Leo Koretz

Leopold Koretz (1879–1925) was an American lawyer who ran an elaborate Ponzi scheme in Chicago, 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 in a criminal career that predated and outlasted his contemporary, Charles Ponzi. 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 Jewish parents on July 30, 1879, in Rokycany, Bohemia, the seventh of nine children. He arrived in the United States in 1887, at age 8.

The family settled in Chicago. 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 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 state's attorney 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. By comparison, the victims of Bernard Madoff'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. Another theory suggests that his death was a suicide, in which he died after eating an entire box of smuggled-in chocolates with the intention of triggering a fatal diabetic coma.