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FACING DOWN THE RULERS OF WALL STREET A HUNDRED YEARS AGO. THEY ARE BACK.

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Wednesday, June 05, 2013

AN AMERICAN TALE


I bring to your attention one of the most successful criminal partnerships in American history, qualified to stand alongside Frank and Jesse James, Clyde Barrow and Bonnie Parker, and the three Hunt brothers, Nelson, Baker and Herbert. But would William Miller have achieved fame as a criminal mastermind if he had never fallen under the influence of Robert Ammon? I can assure you… You betcha!
William F. Miller was living proof of the ancient maxim that upon finding yourself in a hole, you should stop digging. In the late winter of 1898 he was a twenty-six year old, “small, pale young man” working out of space rented in a grocery on the corner of Marcy and Park Avenues in the wealthy Clinton Hill section of Brooklyn. Every night William took the elevated train north along Marcy Avenue and then walked to his apartment at 144 Floyd Street, a three story tenement house in the immigrant working class Williamsburg neighborhood. Around him, wedged between factories and breweries, lived some 200,000 second generation German-Americans, each of them, like William, sharing what Thoreau described as “lives of quiet desperation”.
William attended church regularly. He was the father of twin 14 year old boys, John and Louis. He was a dreamer. He was a failure. His wife was ill. And if she had known the truth she would have been sicker. William had already lost the family nest egg, buying and selling stocks in an illegal “bucket” shop, where the profits were made by separating the naive day traders” from their cash. To maintain the image he had of himself, William told his friends that he had recently made valuable business connections on Wall Street, and now had the inside “dope”, and would soon be rich. The owner of the grocery William rented space from must have felt sorry for the lad, because on Wednesday, April 20th, he gave him all of $10 to invest. William wrote him the following receipt; “Received from Mr. Gus. Brandt; the sum of ten dollars ($10.00) for a one share interest in the “Franklin Syndicate”. Principal guarantied against loss, and may be withdrawn at any time. Dividends to be paid weekly in sums of one dollar and upwards per share until principal is withdrawn. Signed, William F. Miller.”
On Friday Mr. Brandt handed him another “investment” of $10. And as Brandt must have expected, William only invested the money in food and rent for his family. But on Monday morning he was careful to pay Mr. Brandt $2, which he called a “dividend”. After this apparent success was made known to Brandt's employees, and William's acquaintances in the neighborhood, William found himself swamped by dozens of new  investors. And each Monday William would personally deliver the “dividends” to his “customers”. By June, even the practical, pragmatic Mr. Brandt was convinced. He invested  $100 in William’s “Franklin Syndicate”.  In Brooklyn the boy was earning a reputation as a financial wizard. . He was overheard on the grocery store’s "pay" telephone arguing with J.P. Morgan, and other Wall Street magicians. Of course, these were imaginary conversations -  play acting. But they hint that William was desperate to convince his peers of his success. And that seems to have been William's real goal.
With growing desperation, struggling to bring in enough money to meet his weekly dividend requirements, and feed his family,  William began to make the rounds of the brokerage houses on “The Street” trying to sell his new investment plan to professionals. He found no takers because he had no actual plan. And then he  entered the offices of Robert “Bob” Ammon, a Wall Street lawyer with a reputation as an adviser to swindlers and confidence men, of which there were on the Wall Street of 1898, no smaller a percentage than there are today.  Bob Ammon towered over the shallow youth, physically as well as intellectually. He perceived instantly what William was actually selling. He had sold it himself a number of times. But Williams’s “Franklin Syndicate” had one distinct advantage over all the others Bob had executed; it had the honest looking, dupe of William as front man.
Taking the boy in hand, Bob Ammon agreed to act as the lawyer and agent for his “Franklin Syndicate”. He began by making up a list of 1,488 of his previous victims...er, customers, and sent each one the following telegram - collect of course; "To my Depositors: Owing to the enormous success of the Franklin Syndicate, and to the urgent request of a large majority of my depositors, I have decided to incorporate the Franklin Syndicate on December 2nd next, with a capital of $1,000,000….As all depositors are entitled to stock certificates in the corporation, it will be necessary to compare the receipts you now hold with my books, and just as soon as I receive your receipts I will immediately send you your stock certificate to which you are entitled…It is my belief that the Franklin Syndicate shares will be selling at $400 to $500 a share before March 1st next. (But) after December 2nd…I shall open no new accounts for less than $50. All accounts which I now have of less than $50, will have to deposit sufficient to make their account $50…Yours very truly, William F. Miller.  P. S. …it is the intention of the Franklin Syndicate (Incorporated) to continue paying 10% a week.”
Now, none of those receiving this telegram had ever heard of the Franklin Syndicate before, nor of William Miller. The wise who read it laughed at the impertinence, crumpled the telegram and threw it away. But several hundred were intrigued enough to wonder who this man Miller was, who claimed to be able to pay 10% interest a week – 520% interest in just a year. And a few were so intrigued they immediately sent cash by return post to the offices of the Franklin Syndicate. Others felt the need to deliver their money directly to 144 Floyd Street, Brooklyn.
Under Bob Ammon’s guidance, William had taken over the entire third floor of the building he lived in, and hired a staff of twenty-two to open the cash bearing envelopes, and greet the mobs of optimistic investors eager to hand over their meager wealth. The staff spent their free time making bank deposits and writing dividend checks. Mr. Brandt was encouraged to write a letter detailing his previous profits from the Syndicate. An article, appearing in 700 newspapers nationwide, ran under the headline, “Wall Street Astonished. Franklin Syndicate a Big Winner.”  In the accompanying article William Miller was referred as “the Napoleon of Finance”. There was no mention of Bob Ammon. In a follow up letter to the investors, William explained, “"…you know there must be a way where one can double their money in a short time, or else there would be no Jay Gould, Vanderbllt…and other millionaires and syndicates who have made their fortune in Wall street starting with almost nothing….The equilibrium of Wall Street is maintained by the fluctuations between the vast army of losers and the privileged few who win…Our 'inside tips' are from the fountain head of speculative interests, and never fail us. This advantage we not only possess here, but over the Washington wire as well.” Of course William had merely signed the letter. It had been written by Bob Ammon.
By the end of October the Franklin Syndicate was taking in something between $80,000 and $160,000 (today’s equivalent would be $1.5 million to $3.7 million) each week. But the business practices of the Syndicate were unusual enough that two banks closed their accounts, and most others simply refused to do business with them. The press were beginning to get suspicious, as well, identifying the entire project as a pyramid scheme. And Bob Ammon could sense that after a brief few weeks the scam had just about run its course. So one more telegram was issued over William’s name; “We have inside information of a big transaction, to begin Saturday or Monday morning. Big profits. Remit at once so as to receive the profits.” All that week more cash poured in to the offices.
The machinations and sudden growth of the syndicate had reduced William to a nervous wreck. Racked by guilt, followed by private detectives (who may have been government men or in the employ of the lawyer Ammon), William was ready when, in late November, Bob suggested, “Billy, I think you'll have to make a run for it. The best thing for you is to go to Canada.” With William’s help, Bob saw that all the funds in the Syndicate’s accounts were now transferred to his own private bank account, "to protect them". The total amount was some $250,000 ($5 million today). William then boarded a train for Canada under an assumed name, and disappeared.
To the investors, and to those outside the scheme, the collapse of the Franklin Syndicate was sudden and precipitous. It resulted in injury to thousands of lives, Miller’s wife and children being just three more victims. William had left his family protected only by the promised kindness of Bob Ammon, and  Bob's kindness was worth only $5 a week for Miller's wife and her children. Bob also assured William’s wife that this pittance was all that he could afford. In fact the syndicate’s funds were safely hidden under Bob’s various nom-de-corporate disguises. And that is the way the story would have ended, except the Montreal police arrested William in December.
He was placed on trial in New York in the spring, and convicted of grand larceny. And on April 30, 1900 William was sentenced to ten years in Sing Sing. And still Miller refused to believe that Bob had betrayed him. To maintain the fraud, Ammon had paid for William’s lawyers, had acted as one himself, and during the trial had increased payments to William’s wife to all of $40 a month. But once the trial was completed and William safely locked behind the granite walls of Sing Sing, the money stopped and the veil began to slip from poor Miller’s eyes; tuberculosis helped puncture the fantasy.
In 1903 William Miller shuffled his way to the witness stand one more time. He was skeletal. He suffered from a hacking cough. He seemed to be dieing. And when he pointed a bony finger at Bob, the jury believed him. It helped that William willingly confessed some of his crimes, and had helped prosecutors locate $60,000 of the stolen cash which had somehow slipped through Bob's hands. And it helped that Bob was only charged with receiving $35,000, which was all that could be conclusively proven. Convicted, Ammon got five years in Sing Sing. In exchange for his testimony, William Miller had his sentence commuted to the three years he had already served.
William Miller did not die of tuberculosis. He never got rich, but he stopped trying deepening the hole he was now in. He got a regular job, as a store clerk. And then he dropped out of history. The Miller's became just another average American family, struggling to survive in a world that catered to millionaires. Bob Ammon served his five years in Sing Sing, and then he too dropped out of history. He became just another average millionaire, living in nation that considers it impolite to inquire how its citizens attained their wealth, but proper to celebrate how much wealth they have.
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