Leo Koretz
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Leopold Koretz (1879–1925) was an American
lawyer A lawyer is a person who is qualified to offer advice about the law, draft legal documents, or represent individuals in legal matters. The exact nature of a lawyer's work varies depending on the legal jurisdiction and the legal system, as w ...
who ran an elaborate
Ponzi scheme A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...
in
Chicago Chicago is the List of municipalities in Illinois, most populous city in the U.S. state of Illinois and in the Midwestern United States. With a population of 2,746,388, as of the 2020 United States census, 2020 census, it is the List of Unite ...
, called the "Bayano oil fraud," which garnered an estimated $30 million (about $450 million today) from dozens of investors in Chicago. The scheme used fraudulent claims of oil interests in
Panama Panama, officially the Republic of Panama, is a country in Latin America at the southern end of Central America, bordering South America. It is bordered by Costa Rica to the west, Colombia to the southeast, the Caribbean Sea to the north, and ...
in a criminal career that predated and outlasted his contemporary,
Charles Ponzi Charles Ponzi (; ; born Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi; March 3, 1882 – January 18, 1949) was an Italians, Italian charlatan and Scam, con artist who operated in the United States and Canada. His Pseudonym, aliases included ''C ...
. Koretz was so trusted and admired that after Ponzi's fraud was exposed in 1920, his investors nicknamed him "Our Ponzi," never suspecting they were being duped as well.


Early life and family

Leopold Koretz was born to
German Jew The history of the Jews in Germany goes back at least to the year 321 CE, and continued through the Early Middle Ages (5th to 10th centuries CE) and High Middle Ages (c. 1000–1299 CE) when Jewish immigrants founded the Ashkenazi Jewish commu ...
ish parents on July 30, 1879, in
Rokycany Rokycany (; ) is a town in the Plzeň Region of the Czech Republic. It has about 14,000 inhabitants. The historic town centre is well preserved and is protected as an Cultural monument (Czech Republic)#Monument zones, urban monument zone. Admini ...
,
Bohemia Bohemia ( ; ; ) is the westernmost and largest historical region of the Czech Republic. In a narrow, geographic sense, it roughly encompasses the territories of present-day Czechia that fall within the Elbe River's drainage basin, but historic ...
, the seventh of nine children. He arrived in the United States in 1887, at age 8. The family settled in
Chicago Chicago is the List of municipalities in Illinois, most populous city in the U.S. state of Illinois and in the Midwestern United States. With a population of 2,746,388, as of the 2020 United States census, 2020 census, it is the List of Unite ...
. Koretz, who preferred the name Leo, was a star debater at Lakeview High School. He studied at night and graduated from the
Chicago-Kent College of Law The Chicago-Kent College of Law is the law school of the Illinois Institute of Technology, a private research university in Chicago, Illinois. It is the second oldest law school in the state of Illinois (after Northwestern Law). Chicago-Kent wa ...
in June 1901.


Career

One of Koretz's associates when he began the practice of law was Robert E. Crowe, who as the
Cook County Cook County is the most populous county in the U.S. state of Illinois and the second-most-populous county in the United States, after Los Angeles County, California. More than 40 percent of all residents of Illinois live within Cook County. ...
state's attorney In the United States, a district attorney (DA), county attorney, county prosecutor, state attorney, state's attorney, prosecuting attorney, commonwealth's attorney, or solicitor is the chief prosecutor or chief law enforcement officer represen ...
would later investigate Koretz and arrange for his arrest. Koretz's swindling career began in 1905, when he forged and sold a series of mortgages on non-existent properties, using the proceeds in a Ponzi scheme to cover interest payments and finance an opulent lifestyle. He soon graduated to land speculation in Arkansas, peddling more fake mortgages and bogus stock in eastern Arkansas rice farms. In 1911 Koretz began selling stock in the Bayano River Syndicate, which he claimed controlled millions of acres of prime timberland in a remote region of Panama. His announcement of the "discovery" of oil on the property in 1921—and a promise of 60-percent annual returns—sparked a stock-buying frenzy in which many investors begged Koretz for a chance to purchase shares. The scheme was exposed in November 1923 when a group of Koretz's wealthy investors traveled to Panama to see the purported oil operations and discovered the fraud. Koretz fled to
New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...
, and then to
Nova Scotia Nova Scotia is a Provinces and territories of Canada, province of Canada, located on its east coast. It is one of the three Maritime Canada, Maritime provinces and Population of Canada by province and territory, most populous province in Atlan ...
,
Canada Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, making it the world's List of coun ...
, where he posed as Lou Keyte, a wealthy retiree and literary figure. He purchased and renovated the secluded Pinehurst Lodge near present-day
Kejimkujik National Park Kejimkujik National Park () is a National Parks of Canada, national park of Canada, covering in the southwest of Nova Scotia peninsula. Located within three municipalities, Annapolis County, Nova Scotia, Annapolis, Region of Queens Municipality ...
, in southwestern Nova Scotia, where he lavishly entertained a new circle of friends that included the future Canadian author
Thomas Raddall Thomas Head Raddall (13 November 1903 – 1 April 1994) was a Canadian writer of history and historical fiction.Zane Grey Pearl Zane Grey (January 31, 1872 – October 23, 1939) was an American author and dentist. He is known for his popular adventure novels and stories associated with the Western genre in literature and the arts; he idealized the American frontier ...
, whose work he falsely claimed credit for promoting among New York publishers. Koretz was identified and arrested in Halifax on November 23, 1924, through a suit he had brought to a tailor for repair of the lining, on which a label with his real name was sewn in along with the name of the Chicago clothier from whom it had been purchased. He was extradited to Chicago and pleaded guilty. Charles Ponzi is said to have swindled investors out of $20 million in 1920 ($300 million in current dollars), in a con immortalized as a
Ponzi scheme A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...
. Leo Koretz is estimated from 1905 through 1923 to have bilked his family members and other unsuspecting investors of $30 million, equivalent to $450 million today. By comparison, the victims of
Bernard Madoff Bernard Lawrence Madoff ( ; April 29, 1938April 14, 2021) was an American financial criminal and financier who was the admitted mastermind of the largest known Ponzi scheme in history, worth an estimated $65 billion. He was at one time ...
's Ponzi schemes between the early 1990s and 2008 were believed by the U.S. Security Investors Protection Corporation to have lost as much as $65 billion.


Personal life

Koretz married into a comfortable German Jewish family on January 30, 1906. Koretz and his wife, the former Mae Isabel Mayer, had a son, Mentor (later known as Red Kearns), and a daughter, Mari.


Death

Shortly after he was sent to the state prison in Joliet, the 45-year-old Koretz, who had been
diabetic Diabetes mellitus, commonly known as diabetes, is a group of common endocrine diseases characterized by sustained high blood sugar levels. Diabetes is due to either the pancreas not producing enough of the hormone insulin, or the cells of th ...
since 1919, died on January 8, 1925. Sources vary on his cause of death: one reports that his death was an apparent
suicide Suicide is the act of intentionally causing one's own death. Risk factors for suicide include mental disorders, physical disorders, and substance abuse. Some suicides are impulsive acts driven by stress (such as from financial or ac ...
, in which he died immediately after eating an entire box of smuggled-in chocolates with the intention of triggering a fatal
diabetic coma Diabetic coma is a life-threatening but reversible form of coma found in people with diabetes mellitus. Three different types of diabetic coma are identified: #Severe diabetic hypoglycemia, low blood sugar in a diabetic person #Diabetic ketoac ...
; another reports his death to have occurred after several days spent at the prison hospital, following an ongoing decline in his health, where his treatment had included injections of insulin in an effort to stay the disease. Koretz was buried the following afternoon in a Jewish graveside service at Waldheim Cemetery Co. in
Forest Park, Illinois Forest Park (formerly Harlem) is a village in Cook County, Illinois, United States, and a suburb of Chicago. The population was 14,339 at the 2020 census. The Forest Park (CTA station), Forest Park terminal on the Chicago Transit Authority, CTA ...
.


References

{{DEFAULTSORT:Koretz, Leo 1879 births 1925 deaths Pyramid and Ponzi schemes American people of German descent American people convicted of fraud American confidence tricksters 1925 suicides People who died by suicide in prison custody Suicides in Illinois Emigrants from Austria-Hungary to the United States