THE LITERATURE OF FRAUD AND SWINDLING

By Patterson Smith

Can a crime be artistic? Yes, if it is an artful swindle. Which perhaps explains why the literature of fraud and swindling is so attractive to a broad group of crime collectors who disdain the blood and passion of what is normally viewed as the heart of the crime genre—the murder case. In addition to its esthetics, the variety of the literature of deception also attracts, for its range is enormous: from harmless hoaxes and impostures at the low end of the venality scale to all manner of larceny at the upper end. Some obvious categories are consumer fraud, cheating at cards, mail fraud, bucket shops, insider trading, forgery, and embezzlement, but we may also include quackery, religious hustlers, and psychic frauds, not to mention the faking of literary works, objets d’art, and archeological artifacts.

Although violence is ordinarily absent from them, fraudulent schemes can have devastating consequences. One reason forgery remained a hanging offence in England until 1837 was because a forged document was the only means through which a lord, ordinarily secure against burglary in his castle, could be robbed of his entire estate.

In the vast array of fraudulent mechanisms, a particular kind of swindle stands apart by the sheer virtue of its artistry: the confidence game. A good "con" can excite in most everyone (including, sometimes, its victim) admiration for the beauty of its conception and the elegance of its execution.

The term "confidence man" first gained wide currency from the publication in 1857 of Herman Melville’s novel so titled. Research by J. D. Bergmann suggests that Melville picked up the term from the case of a swindler named William Thompson who attracted considerable notice in New York City before his apprehension in 1849. A contemporary newspaper reported:

I don’t think that would work in New York City today, Thompson.

The interest of the general reader in a good scam was first brought home to me many years ago when my sister, departing on a cruise, borrowed a book that she chose pretty much at random from my stock. It was a copy of "Yellow Kid" Weil (Ziff-Davis, 1948), W. T. Brannon’s biography of a master career swindler who worked out of Chicago. My sister, who had never read a crime book in her life, often since told me what a great book it was and asked if I could supply copies for her friends. Sorry, Marion, it’s now become too valuable a book for casual readers.

One of Weil’s cons was the pedigree dog trick. In this scenario Weil enters a saloon dressed to the nines and accompanied by his dog Rex. He tells the saloon keeper that he has a deep attachment to the animal, whose pedigree he describes as one of great rarity and value. With that, he pulls out his gold watch and announces that he is late to a meeting at his bank, where he expects to close a profitable deal. The dog, regrettably, is not welcome in the banker’s office; could the saloon keeper be trusted to care for Rex during Weil’s absence? The saloon keeper consents and a grateful Weil tips him generously and departs for his appointment.

Shortly thereafter into the saloon walks a stranger who excitedly takes note of the dog, declares it to be the very breed that he has long vainly sought, and announces that he must have it. He will pay dearly for it. Alas, the saloon keeper cannot sell it; it has been left by its owner in his care. The stranger, growing ever more desperate, makes increasing offers for the dog, finally announcing his willingness to pay $300. He leaves his hotel address with the saloon keeper, presses $50 into his hands, and insists that he persuade Rex’s owner to sell the dog when he returns from the bank. The stranger departs.

Act III. Weil enters the saloon in a despondent state, confiding that his deal at the bank has fallen through and his financial prospects are considerably reduced. The saloon keeper, seeing a lucrative opportunity, offers to buy Weil’s dog. Weil protests that he could never part with dear Rex. Only when the saloon keeper finally increases his offer for the dog to $200 does Weil accept. He departs with the money, saddened that his straitened circumstances have forced him to part with his pet.

The denouement is a sad one for the saloon keeper. The stranger who so eagerly desired the dog cannot be located at the address provided. Instead, he is meeting with Weil in celebration of another successful coup. The two will find a new five-dollar mutt for their next victim.

The pedigree dog trick is known as a "short con," the term given to a ruse whose object is the gain of a small amount of money, perhaps only the contents of the victim’s wallet or even the change from a small bill. At the other end of the spectrum is the "big con," the highest form of the confidence man’s art, whose object is to take the "mark" (victim) for all that he is worth—send him home to clean out his bank account, sell his bonds, mortgage his ranch.

A big con usually required several con men working in concert and was often put into operation only after long preparation in learning the mark’s background and business. A "steerer" would draw the mark into their net through a seemingly chance encounter. The mark’s confidence would be built up through letting him win money (a "convincer"), often in increasing amounts, until the stage was set for the grand score. The big con required high acting skills, teamwork, patience, and complete self-assurance. Confidence men had them all.

The swindle often required an elaborately constructed set, known in bunco parlance as the "big store," which was peopled with confederates and made to look like a gambling parlor or brokerage office, or whatever suited the story they were feeding the mark. (Weil at one time rented an empty bank building that he could staff with colleagues posing as cashiers and customers.) At the critical moment the victim suddenly—through a carefully orchestrated "misunderstanding"—finds that he is not a big winner but a big loser. Immediately following this horrific discovery the mark is subjected to the "blow-off," a supervening event (such as a raid by the "police") that provides a pretext for clearing the premises and for the gang to scatter.

Following the blow-off the ring may stage a sequel called "cooling the mark" to prevent him from raising too much outcry. This might be accomplished by expressions of sympathy from another "victim" or promises of help in recovering his losses if the mark will go to another city and await further contact (then another city and another). Sometimes the mark can be played for still more money as he invests additional sums in an attempt to recover some or all of what he has already lost.

The movie The Sting, set around 1930, provides an excellent depiction of how short and big cons operated. The movie opens with a short con by means of which a man is tricked out of his wallet. It builds to a climactic big con centered around a horseracing parlor. The mark has been led to believe that he is in contact with a tipster inside the telegraph office who has advance information on the race results. After placing some winning bets that build up his confidence, the mark is ready for the sting. He wagers a suitcase full of cash on a horse. Through a fatal misunderstanding of the tipster’s instructions, the bet loses. In the frenzied sequel, a shot is fired, a man falls to the floor bleeding, and everyone is rushed out the door to escape the threatened arrival of lawmen.

The shooting has been faked, the mark has been fleeced, and the con men exult.

It may seem that that scene from The Sting is a gross Hollywood exaggeration. It is not. Similar scenes from real life are played out in the pages of Philip Van Cise’s Fighting the Underworld (Houghton Mifflin, 1936). The author was a district attorney who finally brought the con men to justice in Denver, where the fix was in. Bunco men could often buy protection from policemen and sheriffs on condition that only out-of-towners be victimized. (The psychology of the con also favored marks who were strangers to the city; bunco men never attempted a big sting in the mark’s home town.) In Denver the local fixer had the reputation of not having one man sent to prison in twenty years, and several immune confidence gangs operated in loose confederation, even sharing a big store. When Van Cise was ready to make a raid on the grifters, he knew he could not rely on the Denver police force and instead engaged state rangers to make arrests. Since he likewise could not trust the station houses as lockups, he utilized a suburban church basement for the detention of his prisoners.

When I was in Denver one day in the 1950s, I recalled Van Cise’s book and decided to try to look him up. In the phone directory I found Van Cise & Van Cise, attorneys at law, which seemed a likely connection. I dropped in cold and learned from the receptionist that the head of the firm was indeed the book’s author. I stopped briefly in the venerable man’s office to tell him how much I had enjoyed his work. I was hoping he might tell me something about the book’s aftermath or offer a fresh anecdote, but he merely thanked me politely for calling on him and volunteered nothing further.

Following closely upon Fighting the Underworld was The Professional Thief (University of Chicago Press, 1937), an important work in the field—but difficult to find in first issue in a dust jacket. Its title page describes it as written "by a professional thief, annotated and interpreted by Edwin H. Sutherland." Sutherland was a leading American criminologist who formalized the concept of white-collar crime. The Professional Thief was the first academic study of swindlers and swindling and is proof that sociology doesn’t have to be dull. Sutherland drew heavily on Van Cise to confirm and supplement many points that his professional-thief confidant related to him.

Another important source for Sutherland was a book by J. Frank Norfleet, the only full-length book by an American confidence game victim. Entitled Norfleet: The Actual Experiences of a Texas Rancher’s 30,000-Mile Transcontinental Chase after Five Confidence Men, it was first issued under the imprint of White Publishing Company, Fort Worth, 1924. Later issues with modified imprints followed, all in dark blue cloth and a front cover bearing a drawing of the rancher in a three-piece suit with cowboy hat and boots. The book was intended to help Norfleet recoup his losses, and autographed copies are often met with.

In Norfleet’s case a big store was not employed, but the drama was played out in hotel rooms. A common ruse known as the "pigeon drop" served as the opening stratagem. The story begins in a Dallas hotel in 1919, where the rancher, who had some land he wished to sell, had a "chance" encounter with a steerer masquerading as a mule trader. The steerer introduced Norfleet to a land agent who expressed interest in purchasing his parcel.

In the hotel lobby the rancher, in the company of the land agent, found a wallet stuffed with currency and impressive credentials. The two men located the wallet’s owner in his hotel room, where he turned out to be a stock broker with a big wardrobe and close connections to a stock exchange. He offered Norfleet $100 in gratitude for returning his wallet. When Norfleet refused it, the broker insisted on investing the money on Norfleet’s behalf on the exchange, where he was privy to inside information. Later in the day, the broker presented him with $800 in cash (the first convincer) as his winnings.

The next day the broker told Norfleet that an unusual opportunity had arisen for the broker to make lots of money on the exchange but he dared not do so trading under his own name. Would Norfleet permit him to use his name and share in the profits? It was all perfectly legal, Norfleet was assured, and could be done without cash on the strength of the broker’s membership in the exchange. Norfleet agreed.

At the end of the day, in the broker’s hotel room, Norfleet was told his investment had yielded $28,000 in profits. The broker was on the point of handing over the proceeds when, as is customary in these scenes, a Slight Problem arose. The secretary of the exchange appeared at the door of the room and announced that since the trades had not made in the name of a member of the exchange, the winnings of Norfleet and the land agent (who had also been permitted to participate) could not be withdrawn without presenting "confirmation money"—cash showing that they could have covered their positions if the trades had gone against them. Until the cash was produced, the winnings could be used as a basis for further trades.

The broker now told them that his business required his presence the next day at the Fort Worth branch of the exchange, where their credits would be honored. The threesome repaired to Fort Worth, and the broker continued to trade on their behalf. That evening the secretary of the Fort Worth exchange appeared at their hotel to advise that their total winnings now reached $160,000. There remained, of course, the Slight Problem. Confirmation money in the amount of $80,000 in cash would be necessary to show that they had been trading in good faith.

Norfleet went home to borrow his share of the confirmation money, while the land agent came up with $30,000 from his end. The trio was still short $10,000. Anxious hotel-room conferences followed. The broker announced that he was taking the $70,000 accumulation to Dallas for deposit with that exchange pending acquisition of the remaining confirmation money. So far events were following the con men’s script, but now an unexpected event occurred which illustrated their adaptability and utter aplomb.

It had escaped the gang’s attention that Norfleet, not entirely convinced of their bona fides, was packing a gun. When the broker started down the elevator with the $70,000, the rancher stuck it in his ribs and said Whoa. Back in the broker’s room, Norfleet accused him and the land agent of being in cahoots. An emotional scene followed in which the broker threw the $70,000 down before Norfleet and told him to take it all if he could not stand by his word. (A real convincer!) The land agent swore that he had never seen the broker before meeting him with Norfleet, and the agitated broker gave him "the grand hailing sign of distress of a Master Mason."

The rancher was mollified and concluded he had misjudged the two men. His confidence was secure when the next day the land agent, who had persuaded his company to purchase Norfleet’s property, showed him $30,000 that he said his company had wired to him for that purpose. The land agent said he would place the money with the signed purchase contract at Norfleet’s disposal in a specified Fort Worth bank. The land agent then set off for Austin to sell some bonds to raise the remaining $10,000 in confirmation money that the three needed to secure their personal stock exchange winnings.

Pending receipt of the final $10,000, the broker, now with Norfleet’s agreement, returned to Dallas to deposit with the exchange the $70,000 already amassed. Norfleet was to meet the broker at his Dallas hotel the next morning. Norfleet duly appeared at the hotel. The broker did not. Alarmed, the rancher hurried back to Fort Worth to the bank where the $30,000 in purchase money from the land agent was supposedly awaiting him. That was not there either.

"Forty-five thousand dollars gone! Ninety thousand dollars in debt! Fifty-four years old!" That is how Norfleet now saw himself.

An interview with Pinkerton’s Detective Agency and law officers in Forth Worth gave him little reason to hope for the return of his money or the apprehension of the criminals. Most victims would now have returned home and bitterly readjusted their lives. Norfleet would not accept his lot. Though small of stature and unprepossessing, he was determined to run down his foes. He followed clue after clue from city to city, for thousands of miles and three hundred pages. His path took him through Denver, where he acted as a decoy for Van Cise. Elsewhere in the country, crooked cops often impeded his pursuit, but he eventually was able to count four members of the bunco gang imprisoned and another a suicide. Seventy-five members of associated bunco rings were also brought to justice through his efforts.

A revised edition of Norfleet, scarcer than the original, was published in orange cloth and dust jacket by the Imperial Press of Sugar Land, Texas, in 1927. The title page described it "as told to Gordon Hines" and the plates were increased from nine to twenty-four. Mr. Hines’ foreword expressed the hope that the reader would find the new version "considerably improved" since the older version had been "found to contain a number of crudities of various sorts that tended to impair the otherwise splendid value" of the story.

Confessions of a Con Man (Huebsch, 1909) was another of Sutherland’s sources. It too is a charming work, although Ricky Jay, the foremost authority on confidence games, has told me that he is not entirely convinced of its reliability. It is one of the earliest of the full-length confessional books on confidence games, written in the first person "as told to Will Irwin." Its attractive gilt-stamped red-cloth binding is adorned on the front cover with a paper-label sketch of a circus grifter at his three-card monte stand.

Circuses and carnivals abounded with crooked games of chance and so-called games of skill. Irwin’s con man opines that the smaller the circus the more crooked its games, to the point where small circuses were essentially fronts for the grifters who traveled with them. The buncos at these events were necessarily short cons, since the crowds were transient and money had to be made quickly.

For maximum profitability, it was essential that the local authorities be bought off when the circus was in town, since the swindled victims were hometown folk. Irwin’s hero devotes a chapter to his role as a circus fixer. He found that generally in a small town the chief of police was easily bribed with tickets alone, whereas justices of the peace or the mayor required ten to twenty dollars apiece. The pay-offs did not ensure day-long trouble-free operations: "Generally some skinned sucker would put up such a kick that the authorities would awake to the nature of our harmless little games, and close us out. I’d stall the police as long as I could; when I reached the end of my devices I would let them arrest a dealer or two." The fines were an ordinary expense of doing business.

Three years after Sutherland came the crème de la crème of the con game genre, David Maurer’s The Big Con (Bobbs-Merrill, 1940). By the time I entered the book trade in the 1950s, it was being listed nearly every week in AB’s "Books Wanted" columns, and the wily Chinese were producing a pirated edition. As testament to its enduring popularity, the work appeared in paperback in 1949 (Pocket Books) and again in 1962 (Signet). A modified version with its title unaccountably altered to The American Confidence Man was published by C. C. Thomas in 1974.

Maurer was a philologist who did pioneer work in the argot of the underworld. He was able to gain the confidence of pickpockets and bunco steerers and capture not only their manner of speech but their behavior patterns and thought processes as well. In The Big Con he describes in intriguing detail the operation of the big con in various settings, including the fake stock exchange and the fake horse-race parlor, known in con parlance as "the wire" because it depends on a telegraph tipster.

Indeed, so closely did The Sting’s screenplay borrow from The Big Con that in 1974 Maurer brought a copyright infringement action in federal court against Universal Studios, the movie’s producer. Several criminologists were lined up as witnesses on both sides. It occurred to me that Universal’s defence to the lawsuit best lay in demonstrating that the description of the wire swindle provided by Maurer was not unique to him. Sensing a sales opportunity, I wrote to Universal Studios to advise them that I was uniquely qualified to assist them with material in the genre.

I was duly contacted by an attorney representing Universal Studios. I expected she would be interested in acquiring as exhibits all publications that described "the wire" and predated The Big Con. Whether or not she thought my argument cogent, she bought only one book, perhaps out of pity. I later heard that Maurer and Universal settled the case on the courthouse steps for an undisclosed amount. I hope Universal lost a bundle.

An important part of the swindling genre are books devoted to protecting the public by detailing the various swindles to which it may fall victim. An example from the last century is Anthony Comstock’s Frauds Exposed; Or, How the People Are Deceived and Robbed, and Youth Corrupted (J. H. Brown, 1880). The author is today remembered chiefly as a bluenose who founded the New York Society for the Suppression of Vice and who, if he were alive, would be championing censorship of the Internet. Obscene literature is indeed a concern of his book, but the focus is on exposing frauds. As a special agent of the U.S. Post Office, he had ample opportunity to observe and record them.

Comstock devotes several chapters to lotteries which, then as now, were rife throughout the land, but at that time usually privately operated and often thoroughly crooked. Some lottery companies held drawings in which the winning tickets were held only by insiders; others simply made sure that no winning tickets were in the draw. Some firms held no drawings whatsoever, content to advertise prizes and sell bogus tickets. One ruse was to promise "agents’ tickets" to those who purchased and resold a certain number of regular tickets. Every agent’s ticket, the firm promised, would win a prize—"No blanks!" To the reader wondering how anyone could be taken in by such a transparent fraud, Comstock says, "All are not so wise as you. Many a person brought up in the country, surrounded with pure influences in the home, is thoroughly honest, and believes others are too."

E. G. Redmond’s Frauds of America; Or, Beware of Shams displays none of Comstock’s concerns about corrupting youth but sticks to the swindles. It was published by J. L. Nichols & Co. in 1902 (an 1896 edition, which I have not seen, is also recorded) and describes many a fraud incomprehensible to the public today. Some months ago, for example, a dealer asked me if I were interested in an old circular letter which was a complete puzzlement to him. It offered to sell counterfeit U.S. banknotes for a fraction of their face value—banknotes indistinguishable from the genuine article.

I recognized the circular as an example of the "green-goods" swindle, a common fraud a century ago that is discussed by Comstock and Redmond. In a green-goods operation, circulars are mailed out which offer counterfeit banknotes that are guaranteed to be undetectable. The explanation offered is that they have been produced on genuine plates stolen from the Bureau of Engraving and Printing by an employee who had been cheated out of his pension. With the circular is a fake newspaper article relating how the government had failed to convict the miscreant because Treasury officials could not swear that the bills were not produced from government plates.

Accompanying this persuasive material is a code name and number which the prospect is to use in wiring his reply. If he is hooked, he will be instructed to bring his purchase money (cash, of course) to a meeting with the supplier. There he will be "turned"—tricked out of his money.

A common method of turning involved the "envelope switch." Say the sucker has brought $100 with which to purchase $1000 in counterfeit bills. The con man counts out the $100, places it in an envelope, seals it, writes a code number on it, and gives it to the victim to hold. The mark is told that the $1000 will be delivered the next day in an envelope marked with the same code. Only when the purchaser is satisfied with his merchandise is he to hand over the envelope with his purchase money. Delivery of the $1000 in banknotes never arrives. When the victim opens the envelope to retrieve his $100, he finds only blank paper cut to the size of bills.

The best source that I know for details of a green-goods operation is the Report of the [N.Y.] Senate Committee Appointed to Investigate the Police Department of the City of New York (5 vols., Albany, 1895), commonly known as the Lexow Committee Report. Herein are described the roles and percentages of the take that were allotted to the various con men: the circular writer; the steerer; the ringer and the turner, who collaborated in a "turning joint" to switch the packages of bills; and the trailer, a big fellow who followed the mark in case the fraud was discovered prematurely. In that event the trailer, pretending to be a detective, threatened to arrest the mark for counterfeiting if he became contentious.

Using various mailing lists, thousands and thousands of green-goods circulars were mailed out, first from Manhattan post offices before Comstock got after them, then from Jersey City across the Hudson River. The marks would buy as much counterfeit money as they could afford. A big spender with $650 to invest could obtain not only $10,000 in green-goods but a "state right" granting him exclusive rights to future purchases in New York.

To work this scam, the bunco rings paid protection money to the police, to the telegraph employees who cooperated in handling the flood of incoming messages from the marks, and to postal employees who dealt with the thousands of envelopes returned as undeliverable that were an unavoidable consequence of the mass mailings.

The Lexow Committee’s probe into the matter produced some amusing testimony. The committee possessed a printer’s bill rendered to a bunco man for 100,000 "sets," which undoubtedly referred to the green-goods circulars and accompanying fake newspaper articles.

A senator asked: "Suppose it was a circular, on its face, that was submitted to you, that was a fraud on its face, would you print such a circular?" Printer: "If I had known it was a fraud I would not have printed it."

Senator: "When I say fraud on its face, I mean a fraud that you could read, a man like you, of your intelligence?" Printer: "I never went to school in my life."

Asked what the "one hundred thousand sets" referred to, the printer replied, "I told you it was printing."

Senator: "I am asking you what printing it was?" Printer: "It was printing."

Another senator: "What was the printing?" Printer: "I could not tell you; I told you before that I never went to school, and I can read very little."

Senator: "If you were in Sing Sing for three or four years, perhaps you could tell when you came out."

A little-know cautionary book on cons appeared in 1914, entitled The Destruction of Mephisto’s Web; Or, All Grafts Laid Bare. Written by James Henry Keats under the nom de plume H. K. James, it bears the unlikely imprint of The Raleigh Publishing Co. of Salt Lake City. This work has a strong emphasis on card-table cheating and crooked gambling apparatus, but it also includes an account of a big con known as the foot-race that was perfected by a western confidence ring. It exhibits the common theme of "the cheater cheated."

In the book’s example, Sandy, a con man, ingratiates himself with a wealthy California rancher who looks like a promising mark. Sandy arranges for his big store in Kansas City, where the con men have established a fake sporting club, to send Sandy a telegram supposedly from his friend Roy, a club member. Letters from Roy follow. The mark is permitted to see these communications, which outline a scheme by which tens of thousands of dollars can be gained at the expense of wealthy club members by wagering on a fixed foot-race.

According to the plan as presented to the rancher, Lacey, a leading sprinter and the club favorite, is to take the fall against Owens in a hundred-yard dash. The two runners and Roy are in on a scheme to take advantage of the other club members’ inclination to bet heavily on Lacey. For the plan to work, $5000 is required as front money, which neither Roy nor Sandy can put up. Perhaps the rancher can help, since it is a can’t-lose deal: he will be able to make winning wagers without having to put up cash, merely by having a letter of credit available at the local bank.

The mark is thus lured to Kansas for his no-risk profit. But through a complicated stratagem, he is maneuvered into putting up the cash. No matter, he thinks, the race is fixed in favor of Owens, on whom he has bet. On a track out of town, remote from spectators, the race begins with Owens pulling strongly into the lead. Half-way through the course, he stumbles while looking over his shoulder at his pursuer. Lacey slows down in an evident attempt to remain behind him. At this point one of the club members, ostensibly seeing a fix, points a gun at Lacey and tells him to keep running or he will shoot him. Lacey is forced to finish the race a winner, and the rancher loses his $5000.

An important book on the short con is John C. R. MacDonald’s "Crime Is a Business": Buncos, Rackets, Confidence Schemes (Stanford University Press, 1939). It carries a foreword by August Vollmer, the "college cop" who is chiefly responsible for professionalizing the American police. Vollmer describes the work as "the most complete exposition of the methods used by criminals for defrauding the public that has ever been presented," which was certainly true in its time and may still be. Although, like Sutherland’s work, it was published by a university press, it is a nuts-and-bolts description of over a hundred cons, and its approach is taxonomic rather than sociological. (The classification scheme produces some surprises; the ancient and ubiquitous three-card monte game, for example, is classified as a "service-station attack.")

This book provided me with an early lesson in the doubtfulness of commonly heard claims that a certain book was suppressed. As a young bookseller I was told by a California dealer that the comparative scarcity of "Crime Is a Business," given its status as a university press publication, was due to its having been taken off the market by Stanford because the police regarded its recipes for cheating as too dangerous to remain in public hands. Intrigued by this explanation, I wrote to the publisher to inquire if it were true. A Stanford editor replied to say that no, it had never been pulled off the market; it was simply a book with disappointing sales.

In the realm of financial swindles probably no name is more famous than that of Charles Ponzi, who though he did not invent the pyramid scheme, carried it to new heights. An Italian who emigrated to American as a teen-ager in 1893, he made his first big score in Boston in 1919. It was not a swindle at all, but a newly discovered means of becoming rich with government backing.

The scheme involved International Reply Coupons, those little certificates that dealers sometimes receive in lieu of postage from over-seas inquirers. Then as now, Reply Coupons purchased in the post office of any country could by international compact be exchanged for postage stamps of a certain value in any other country. Ponzi noticed that in some depressed European countries, Reply Coupons could be purchased for amounts well below the value at which they could be exchanged for U.S. postage stamps.

Studying foreign exchange rates, Ponzi calculated that $100 worth of Italian lira could, when routed through the medium of International Reply Coupons, be turned into U.S. postage stamps worth $330. Not only were the transactions legal, they were backed by the postal regulations of both governments. All that was needed to put the plan into operation was money, which Ponzi lacked.

To satisfy this need, Ponzi founded the Securities Exchange Company. Operating in a state without blue-sky laws, the company "began its business career under the most favorable auspices," as Ponzi later wrote. "True, it had no capital. But it had no black eye either. And no liabilities." After a short albeit lucrative run, the Reply Coupon program foundered when the authorities erected bureaucratic barricades against it. But by this time Ponzi had perfected his pyramid routine of paying large returns to early investors in fraudulent enterprises that were financed by revenues from eager subsequent investors.

Inquiry into Ponzi’s seemingly flawless money machine finally brought about its exposure and collapse, and his imprisonment followed. Released in 1925, he returned to swindling and again was imprisoned. In 1934 he was ordered deported to Italy. Before leaving America he arranged for the publication of a book, The Rise of Mr. Ponzi, of which he is author, subject, publisher, and copyright holder. The title page advises that the book is a first edition, the place of publication is given as New York City and Rome, and the copyright date as "1935–1937." It is a cocky, exuberant, and engaging first-person account of Ponzi’s financial vicissitudes which ends with the declaration, "Temporary set-backs, perhaps, but utter and permanent defeat, never!"

Ponzi’s position in the pantheon of swindlers makes his book very important to the collector. It is also very rare. The story is that the book’s printer, not having digested the lessons of its manuscript, failed to ask Ponzi for money in advance, and destroyed the print run when he was not paid. Perhaps this is one case where the story of a suppressed book is true.