(I wrote the following column in October of 2008, and thought it might make interesting reading in light of the Bernie Madoff scandal which broke in December, with an update at the end.) I doubt that you have ever heard of 67 year old Robert Dean White, but you really ought to hear what he has to say. Federal prosecutors have an extensive library of the imparted wisdom of Mr. White, and my personally favorite “cut” is his description of the parent firm he worked for, “The Petters Group Worldwide”, as “…a Ponzi scheme.” They have recently been replaying that little tune in every hedge fund board room in Greenwich, Connecticut. It has been the Musak of the Bush era Neo-con dead-end investment club we have all recently become investors in. This is what becomes of people who actually start to believe that there isn’t a dime’s worth of difference between the people running for public office. There is always a difference, even if it’s just their price tag.
Charles Ponzi (above -AKA Charles Ponei, AKA Charles P. Bianchi) was far from the first to invent this kind of scheme. He just put his name on it. He was an Italian immigrant who stumbled upon the International Postal Reply Coupon, a now defunct system of international postage. The price of IPRC stamps varied from nation to nation, and Ponzi convinced investors that he was buying the stamps cheaply in Italy, in huge bulk, and selling them for a profit in America. He promised a 400% return on investments and seemed to be making good on that promise. People actually paid him to take their money. Ponzi went from a penniless ex-con in 1919 to a millionaire in 1920: in July alone he made $420,000. And that was in 1920.
Then in August the Boston Post asked the U.S. Post Office how many IPRC’s Ponzi had actually exchanged and found out the number was zero. Ponzi was using new investments to pay off old investors, and pocketing a substantial profit. By September of 1920 Ponzi was in jail. The vast majority of his investors lost everything. A team of accountants searched valiantly for months but were never able to reconstruct where all the money had disappeared to. After serving his sentence and being deported Ponzi told an Italian reporter not to feel sorry for his victims, “Even if they never got anything for it, it was cheap at that price,” he said. “It was easily worth fifteen million bucks to watch me put the thing over.”
Tom Petters, the 51 year old High School graduate behind The Petters Group World Wide (“Partnership Defined”), a self described $2.3 billion investment group with 3,200 employees, founded his first company when he was just sixteen. He leased an office in downtown St. Cloud, Minnesota, out of which he sold stereo equipment to college students. When his father found out about the venture the budding entrepreneur was pulled up by his short hairs and forced to close it all down. But Tom was just starting slow.
In 1988 he formed The Petters Group. In June of 2002 Tom and Ted Deikel bought the name and inventory of “Fingerhut” from Federated Department Stores. A year later he bought s"eBid.com". Two years later he shelled out $246 million for "Polaroid". In October 2006 he joined with Whitebox Advisors to buy "Sun Country Airlines". In February 2007 he bought the marketing company "Juice Media Worldwide", and in November he became sole owner of "Sun Country". In 2008 his acquisitions accelerated. He bought "EducAsian" in January, the magazine conglomerate "Metropolitan Media Group" in July and the charter airline "Southwest Aviation" and "Enable Holdings, Inc.", both in August. And in September of 2008 the F.B.I. raided John’s offices, his home, and the home of Mr. Robert Dean White. Tom’s entire house of cards folded like…well, like a house of cards.
Just a month prior to his personal Goetterdaemerung, Tom explained to the fawning students of the Carlson School of Management, “You’ve got to figure out how to leverage and move things forward and not backwards. Sometimes sideways and left and not always how you had anticipated.” But evidently Tom did anticipate what was coming because he is heard on one of the F.B.I tapes admitting that he cheated on his taxes, and used an employee to create false documents for investors, but that he “didn’t know what choice” he had. I guess honesty was not a viable choice.
The Feds allege that for ten years Tom has been showing investors purchase orders to prove he was selling merchandise to Walmart. But when one investor finally checked with Walmart, the discount chain said the P.O. numbers were fake and they had never bought anything from any of Tom’s many, many companies. This revelation led to a Federal audit of PGW that showed $1.9 billion in the “in” drawer and $3.5 billion in bills, the “out” drawer. And since the Feds lack the imagination of the Wall Street types, owing more than you own equals bankruptcy. Ah, if they only had the imagination of Tom Petters, or of Charles Ponzi, they would know that being in debt was just another opportunity. Have you ever noticed that none of these wise guys have any interest in history? To me that explains a lot.
PS: December 24, 2008 Page One ;"The Minniapolis Star Tribune";
"The man accused of trying to swindle Tom Petters' defense attorney out of $250,000 received a sentence Wednesday of nearly three years in prison Before sentencing, Derrick Riddle simply said to the judge, "Give me what you got." Hennepin County District Court Judge Mark Wernick sentenced him to 34 months with credit for two months served since his arrest in October....Riddle initially contacted lawyer Jon Hopeman, saying he could help influence a judge in Petters' favor in exchange for $250,000. ...Petters, once a high-flying Twin Cities businessman, is in federal prison awaiting trial on multiple fraud charges alleging that he ran a $3.5 billion Ponzi scheme for more than a decade."
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Leofric owned most of southern England and his wife was Lady Godiva of naked horse riding fame. In addition to Edith they had produced five sons, in descending order of seniority and brains, Sweyn, Harold, Tostig, Gyrth and Leofwine. And by all accounts they were all trouble. In 1046 Sweyn was accused of seducing the Abbess of the monastery of Leominster. The modern translation of the Saxon term for “seduction” is “rape”, and King Edward had Sweyn banished. It took a year for Leofric to blackmail Edward into letting the little monster come home. Sweyn never forgot daddy’s delay in rescuing him, and Edward became determined to get rid of the whole Godwin family.
In 1051 the citizens of Dover got fed up with an extended visit by some of Edward’s Norman relatives and they staged a riot. It is likely that Edward’s relatives had intended to inspire just that response because Edward immediately ordered Leofric to punish the citizens Dover. But since Dover paid rent to Leofric, he would be punishing himself. So Leofric refused. And that gave Edward the excuse he needed. He ordered Leofric and his sons banished from England, (they hid out in Ireland and France) and Edward shipped poor Edith off to a nunnery. But in this dispute, the youngest son, Leofwine Godwin, sided with Edward. It was the “smart” play for Leofwine since, as the youngest son he was never going to get rich living off his older brothers’ leavings.
But the banishment only lasted a year before Leofric and his sons invaded England and forced Edward to return all of their seized lands and let Edith out of the monastery. And, of course, Leofric also forced his own youngest son, Leofwine, into exile in Scandinavia; after all, turnabout is fair play. Leofric died in 1055, not long after the death of Sweyn, cause unknown in either case. That made Harold the head of the family, and that made his brother Tostig his problem. Tostig was running Northumbria and had doubled the taxes while boozing it up and stealing from the local nobels. In 1065, while Totsig was out of town, the noblemen of York, Lincoln and Nottingham rose up and slaughtered Tostig’s sycophants and marched on Oxford, the local government center. King Edward decided he didn’t have the energy to fight and Harold agreed with him, and together they turned the government of Northumbria over to the rebel leader, Morkere. Totsig was out of a job and very unhappy with his brother. He immediately sailed for Scandinavia.
Near the end of 1065 Edward fell into a coma and finally died on January the fifth, 1066. Harold, never one to waste time, was crowned King, Harold II, on January sixth, the first king ever crowned in Westminster Abby. And poor Edith, the daughter of Lady Godiva, the girl who had been a queen at 16, a divorcee and a nun at 24, and a queen again at 25, was now, at the advanced old age of 26, a widow and a nun again. Her loving brother Harold, shipped her off to a brand new abbey at Winchester, where she died in December of 1075, at the age of 36. The Saxons were very hard on their women.
Harold immediately marched his army north, moving so quickly that on September twenty-fifth he caught the Vikings without their armor on, at Stamford Bridge, just North of York. According to legend, Harold met Tostig before the battle and offered him a chance to change sides - again. Tostig asked what Harold could offer the Vikings if they would peacefully go home. Harold replied that he could offer each of them six feet of English soil, or more if they were taller. Making peace and saving lives did not interest the Saxons very much. Harold’s army than fell on the Vikings and almost wiped them out. It was a great victory, spoiled only when word arrived that William and his Norman army had landed on English soil on September twenty-seventh.
Harold now marched his exhausted men 240 miles south to meet William’s army at Hastings on October the fourteenth. There, nine hours of slaughter reduced the vaunted Godwin family to just Edith, sewing away in her nunnery. William was remembered as the “Conqueror”, and Harold as the “Conquered”. But really, history must have been glad to see the back side of such a bloodthirsty pack of cannibals as the ruling Saxons of England.
The first alarm was sent in from Box Number 289 on the corner of Greene Street and Washington Place, just one block East of Washington Square Park. It was just 4:40 p.m. The fire at that moment was less than five minutes old. The alarm sounded at Company #18 on 12th street. At the sound of the bells the three horses on each unit began to move on their own from their stalls. In addition the lead horse in each team had been trained to pull ropes that opened the fire house doors. The fire horses were eager to answer the alarm. Upstairs the firemen, just as eager, leapt to their lockers, pulled on their boots, baggy pants and great coats. By the time they were sliding down the brass pole all the horses were waiting in place beneath the traces, hanging from the ceiling. The traces were dropped onto the team’s backs and the crews slapped on the leather. Within moments the “steamers” (pumpers able to produce 1,000 gallons of water a minute), the hook and ladder wagon (company #20, carrying the tallest extension ladders in the city - another piece of luck), the hose wagon (company #72) and the supply wagons, all with their crews hanging on for dear life, were speeding their way toward Washington Square Park.
In a squat block-sized building at the corner of 10th Avenue/West Side Avenue and Gransevoort Street, the same alarms sounded as well. Here, in the Granesvoort Pumping Station, was the city’s answer to the invention of the skyscraper; five Allis-Chalmers electrical centrifical pumps, able at the flick of a switch to send 300 gallons of water a minute into the pipes. The new High Pressure System was less than five years old and was designed to increase water pressure at each fire hydrant in the district from 25 to at least 90 pounds per square inch. In tests this system had been able to send a stream of water as high as a ten story building. As soon as the alarm sounded on that Saturday afternoon the pumps were turned on. Within three minutes the lines were fully pressurized, before the pumpers had even arrived on the scene . But it was already too late.
It was 4:44 p.m. As the first pumper turned the corner onto Greene Street, the horses heading on their own toward the fire plug, reared and suddenly stopped. The firemen on board were almost thrown to the ground. One fireman dismounted to see what had spooked the horses. He saw a bolt of cloth lying in the street. He moved to pick it up before he realized it was a woman’s body, crumpled on the pavement. 
At about the same moment “Hook and Ladder Company # 20” barely made the turn onto Washington Place, when the horses here also reacted with horror to the carnage on the street. Firemen grabbed blankets and nets, designed to catch people leaping out of buildings. But these women, some as young as 13, were dropping from the ninth floor and they ripped right through the fabric and thudded onto the concrete. The rescue nets and blankets were useless.
Immediately upon arrival fireman from Company 18 began to fight their way up against the stream of frantic civilians, pouring down the stairs. The firemen found fire on the 8th floor, and per their training they stopped to fight it. To have gone higher would have put them above the fire, a suicidal position in a building blaze.But one floor above them, the fast majority of victims died, some leaping to their deaths as the flames began to engulf their clothing.
