During the ACFE's 22nd Annual Fraud Conference and Exhibition, the 2011 Cliff Robertson Sentinel Award went to William H. McMasters, the Boston publicist who, in 1920, helped take down the most notorious pyramid schemer of them all: Charles Ponzi.
For the first time ever, the ACFE presented its annual Cliff Robertson Sentinel Award posthumously. Who was the person who earned such an honor, 43 years after his death? William H. McMasters, the man who exposed Charles Ponzi as a fraud in 1920.
He was Ponzi's publicist for just a short time before he realized his client was a fraudster. McMasters then wrote a scathing exposé for The Boston Post that led to Ponzi's ultimate downfall. The newspaper received the 1921 Pulitzer Prize for its Ponzi coverage. McMasters never even saw the medal and, during his lifetime, he never received public recognition for his role. It is past time to give him his due.
BRUSH WITH INFAMY
Possibly the most remarkable part of the story is that McMasters wrote the exposé on Ponzi only 10 days after Ponzi hired him. Compare that to the years of reporters' and investigators' questions before Bernie Madoff's scheme finally came crashing down.
IT ALL COMES CRASHING DOWN
McMasters approached Richard Grozier, the Post's assistant editor and publisher, about running an exposé on Ponzi. Grozier balked because he was afraid Ponzi would sue him for libel. However, McMasters got a promise from Nathan Tufts, the district attorney of where Grozier lived, that the publisher would be immune from lawsuits if the article proved untrue. So, McMasters wrote the article with the spectacular headline, "Declares Ponzi Is Now Hopelessly Insolvent." Grozier paid him $6,000.
That Monday morning of Aug. 2, "when Ponzi opened his Boston office … the line was more than a half-mile long." McMasters wrote of terrified investors in tears, some even fainting. But Ponzi paid off these investors for more than a week. He sued the Post for $5 million, and he made speeches railing against the paper. Even the attorney general told McMasters on the day the article appeared that he had made a mistake in running such a scathing story before any official reports.
However, McMasters persevered. He responded with another Post article on Aug. 3, which ran with a separate article by a reporter who confirmed with Pelletier his conversations with McMasters and Ponzi. McMasters then asked the attorney general to request that investors mail letters saying how much Ponzi owed them. The "overwhelming" response helped prove his exposé — there were simply too many investors owed too much and not enough money to pay them.