JUNE 2018

JUNE 2018
FOX NEWS during the 1890's


Friday, December 11, 2009


I doubt that you have ever heard of Robert Dean White, but he sings very well. Federal prosecutors have an extensive library of his tunes. My personal favorite from the "White album" is the “cut” when he describes the corporation he worked for, “The Petters Group Worldwide”, as “…a Ponzi scheme.” It has been the Musak of every Bush-era Neo-con hedge-fund dead-end investment club in from Greenwich, Connecticut to Moscow. But even before it was set music it was the punch line to one of the oldest jokes in the world.

Charles Ponzi (AKA Charles Ponei, AKA Charles P. Bianchi) was far from the first to invent this dance tune. 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 by buying the stamps cheaply in Italy, in huge bulk, and selling them for a profit in America, he could offer a 400% profit. He was such a good salesman that victims 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. Today's equivilent would be over $4 million - in one month!

Then in August "The Boston Post" newspaper asked the U.S. Post Office how many IPRC’s Ponzi had actually exchanged and found out that the number was zero. Ponzi, it seemed, was using new investments to pay off old investors, after 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.”

I wonder what Tom Petters thought he was worth? Tom dropped out of high school after founding 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 he forced the budding entrepreneur to close it all down. But Tom was getting started.

In 1988 Tom had formed "The Petters Group World Wide", a self described $2.3 billion investment group, which billed itself as “Partnership Defined”,  with 3,200 employees. In June of 2002 PGWW and a partner 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. Then 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.

The companies Tom had bought were all real with real assets, but they were all in trouble. And Tom fixed them. How did Tom, the financial wizard, fix them? Corporate Vice President Michael Catain explained later, "Tom Petters had me set up a company that acted as though it bought merchandise. ... I was supposed to be the middle man providing the inventory in case an investor called....We'd get an e-mail of what deposits (meaning investments) were coming in. We would do the wires. Deanna (Colman, corporate accountant) handled the other end."

According to Robert White, he was urged to help Tom out of a short term money crunch. "I came up with some phony bank statements to make it look like money was spent the way it was supposed to." After committing this fraud, it dawned on Robert
that some of the other corporate paperwork might have been faked as well. White asked
Deanna Coleman which of the companies' promissory notes were real. White said,
"She laughed at me and said there are no good notes there." And why did Ms. Coleman go along with this scheme? "Tom promised me over and over again that he'd get us out of this." Then 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. (Its happened before, you see.)

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.” The budding business garduates were enthralled. 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 alleged 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 PGWW which showed $1.9 billion in the “in” drawer and $3.5 billion in bills, meaning 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 to buy stuff. Have you ever noticed that none of these wise guys have any interest in history? To me that explains a lot.

Tom's explination to the jury during his 18 day long trial, was that three of his junior officers had tricked him.  But the tapes, the testimony of his junior officers (all of whom went to jail) and according to the jury, the prolific e-mails Tom sent, told a different story. After thirty-one hours of deliberations they convicted Tom, on December 2, 2009, of 20 counts of wire fraud, mail fraud, conspiracy and money laundering.

It all reminds me of the joke about the traveling salesman who stopped at a farmhouse, seeking a drink of water. As he stood at the kitchen sink he saw a chicken outside wearing a pinned-up pair of blue jeans. The farmer explained, "We had a tornado about two months ago. Killed all my other birds. She and our rooster were the only ones who survived. But it plucked every feather off that poor chicken. My wife felt so sorry for her, she sewed her up that pair of pants." The salesman can't stop laughing, until the farmer put a hand on his shoulder and confided, "If you think that's funny, you ought to see that rooster trying to hold that chicken down with one leg, and get those pants off with the other."

A Ponzi Scheme is all about getting the investor's pants off. And that dance has been going around since before the chicken or the egg.

 - 30 -

Wednesday, December 09, 2009


I would call it the definitive way of dealing with a swelled head. Oh sure, Oliver Cromwell had some doubts while he was dying. And it was about time he did. All his life Oliver had been such an imperious narcissistic autocrat that in retrospect, the despotic and conceited Charles I now seemed reasonable - once Oliver had beheaded Charles. But then Oliver went on the ultimate ego trip, launching a bloody war trying to eradicate Catholicism from Ireland. He would have had better luck trying to reintroduce the snakes. Oliver was so supercilious that in 1650 he wrote to a Scottish opponent, “I beseech you in the bowels of Christ think it possible you may be mistaken,” and just three years later he suffered no such introspection while making himself dictator, because, “…the spirit of god (was) so strong upon me, I would not consult flesh and blood.” Flesh and blood has bowels, Oiliver, it seems, did not. It turns out the one nation Oliver never even attempted to conquer was gall

And then at the age of 59, on his death bed, on the afternoon of September 3, 1658, Oliver was beset by humility at long last (as well as a urinary tract infection – which is what kills you when you don’t have antibiotics). Oliver whispered, “My design is to make what haste I can to be gone.” But it was too late to be hasty. Even dead, Oliver could no longer escape the judgment of those who had suffered under his turgid arrogance.

His corpse was entombed in Westminster Abbey, along with all those kings and queens he thought himself superior to. His followers attached a plate to his coffin reading “Oliver Cromwell, Protector of England, Scotland and Ireland”, so that on Judgment Day there would be no chance Oliver would be overlooked. They might as well have planted a big arrow above his crypt that read “Dig Here!”

Judgment day arrived less than three years later, As soon as Charles II was crowned king, he had 12 of those who had participated in his father’s trial tried for high treason. The inevitable executions which followed produced a macabre precursor of Super Bowl Week. From Monday October 8th through Saturday the 13th , 1660 (on the old Julian calendar), the twelve were each subjected to what contemporary witness William Harrison described as “The greatest and most grievous punishment used in England….drawing from the prison to the place of execution upon an hurdle or sled, where they are hanged till they be half dead, and then taken down…”. It wasn’t until after the hanging that the festivities really got started.

The guest-of-dishonor was stretched naked on a butcher block table. First, his genitalia were removed and displayed to him. They were then thrown into a fire. Then, according to English Wikipedia, “A splash of water was usually employed to wake the man if unconscious…A large cut was made in the gut…and the intestines would be spooled out on a device that resembled a dough roller. Each piece of organ would be burned before the sufferer's eyes, and when he was completely disemboweled, his head would be cut off.” And not quickly removed, with a single swipe of a massive sword or an axe, but via repeated whacks with a meat clever. The idea was not to kill the unfortunate honoree, but to torture him, and thus to entertain the crowd.

This was a spectator sport, drawn out for hype and hyperbole. Samuel Pepys was there for the anticlimax. He noted in his diary, “Saturday 13 October…went out to Charing Cross, to see Major-general Harrison hanged, drawn, and quartered…He looking as cheerful as any man could do in that condition. He was presently cut down, and his head and heart shown to the people, at which there was great shouts of joy…After that I went…home, where I was angry with my wife for her things lying about, and in my passion kicked the little fine basket, which I bought her in Holland, and broke it, which troubled me after I had done it.” Death, where is thy operant conditioning?

Oliver Cromwell, being legally and retroactively the villain-in-chief would not be spared these humiliations just because he was deceased. He was spared the pain, but then there had been the urinary tract infection. On the morning of January 30, 1661 Oliver’s corpse and those of two of his fellow deceased co-conspirators, were hung by their necks at Tyburn, the traditional place of execution for “commoners”. Ouch, that little insult must have hurt. The un-dearly departed hung in public, like hams in a smoke house, until four in the afternoon. Then their heads were removed; I presume they cut off Oliver’s last, as we are told it took eight chops. The poor executioner must have been shagged out from removing the first two heads.

Oliver’s corpse was then discarded into a pit and his head was raised upon a 20 foot wooden pole above the south side of Westminster palace. Finally, Oliver was as aloof as he had always imagined himself to be, head and shoulders above all other contenders...except he no longer had any shoulders. And there he bobbled about in heavy winds until at least 1672, when, it seems, people had begun to forget just whose head was which head.

Legend claimed that Oliver’s pole was blown down in a storm and Oliver’s dome fell into the hands of Mr. John Moore, a guard, who snuck the coconut home and stuffed the noggin in his chimney. When it was realized that the arch villain Oliver Cromwell had somehow escaped, rewards were offered and notices posted demanding and threatening punishments unless he were returned. So Mr. Moore gave the head to an apothecary in King Street, who then sold Oliver’s skull to a Mr. Humphrey Dove, Esq. Lawyer Dove kept Oliver confined to a chest until his death in 1687 – Mr. Dove’s death that is. After this it appears that Oliver made a clean getaway, no mean feat for a man with no feet...or legs.

In 1710 a Claudius Du Puy opened a museum of curiosities in London containing as its most curious curiosity of all, the head of Oliver Cromwell. That the exhibit was a financial failure was no fault of Oliver’s. He did his part. He was still dead. He still had no body to support him . But was this head really Oliver’s head? Or was it an imposter’s skull masquerading as the demon Protestant?

It would not be until the 1930’s that two scientist issued a 109 page report authenticating to a “moral certainty” that the head in question was unquestionably the head of Oliver Cromwell. And on March 25, 1960 Oliver’s morally certain head was finally buried somewhere near the chapel of Sidney Sussex College, in Cambridge, England. And nobody knows exactly where.

And that anonymity must be driving Oliver out of his mind!

- 30 -

Sunday, December 06, 2009


I have always thought of Joseph II, Emperor of Austria, as a bit of a schizophrenic, half enlightened revolutionary and half unsighted dictator, and totally a legend in his own mind. He explained himself this way; “I am a royalist by trade”, a truly conflicted description by a man whom, I suspect, did not fully understand what a tradesman was or did.

But Benedict Anton Michael Adam Hapsburg (his real name) was astute enough to hire Amadeus Mozart to waltz his court, and turned him lose to produce his greatest opera, Don Giovanni; and for that we all should be grateful to the man they called the “Musical King”. I prefer Mozart’s “The Wedding of Figaro” myself, but then it is a generally accepted truth that I have no taste in opera.


But I love the “il catalogo e questo” when the servant Leporello comforts Donna Elvira by listing Don Juan’s feminine conquests. “In Italy, six hundred and forty; In Germany, two hundred and thirty-one; A hundred in France; in Turkey, ninety-one; But in Spain already one thousand and three.”

Joseph’s catalog of failings came into sharp focus in 1787 when, displaying a miserable sense of geopolitical timing, Joseph declared war on the Ottoman Turkish Empire. He was just trying to live up to a treaty with Catherine the Great of Russia, but it was not a popular decision with the ruling elite in Vienna. The conservatives were unhappy with the new taxes levied to pay for the war. The price of bread in Vienna went so high that bakeries in the capital were actually looted. And that simply encouraged the young liberals to see the war as a betrayal of the democratic ideas Joseph had seemed to support. They found reasons to travel abroad and avoid their draft notices.

The rest of the polyglot empire had fewer options. While the army was officered almost solely by German speaking Austrians, the bulk of the soldiers were divided between Italian speaking Lombards from south of the Alps and Slavic speakers from the Balkans. And no attempt was made to bridge the divides between them. When Joseph took the field in the summer of 1788 to join his 100,000 man army in laying siege to Belgrade, disaster seemed inevitable to everybody except Joseph.

The decision to lay siege to Belgrade was logical. The Turkish city on the Danube had been captured by Austrian armies in 1688 and again in 1717. Each time it had been lost again, the last time in 1739, but there was a young leader on the throne in Turkey, and Joseph was looking to grab a quick trophy to assuage his critics.

Unfortunately Joseph encamped his army on mosquito infested marshland outside of Belgrade, and over the next few weeks 33,000 of his troops contracted malaria, including Joseph. He had lost a third of his army and he hadn’t even fought a battle yet. And then in early September Joseph received intelligence that the Turks were sending troops to reinforce the fortress of Vivda, on the Timas River, a tributary of the Danube.

The fortress was called Bada Vida, or Grandma Vida, because it had been a border fort since before the Romans. Clearly the Turks were intending on opening a supply line to Vida, down the Timas and then up the Danube to Belgrade, breaking the seige. Joseph decided the best way to counter that move was to take Bada Vida, before the Turkish reinforcements arrived. So between attacks of debilitating fevers, Joseph ordered an immediate forced march to capture Vida, and the nearby village of Karansebes.

You see, Joseph had a logical reason for doing everything he did. On paper Joseph was a genius. It was only in reality that he was a complete fool. Having been raised to be a King, Joseph expected his army to have blind faith in him. In reality his army lacked faith in them selves, faith in their leaders and they certainly had no faith in Joseph. That just left everybody blind.

The troops dispatched to Vida had no idea why they were marching away from Belgrade so quickly. In a few hours their joy at escaping the stinking marshes was replaced by exhaustion. And still their Austrian officers drove them onward, without stopping for food or rest. By September 17th the forward cavalry scouts had reached the Timis River. Crossing over the bridge late in the afternoon, the fatigued scouts fell upon a camp of tzigani, commonly called gypsies. The tzigani were well stocked with schnapps, which they reluctantly sold to the cavalrymen. Suddenly things were starting to look up in this crummy war.

An hour behind the scouts in the gathering dusk came an equally weary infantry battalion. The cavalrymen, well drunk by this time, decided the infantry were after their booze. They constructed a makeshift fort from the gypsy wagons and, as the infantry approached, fired a warning shot or two. The infantry officers, unsure what was going on, shouted for their men to halt, pronounced in German as “halfte, halfte”. What the Slavic infantry heard was “utisit, utisit”, which is Czech for “Allah”. They thought their own officers were warning them the shooting was coming from Turkish Muslims.

Some returned fire. When the infantry fired back, more of the drunken cavalry fired. This exchange of gunfire, first, convinced the officers it was Turks to their front, and second, stampeded the tzigani’s horses, which convinced the officers they were about to be attacked by Turkish cavalry. The Austrian officers ordered a retreat, wondering why their scouts had not warned them the enemy was so near. The retreat immediately turned into a rout.

As the following battalions crossed the bridge they heard shooting to their front. Understandably they mistook the retreating solders for advancing Turks. They threw their men into firing lines and let go with volley after volley. And still the attackers came on, charging through the darkening shadows. From the “Turks” point of view, they were not attacking they were retreating, under heavy fire. They had to get to the bridge, to escape the Turkish trap they had obviously stumbled into. And like dominoes the Austrian battalions fell over, one after the other.

On the other side of the bridge, officers were throwing up a defensive line to hold back the Turks, of whom there were actually none within fifty miles.

Meanwhile the drunken scouts had begun to suspect they might be in some trouble. They grabbed their booze and went galloping for the only escape route. As they thundered over the wooden bridge, the Austrian artillery opened up. The cavalry overran them, and the entire Austrian army melted away, pausing only to plunder a few villages and rape a few peasant women. The retreat reached such levels of panic that Joseph was knocked off his horse and fell in a stream, not a recommended treatment for a man recovering from malaria. The army did not stop until they returned to their siege lines outside of Belgrade and the perception of safety.

Forty-eight hours later a small part of the real Turkish army, sent to secure the fortress of Vida, stumbled upon the remains of a great battle. Ten thousand dead and wounded Austrian soldiers, with their equipment, were scattered across the fields around the village of Karansebes. It was a great victory which didn’t cost the Turks a dime. They weren't even there. The only other losers,, besides the Ausrians, were the tzigani who lost their horses, and an unknown number of human casualties.

Joseph abandoned the army in front of Belgrade, turning it over to retired Field Marshal Gideon von Loudon. Loudon would capture Belgrade the following year. By then Joseph was near death, weakened by malaria. He died in November 1788, broken by his failures. And by dying, Joseph now abandoned Mozart.

Amadeus Mozart lost his cushy court job. He never wrote another opera, and spent the next two years spending more time writing letters begging for money than he spent writing music. He died in 1791, famously buried in a pauper’s grave. Realizing this makes watching the the final scene in “Don Giovanni” all the more poignant. The aging reprobate hero is challenged to either repent or burn in eternal damnation. Don Juan has the chutzpa to sing, “To none will I succumb! For me there's no repentance.” How refreshing to meet an honest liar, if only in on the stage.

It was almost as if Mozart was trying to send a message to Joseph. I wonder if the Emperor never got it?

- 30 -

Blog Archive