterious syndicates and Panamanian oil fields. The handful of accounts written long after he was caught added fresh layers of myth and distortion, fooling readers as expertly as Leo had hoodwinked investors. But the real story of the man who pioneered and mastered the Ponzi scheme is so gripping—and, at times, so incredible—that it needs no embellishment.
I discovered Leo and his swindle by chance. I was thumbing through a drawer of index cards at Nova Scotia’s public archives in the late 1980s when an ent
ry caught my eye. Typewritten and yellowed with age, it directed researchers to Halifax newspaper coverage of an intriguing incident in 1924.
Leo Koretz (alias Lou Keytes), from Chicago, swindled $2 million in phony oil scheme. Hid out in Nova Scotia. Arrested and taken back to the U.S. where he died in prison.
Here was a story begging to be told. I did some digging and published a magazine article on the Bayano swindle and Leo’s life on the lam in Canada. But I had only scratched the surface, and over the years, I picked away at the research for this book. Uncovering Leo’s past and piecing together how he had worked his swindle became part hobby, part obsession. I compiled the detailed coverage of the case that had appeared in the Chicago and Halifax newspapers. I made contact with Leo’s descendants. I tracked down court records of his crimes and eyewitness accounts of his activities. I visited Leo’s Canadian hideaway while Pinehurst Lodge was still standing, walked the streets of the North Side neighborhood where he grew up, checked out his haunts in New York City.
I was determined to learn the truth about a larger-than-life figure who rarely, if ever, told the truth himself. And Leo’s story, I discovered, is woven into the fabric of the corrupt politics and gang warfare that plagued Chicago in the 1920s. His life and his swindle parallel the rise to power of Cook County State’s Attorney Robert Crowe, one of the most controversial figures of the time; the Bayano fraud and its spectacular collapse is Crowe’s story, too.
This book separates fact from fiction. Every word in quotation marks, every headline, comes from a newspaper account or interview, a court document, or a diary or letter tucked away in an archive. (Spelling variations of the time, such as clew for clue and through abbreviated to thru, have been retained.) Dialogue is presented as it was recorded; scenes and events are portrayed as they were described in contemporary accounts and documents. Thanks to Chicago’s sharp-eyed reporters, we know that Leo was chauffeured around the city in a maroon Rolls-Royce limousine and that the polka-dot bow tie he wore the day he dictated his confession was blue. The smoke from camera flashbulbs was so thick the day he pleaded guilty that courtroom windows were opened to clear the air—we know this, because Halifax deputy sheriff Rainard Scriven was there and recalled this detail in a press interview. We know that the billiard table in Leo’s Evanston home was so big it would have cost a small fortune to remove it because this was the conclusion of the bankruptcy officials who liquidated his assets.
Much of the material presented here has been drawn from the extensive newspaper coverage of Leo’s schemes and his life as a fugitive and of Crowe’s efforts to find and prosecute him. While the journalists of 1920s Chicago thrived on one-upmanship and sometimes played loose with the facts, their reports remain the most reliable source of information on the Bayano swindle and Crowe’s manhunt. With the best reporters on six dailies chasing down the story, few details were overlooked, and almost everyone Leo befriended, fooled, or swindled was tracked down and interviewed. Court records and archival research in the United States and Canada added new details and insights and often confirmed what was reported in the press. The transcript of Leo’s confession has disappeared from court files, but his testimony at a bankruptcy hearing was recorded almost verbatim in the newspapers, making it possible for the master swindler to explain, in his own words, how he devised and operated his audacious scam.
The sources of quotations can be found in the endnotes that follow. Archival records are also identified, but information drawn from books and other published works is cited only when the source is obscure or facts may be in dispute. Genealogical resources such as census returns, city directories, professional guides, and steamships’ passenger lists provided background information on people and were used to trace their movements. Names were checked against these and other official records, since spellings sometimes varied in press accounts. The amounts individual investors sank into Leo’s schemes were compiled from creditors’ claims filed with the bankruptcy court.
All dollar figures are those used at the time. Where figures have been converted to their value today, this has been done using an online conversion tool developed by the Economic History Association and accessible at www.measuringworth.com/uscompare. Conversion rates for the early 1920s fluctuate, and unless otherwise noted, 1923—the pivotal year in this story—has been used as the benchmark. In terms of purchasing power, $1 in 1923 is equivalent to about $13 today. A $1,000 share in the Bayano Syndicate, of course, remains as worthless now as it was when Leo was selling the shares in the Roaring Twenties.
NOTES
CHAPTER 1
3 to honor a financial wizard Details of the Drake banquet, who attended, and what was said are drawn from “ ‘Ponzi’ Koretz Once Feted at De Luxe Feast,” Chicago Daily Tribune, December 14, 1923; and “Koretz Feted by Friends in ‘Gratitude,’” Chicago Evening American, December 14, 1923.
3 most spacious hotel The Blackstone and the Drake 1924: Shopping List and Points of Interest Information Book (Chicago: Drake Hotel Company, 1924), 34.
4 Standard Oil had offered Grand jury indictment, dated February 1924, in United States v. Leo Koretz, p. 2. RG 21, U.S. District Court, Northern District of Illinois, Eastern Division, Chicago. Criminal Case Files, 1873–1978, case no. 12242, National Archives and Records Administration (NARA), Great Lakes Region, Chicago. The offer was reported in “Oil Swindle Nets Millions,” Chicago Daily Tribune, December 13, 1923.
5 wealthiest Jew in Chicago “Locate Koretz, Expect Arrest in a Few Days,” Chicago Daily Tribune, December 20, 1923.
5 an outstanding example “Cashed 40 Checks for $400,000,” Chicago Evening American, December 15, 1923.
6 one of those kinds of places “Rolls-Royces in Koretz Garage,” Chicago Evening American, December 14, 1923.
6 in the $20 million range Affidavit of Basil Curran, dated June 16, 1924, filed in In the Matter of Leo Koretz, Bankrupt, case no. 32520. RG 21, Bankruptcy Records, 1898 to 1979, Records of the U.S. District Court, Northern District of Illinois, Eastern Division, Chicago. NARA, Great Lakes Region, Chicago.
6 a rating of 100 per cent “Koretz Dupes Get $400,000,” Chicago Daily Tribune, December 14, 1923.
6 a personal magnetism W. A. Swanberg, “The Fabulous Boom of Bayano,” in The Double Dealers: Adventures in Grand Deception, ed. Alexander Klein (Philadelphia: J. B. Lippincott, 1958), 17.
6 a genius with the ladies “Koretz Liked the Ladies, but Liked ’Em Safely Married,” Chicago Evening American, December 15, 1923.
6 His manners were wonderful Ibid.
8 He has always been good “‘Fox’ Seen in Loop Monday; Plane, Pilot Hunted,” Chicago Evening American, December 15, 1923.
8 the era of wonderful nonsense Hugh Rawson and Margaret Miner, The Oxford Dictionary of American Quotations, 2nd ed. (New York: Oxford University Press, 2006), 292; also quoted in John J. McPhaul, Deadlines and Monkeyshines: The Fabled World of Chicago Journalism (Englewood Cliffs, NJ: Prentice-Hall, 1962), 223.
8 More people were comfortably well-off John Kenneth Galbraith, The Great Crash, 1929 (New York: Time, 1961), 8.
8 I want a great deal of money F. Scott Fitzgerald, This Side of Paradise (New York: Collier Books, 1986), 268.
8 the only great city Quoted in Donald L. Miller, City of the Century: The Epic of Chicago and the Making of America (New York: Simon and Schuster, 1996), 17.
8 No other place butchers William Joseph Showalter, “Chicago Today and Tomorrow,” National Geographic 35, no. 1 (January 1919): 3.
10 Do as the lady wishes! Wayne Andrews, Battle for Chicago (New York: Harcourt, Brace, 1946), 121.
11 Koretz would not take “Here’s Story of Koretz, Business Hypnotist,” Chicago Evening American, December 14, 1923.
11 I tried to dissuade people “Koretz Tells How the ‘Suckers’ Bit,” New York Times, December 3, 1924.
11 a sort of negative salesmanship Edwin Baird, “Too Many Women!” Inside Detective, October 1938, 31.
12 I mentioned to a
friend “Koretz Tells How the ‘Suckers’ Bit,” New York Times, December 3, 1924.
12 In his former existence The slides were reproduced in the Chicago Evening American, December 18, 1923.
13 Everybody had confidence in him “How He Did It Told by Friend Who Took His Word,” Chicago Evening American, December 14, 1923.
13 the very soul of honor “Koretz’s Rise to Wealth Reads like Dime Novel,” Chicago Evening Post, December 13, 1923.
13 His followers were devout “More Participators Tell Experiences with Koretz,” Chicago Evening American, December 15, 1923.
CHAPTER 2
14 tempted to buy some shares The comment was reported in “Curious Crowds at Union Station to Get Peep at Leo Koretz,” Chicago Evening American, December 1, 1924.
15 a system of wholesale robbery George J. Svejda, Castle Garden as an Immigrant Depot, 1855–1890 (US Department of the Interior, National Parks Service, 1968), 128–30, available online at http://www.nps.gov/history/history/online_books/elis/castle_garden.pdf. Conditions inside Castle Garden are described in Milton Meltzer, Taking Root: Jewish Immigrants in America (New York: Dell, 1976), 52; and “Just from the Steerage,” New York Times, March 9, 1888.
16 Leopold Koretz had been born Information on the Koretz family in Bohemia is based on the Jewish Register Rokycany, births/marriages/deaths 1874, 1875, microfilm HBMa 1782, p. 4, National Archives, Prague, and the following records in the State District Archives, Rokycany: Jewish Register Rokycany, births 1791–1872; marriages/deaths 1802–1932, pp. 6, 7, 10–11, 51, 110; Register of Rokycany Citizens, book 61, p. 95; List of Applications for Passport, book 78, record nos. 53, 59, 65, 68; Domicile Register of Rokycany, book 129A, house no. 10, p. 14; Domicile Register of Rokycany—Index, book 129 I, pp. 141, 951; Book of Issued Home Certificates 1870–1931, book 79, record nos. 946, 1149, 1150, 1349, 1380; Book of Issued Home Certificates 1853–1957, book 77, record nos. 78, 81, 184.
