Notorious swindler Charles Ponzi once called Lexington his home

By Jim Shaw

The ghost of Charles Ponzi is alive and well and thrives in the greed of modern-day swindlers like Brad Bleidt and Bernard Madoff. And, for at least one Lexington resident who fell victim to Madoff’s $50 billion swindle, this is not an amusing story or a whimsical account of an interesting fellow who happened to live in Lexington. For this 85-year-old victim whom we have chosen not to identify, the pain is very real and his future is now uncertain

With the recent arrests of Massachusetts money manager and radio mogul Brad Bleidt and Wall Street billionaire Bernie Madoff, the “Ponzi scheme” has become the focus of national and international news coverage. It has also surfaced as dinnertime banter in homes across the country. But just who is Charles Ponzi, and why are people so fascinated with his story?

Here in Lexington, the name Ponzi holds a different connotation — neighbor. You see, the world’s most notorious swindler – Charles Ponzi – lived right here in Lexington in a beautiful estate on Slocum Road. At the height of his most infamous criminal enterprise, Ponzi called Lexington his hometown.

Ponzi first arrived in Boston by ship in 1903. He claimed to have only $2.50 when he first arrived. With no real luck securing gainful employment, Ponzi soon moved to Montreal, Quebec where he found work as an assistant teller at the newly opened Banco Zarossi. At the time, the bank was paying 6% interest on deposits, which was twice the average rate. This created a huge influx of new depositors. Soon, however, the bank’s real estate investments began to collapse causing economic chaos. In an effort to prevent a mass exodus of depositors, they began paying the interest with money from new deposits. Ponzi took notice of this and the seed was planted.

When the number new depositors drastically declined and they could no longer meet their obligations to existing depositors, the bank was shuttered and its owner fled to Mexico with much of the bank’s remaining cash.

Once again, penniless and unemployed, Ponzi went to visit one of the bank’s former clients. Finding no one there, Ponzi helped himself to the company’s checkbook and forged a check for over $400. He was caught and convicted and spent three years in a Quebec prison.

Ponzi returned to the US and quickly got caught up in an effort to bring illegal Italian immigrants into the country. He was convicted and spent two years in an Atlanta, Georgia prison.

After his release, Ponzi made his way back to Boston where he met and married Rose Gnecco. Ponzi made a lame attempt at honest employment, but his greed and the promise of great riches lured him towards what many consider to be the crime of the century.

One day while opening his mail, Ponzi happened across an International Reply Coupon (IRC). These coupons were intended to be sent overseas for the purpose of return postage. But Ponzi soon realized that there was a value differential. For instance, with the Italian post-war economy in a major decline, the cost of postage in Italy had decreased. So, theoretically, someone could buy IRC coupons in Italy and send them to the US where they could be sold for a higher value. Ponzi went to work and soon bragged that after all of his costs, he was realizing a profit of 400%.

Ponzi decided to bring in investors and promised them a 50% return within six months. His scheme immediately attracted hundreds of eager investors who blindly handed over tens of thousands of dollars. Overnight, Ponzi was a very wealthy man.

The Ponzi House

Ponzi was now part of high society and required all of the trappings of his great wealth. He lavished expensive gifts upon his wife and friends, and dined in the fanciest restaurants. The only thing left was a home appropriate to his stature. He settled on a beautiful estate on Slocum Road in Lexington.

I’m not certain if Ponzi had the home built or if it already existed, but the beautiful stucco mansion that was built in 1913 still stands today. For Ponzi, the home showcased his need to flaunt his new found success.

Now, there are several accounts of just how much money Ponzi had amassed and how many investors fell victim to his scheme. One account says that Ponzi duped over 10,000 individuals for $9.5 million. Another account places the number of victims at 40,000 with over $15 million invested with Ponzi. A quick calculation at www.measuringworth.com indicates that $9.5 million in 1920 dollars is worth over $1.5 billion in GDP value (yes, that’s billion with a “B”) in 2009.

Nearly as fast as his meteoric rise in wealth and influence, came his precipitous downfall. You see, like any pyramid scheme – the basis of Ponzi’s big idea – success only thrives as long as there are new investors to pay back original investors. When the pool of new investors dried up, the jig was up for Ponzi.

In a story printed in the Boston Post in July of 1920, Ponzi’s character, and business acumen was called into question. Most of Ponzi’s early investors stuck with him because they had experienced tremendous profits. Ponzi was forced to hire a publicity person who eventually turned on him as well. The PR guy, William McMasters, quickly determined that Ponzi was a fraud and later stated, “The man is a financial idiot. He can hardly add…He sits with his feet on the desk smoking expensive cigars in a diamond holder and talking complete gibberish about postal coupons.”

Postal regulators soon raided Ponzi’s Boston office and found to their amazement that Ponzi actually had very few of the postal coupons that had fueled the frenzy of his multi-million dollar empire. It was all a complete fraud. Because Ponzi had used the U.S. Postal Service to communicate with his investors, he faced serious mail fraud charges. In all, he was charged with 86 counts of federal mail fraud in two separate indictments. In return for a lighter sentence, Ponzi pled guilty to one of the charges and served five years in prison. After about 3 years, he was released to face state charges for swindling investors. While awaiting trial, Ponzi jumped bail and fled to Florida where he was eventually captured and went on to serve another nine years in prison.

After his release, Ponzi was deported to Italy and eventually traveled to Brazil where he died in 1949 penniless and alone.

Wikipedia refers to Ponzi as “one of the greatest swindlers in American history.” I have a little trouble with that because I associate the word great with people who have had a profoundly positive impact on society. I’m happy that Wikipedia allows people to edit it’s content because I think I’ll go back and correct it so it more accurately reflects who Ponzi was: “one of the most notorious swindlers in American history.”

That would be more appropriate. And, I think our 85-year-old neighbor who was victimized by Bernie Madoff would agree.

How Safe is Lexington?

Q: How safe is Lexington? I keep thinking about the gas explosions in Lawrence and wonder if that could happen here.

A: Natural gas is inherently dangerous. Gas explosions in Lawrence, Andover, and North Andover killed a young man and cut off heat and hot water to 10,000 families. That catastrophe forced 1,800 families from their homes, many into tent cities as temperatures dropped to freezing. Families are now being told they may have to wait till March before their heating systems are fully repaired.

In 2005, a Lexington house on Hancock Avenue exploded when gas workers mistakenly connected a high-pressure gas line to a low-pressure line. Luckily the residents escaped just before the explosion destroyed the house. But the force of that high-pressure gas raced through the town’s pipes – forcing the evacuation of 1,800 homes and shut down natural gas service for many residents.

Q: Should we be concerned here in Lexington?

A: In 2014, Mothers Out Front alerted us that Lexington had 92 unrepaired gas leaks. By 2015, that number had risen to 112 unrepaired gas leaks, with the oldest over 25 years old. At the same time, a Harvard / Boston University study found that 2.7% of all the natural gas used in the Boston area is leaking into the air and those leaks are costing natural gas customers $90 million a year.

Those researchers found that just 7% of the leak sites are responsible for ~50% of the natural gas emissions by volume. And we discovered that Lexington had some of the biggest super-emitters in the Boston area! This isn’t all that surprising as Lexington has a lot of high pressure, leak-prone, bare steel pipe that was put in the ground in the 50s and 60s.

Q: What can we do about improving our safety?

A: Lexington’s Board of Selectmen, with the support of Rep. Jay Kaufman, Sen. Mike Barrett, and the late Sen. Ken Donnelly convened a public hearing in May 2016 to call for action to address this growing problem.

In response, Lexington’s Town Engineer, John Livsey, hosted a meeting with National Grid technical and field personnel, the gas leaks researchers who had documented the location of gas leaks, and Sustainable Lexington. The team identified 15 super-emitter leaks. We were able to send repair crews to fix 12 of them. Those efforts resulted in 6 leaks being fully repaired, 5 leaks partially fixed, and 1 location where the leak was actually made worse.

Mothers Out Front has sent new data based on utility reports, showing the number of unrepaired leaks in Lexington has grown from 112 to 149, and that those leaks are now costing Lexington gas customers $550K a year. We are falling behind the power curve.

Q: What should we do next?

A: Lexington’s Board of Selectmen, with the support of Rep. Jay Kaufman, Sen. Mike Barrett, and Sen. Cindy Friedman will be holding a new public hearing on Tuesday, November 27^th in Battin Hall at the Cary Memorial Building starting at 7PM to listen to your concerns about gas leaks and natural gas safety, to hear recommendations from gas leak experts, and to call for action to address this growing problem. Please come to the hearing!

Hastings School with Solar Canopies

Q: I understand that our two newest schools have been designed to be all-electric schools and will not be using natural gas for heating. How will that work?

A: Yes, Hastings School and the Lexington Children’s Place pre-school buildings are both expected to be net zero buildings. Both will produce more than 100% of all the energy they need on an annual basis from the sun, without using any fossil fuels.

Hastings School will use a heat pump to move heat from the ground into the building during the winter months and then cool the building by pumping heat out of the building during the summer months back into the ground. Ground source heat pumps can deliver up to 5 kWh of heat for every 1 kWh of electricity used to run the heat pump. That means the total amount of energy needed to run the building will be dramatically lower than traditional buildings. In fact, the design team expects that Hastings School will use less than half the energy of a conventionally designed school.

We’ll be installing solar panels on both the rooftops and in the parking lots. In a relatively new twist, we’ll also be adding energy storage batteries to help lower our electricity costs. We’d expect to pay $250,000 a year for the energy needed to run Hastings School without the solar. But the solar + storage energy system combined with the ground source heat pump will produce all the building’s energy from sunshine, plus generate about $150,000 a year in new revenue.

We’ll have a healthy, zero emissions school that generates $400,000 a year in net positive cash flow for the Town, just from Hastings. What’s not to love about that?

Mark Sandeen is the chair
of the Sustainable Lexington Committee

Sustainable Lexington is a Town committee appointed by the Board of Selectmen to enhance Lexington’s long-term sustainability and resilience in response to environmental resource and energy challenges. Work includes the following: Recommend sustainability goals, priorities for implementation, and implementing programs, monitor and measure effectiveness of sustainability programs undertaken by the town, and educate and raise awareness among Lexington residents regarding Lexington’s sustainability and resilience.

Men Paid $1…

Courtesy Photo of the early members of The Lexington Field and Garden Club

By E. ASHLEY ROONEY

The Lexington Field & Garden Club was founded in 1876. It began with men at its helm. They were the community leaders with a heritage of good bloodlines, intellectual superiority, and economic success. Their wives addressed them as “mister,” and most belonged to the mainline Protestant churches.

Lexington was primarily a farming community. It began to prosper when the Lexington and West Cambridge Railroad, later the Boston and Maine Railroad, began its service in 1846
In 1875 as the 2,277 Lexingtonians prepared to celebrate the 100th anniversary of the Battle on the Green and welcome Ulysses S. Grant and his cabinet to the festivities, a letter to the relatively new Lexington Minuteman pointed out that the area in front of the railroad depot was most unattractive. It soon became apparent that a permanent association was needed to improve our streets and open spaces, and the Lexington Field & Garden Club (LFGC) was organized. Matthew Merriam was its first president.

In 1876, the club adopted a constitution that stated, “the object of this association shall be the care and protection of trees and shrubs in the streets and public places of Lexington and the improvement of the town by the planting of additional trees and ornamental plants, the study and development of the natural resources of this vicinity, the cultivation of taste in arboriculture and horticulture and the discussion of these and kindred subjects.”

The club was incorporated in 1891, but long before that it was making its mark on the environment. From its inception, the group focused on improving the appearance of the disreputable train and freight area, which dominated the center of the village. By 1886, the Boston & Maine Railroad had opened double tracks to Boston and back and eventually provided train service 22 times a day, each way. Unfortunately, all those trains led to disreputable mess of railroad ties, coal bins, and piles of wood in the center of Lexington.

The LFGC also sought to beautify the islands at Hancock and Bedford Streets, Pleasant and Massachusetts Ave, and Lincoln and Concord Streets. To this day, the LFGC beautifies these and many other islands. In 1887, it was willing to assume care of the Common on condition that the town provide $150/year while the club gave $50/year. Under its authority, the hay-covered Common, often filled with cows, became a beautiful historical park.

Many new technologies, such as commuter trains and trolleys, were improving daily life, yet the increasingly mechanized environment led to social reformers calling for the construction of parks and recommending physical exercise as a way to ward off stress. Enjoying this new focus on leisure, the club members took many field trips to explore their environs. In 1875, 51 members went to a field meeting at Shaker Glen (off Woburn St.). Mrs. G.O. Whiting organized a committee to provide saucers for the ice cream furnished by the club, which also provided lemons and ice to make lemonade. Forty-four members traveled to Franklin Park and Arnold Arboretum in Boston. When they arrived at the park, they boarded four large park carriages to visit the principal points of interest and enjoy the views of Blue Hills.

A 36-year old patent attorney, Frederick L, Emery assumed the presidency of the garden club in 1904. In September of that year, the Club acquired land now known as Hastings Park and raised the funds necessary to grade and adapt it. During his tenure, he began to petition the railroad to sell the land to the town. By late 1921, Boston & Maine agreed to sell it for $20,000. In 1922, the area became known as Depot Square, but after Emery’s death, it was renamed in his honor. In his will he left $5,000 to the town with the income from the bequest to be spent by the garden club to beautify his Lexington.

Initially and until the 1950s, the men paid dues of $1.00 while the women paid only 50¢. Although the club was founded in 1876, it did not have a female president until Mrs. Hollis Webster was elected in 1933, some 57 years after its founding.
Since 1955, all the presidents were women, but they are listed as Mrs…until 1988. Then they became known without any personal title. Today, you see the LFGC women working on the islands, holding the Arbor Day ceremony, or getting ready for their grand plant sale.

Looking around Lexington, you can see many signs of the club’s work: Emery Park, Captain Parker’s statue, The Cary Library Garden, the Hancock-Clark House Herb Garden, the Munroe Tavern Colonial Flowers, St. Brigid’s Mary Garden, and all the many civic gardens. This year the club has been working with the US Post Office to beautify their grounds.

As the twenty-first century progresses, its leaders are looking for a way to involve more newcomers and men, once again, the club and its activities. They are planning a pruning workshop and a program on stone walls to attract men to the club.