Word: ponzis
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Storm No. 2. Hardly had the dust settled when a storm broke around another big company, the bankrupt Texas Mutual Co. Two appeals court justices accused Texas Mutual of "Ponzi-like manipulations" and called the State Insurance Commission guilty of "fraud if not criminal laxity" for not doing anything about it. Texas Mutual was organized in 1949 by Leslie Lowry, ex-mayor of Beaumont (ousted by recall), and his brother Paul. They started with $500 of their own cash and $19,500 borrowed. To expand their assets, said the court, the Lowry boys bought (with notes, no cash) a shabby...
Bostonians remember Charlie Ponzi. He was the little man's financeer, the one who promised an impossibly high interest rate to anyone who would entrust their money to him, spent a little cash paying off the first installments, and then sat back while the public, its good sense overawed by its desire to be millionaires overnight, magnified his initial pittance into an imposing fund of capital. The inevitable bust left many scars, but apparently it all happened so long ago that people have forgotten what this sort of charlatanism looked like...
...they must have forgotten, for, if not, they would recognize Senator McCarthy's telegram crusade for what it is. Like Ponzi, the Senator advertised of the big things to come. Like Ponzi, he invested a little something--the small effort required to elicit extremist telegrams from roughly .0002 percent of the nation. And like Ponzi, he now sits back while the public blows up this gaggle of telegrams into political support...
...this, however, the fact remains that McCarthy's telegram crusade has become an issue and will probably remain one. Can anything be done to counter it? Unlike the case of Ponzi, there can indeed--if only moderate elements, the people who do not ordinarily rip off letters at the drop of a charge, will make an effort. It is a simple matter for everyone who approves of the Administration to set down their "I Like" and mail it. One would prefer that the matter not be further blown up by a handful of "I Like" and "I Don't Like...
Last week a Brazilian air force lieutenant named Luiz Felipe Albuquerque Jr., 30, also found out. Having lifted some $35 million from Brazilians in a fantastic borrow-from-Peter-to-pay-Paul scheme (and thereby out-Ponziing Ponzi, whose operations never topped $15 million), Albuquerque found that he had gone broke. On the front page of his newspaper Diario do Rio, he printed a shattering notice: "On this date, for unforeseen reasons I am closing my commercial activities . . . Those who intuitively saw that my business would fail were right . . . I shall not run away . . . My creditors will be paid . . . Remain...