Meet Leo Koretz, a Jazz Age fraudster whose audacious schemes made Charles Ponzi look like a piker
Francis Hiltz, the owner of a Halifax tailor shop, was repairing the lining of a suit jacket on a November day in 1924 when he glanced at the manufacturer’s label. “Henry Heppner and Co.,” it read, “Chicago, Illinois.” The customer, an American named Lou Keyte, had no doubt brought the suit with him from the United States. But there was something odd about the label. The man the jacket was made for, it said, was Leo Koretz.
Keyte had only been in Nova Scotia since the spring, but he was already widely known as a wealthy man who spent his money freely and entertained his friends lavishly. He had transformed a hunting lodge in Queens County, about 150 kilometres west of Halifax, into a backwoods retreat where he hosted parties and dances so grand they were written up in the local papers. Stories of his generosity were legendary. The hundred-dollar bill he once produced for an ice cream cone before telling the astonished server to keep the change. The fleets of taxis he hired to ferry guests to soirees at hotels and the expensive bootlegged booze and fine cigars he distributed when they arrived. Then there was the time he imported members of the Boston Symphony Orchestra to play at one of his parties.
Leo Koretz? Hiltz thought the name sounded familiar. Maybe, he remembered thinking, it was someone involved in the trial of Leopold and Loeb, the Chicago university students convicted that summer of murdering a young teenager for kicks, to see if they could pull off the perfect crime. The Halifax papers had covered the case, the so-called Crime of the Century, and perhaps that’s where he had seen the name. There was, however, a bigger mystery to be solved: why was Lou Keyte wearing a jacket that belonged — or had once belonged — to Leo Koretz?
Hiltz took his discovery to Horace Flemming, a high-ranking official of the Bank of Nova Scotia. He promised to check his records and make discreet inquiries. Keyte had an account at the bank and Flemming, too, wanted to know why a wealthy man was wearing second-hand clothes or using two names. He sent a letter to William H. Davies, manager of the bank’s Chicago branch, describing the confusion and asking if he had any information about either Koretz or Keyte.
“You can imagine,” Davies would later note, “the excitement that letter caused.”
In Chicago, it was difficult to find someone who hadn’t heard of Leo Koretz. He was the lawyer-turned-stock promoter with the Midas touch, the financial genius who had struck it rich when oil was found on land he controlled in the Bayano region of Panama, the generous friend who shared his good fortune with hundreds of investors — businessmen, professionals, socialites, even his mother and siblings — by selling them stakes in his Bayano River Syndicate.
He was also one of the most brazen and successful swindlers of the 20th century, a charming, persuasive, lie-spinning Bernie Madoff of the Jazz Age. Koretz had skipped town in December 1923, just before his syndicate was exposed as a giant ponzi scheme that had plucked millions of dollars — as much as $400 million today — from investors’ pockets.
The crime was a press sensation. Reports of the massive fraud and Koretz’s escape upstaged news of gangland shootouts and bootlegging turf wars as Al Capone jockeyed for control of the Chicago underworld. The Chicago Tribune dubbed Koretz the “Panama Ponzi,” but the sheer audacity of his swindle made the notorious Charles Ponzi — arrested in Boston in 1920 after claiming he could double investors’ money in 90 days — look like a piker. The New York Times hailed Koretz as “the most resourceful confidence man in the United States.”
The authorities in Chicago launched an international manhunt. A $10,000 reward was offered for his arrest. Koretz’s round, bespectacled face stared out from wanted posters distributed to post offices across the United States. Reports trickled in of sightings in Texas, Cuba, Hawaii, and as far away as Paris, but the trail went cold. Then, just shy of a year after the Panama Ponzi disappeared, Flemming’s letter arrived from Halifax, a city 2,000 kilometres away, inquiring about a man named Leo Koretz.
* * *
Leopold Koretz (pronounced korits, as a single syllable) was eight when his family emigrated to Chicago from the present-day Czech Republic in 1887. His father, a peddler, reinvented himself as an insurance agent and settled his family among other Jews of German extraction on the city’s north side. Leo was the seventh of nine children and the first to graduate from high school. He found a job as an office boy at a downtown law firm, attended night school to earn a law degree, and set up his own practice.
Clients and fees, however, failed to materialize fast enough for Koretz. He wanted the American Dream, and he wanted it now. He took his first “dip into dishonesty,” as he put it, in 1905, drafting a fake mortgage on a property and selling it to a client who had money to invest. He pocketed the proceeds and when it was time to repay the principal and interest, he raised the money by forging a new mortgage and selling it to someone else. He had no idea how many times he repeated the ruse; he doled out phony mortgages, he later admitted, “like streetcar transfers.”
His next scam was selling shares in rice farms in Arkansas. Rice production was booming, and Koretz had no trouble finding buyers — the problem was resisting his greed. He sold bogus mortgages on the rice properties, raking in more cash but digging himself a deeper hole. “Practically every foot of his rice belt holdings,” investigators later discovered, and had been remortgaged “many times over.”
In 1907, the fledgling swindler fell prey to a seasoned con man. David Nieto, a friend of a friend, claimed he was developing timberland in the Bayano River valley, a remote area about 100 kilometres from Panama City. All he needed was capital to fell and ship the lumber to market. Koretz took the bait. He convinced friends to invest and together they ponied up $10,000. When Nieto demanded more money, Koretz became suspicious. He boarded a steamer for Panama and made a perilous voyage along the coast and up the Bayano River. He found dense jungle, “a few quagmires and mudholes” and plenty of alligators, but no lumbering operation. He had been duped.
He returned to Chicago with a plan to recoup the money he and his friends had lost. The “Big Idea,” he called it. He borrowed Nieto’s scam and took it to the next level. Koretz claimed that he controlled a tropical paradise along the Bayano River and was making a killing selling timber to contractors building the Panama Canal. Investors would earn profits of 10 per cent a year, guaranteed.
At first, he offered shares only to close friends, fellow lawyers and business colleagues. As word spread that Bayano was paying steady profits, the circle of investors widened. Members of Koretz’s synagogue, his rabbi included, jumped on the bandwagon. He sold shares to his siblings, relatives and his widowed mother. Koretz later claimed he had no choice but to rope his family into the scam or other investors might have become suspicious.
He flaunted his success, splurging on dinner parties for his investors, assembling a fine wardrobe, zipping around Chicago in a chauffeured Rolls Royce limousine. To look like a savvy investor who was making millions, he had to spend like a millionaire. His installed his wife, Mae, and his young son and daughter in a lakeside mansion in Evanston, north of the city. He kept an apartment on the city’s south side for rendezvous with his mistresses.
The fake mortgages, the rice farms, the Panama timberlands – each scam was a ponzi scheme. The strategy is simple: rob Peter to pay Paul. Koretz used the money pouring in from new victims to cover the interest payments to earlier investors, after taking a healthy cut to support his extravagant lifestyle. It locked him into a never-ending juggling act. He had to hook a steady stream of new investors to ensure there was enough money to go around.
It was like a hot tip on a horse race
And this is where Koretz’s brilliance distinguishes him from the swindling herd. Even though he was desperate for money to feed the insatiable beast he had created, he rarely asked anyone to invest. He never advertised, counting on word of mouth to bring investors to him. And when they sought him out, he played hard to get. He brushed off many would-be investors, claiming there were no shares available — a strategy that drove up stock prices and turned a trickle of eager investors into a stampede. Reducing supply, as he expected, fuelled demand. As one investor later reflected, “he utilized to a weirdly elaborate degree the principle that a person will literally fight for something that is most difficult to get.”
“It was like a hot tip on a horse race,” recalled another investor. “Everybody jumped on who could.” One businessman, desperate for a piece of the action, tossed a packet stuffed with $30,000 in cash through the transom above the locked door of Koretz’s law office. Bayano was a con man’s dream, an easy-money deal so irresistible that it sold itself. “They began to besiege me with money,” Koretz later noted, “They thrust it on me … and refused to take it back.” Those lucky enough to get their hands on shares were so grateful that the possibility they were being scammed was the last thing on their minds. And Koretz was able to handpick his victims, weeding out anyone likely to become suspicious or ask too many questions.
“Everybody had confidence in him and just seemed to take his word, and never worried about the details,” recalled a lawyer who knew Koretz. Bayano was no longer simply a money-making machine or an exclusive club; it was a cult. “His followers were devout; it was a religious devotion,” said investor Charles Cohn, a partner in an insurance firm and longtime friend. “I had every confidence in the world.”
As the Roaring Twenties dawned, however, Koretz faced a cash crunch. He needed to rake in more money to cover the ever-increasing profits he was paying to investors. He convinced some investors to take additional shares instead of cash for the interest they were owed, staunching some of the bleeding, but it was not enough. He would have to come up with a new angle, a new product from his Panamanian motherlode. A commodity more enticing than timber that investors would find irresistible.
* * *
Sometime in 1921, as he chatted with a friend, Koretz let the news slip.
“I casually mentioned that oil was discovered on this Bayano tract,” he recalled. “The news spread rapidly.”
Coal was yesterday’s fuel; oil would power the future. Millions of Ford Model Ts and other automobiles were rolling off production lines, replacing horses so rapidly that one scientist predicted that within a century the animals would be extinct or seen only in zoos. Demand for oil, which had been waning as electric lights replaced kerosene, soared as gasoline-guzzling cars and trucks took over the nation’s streets and roads.
There was more. The days of the 10 per cent return on investment, Koretz announced, were over. The new Bayano oil syndicate would pay shareholders five per cent interest every month — an astounding annual profit of 60 per cent. Investors could double their money in less than two years. There was a fresh stampede for shares.
Suite 629 of the Drake, one of Chicago’s newest and glitziest hotels, became the sumptuously furnished headquarters of Koretz’s oil empire. Longtime investors and newcomers alike gathered there, with a million-dollar view of Lake Michigan as a backdrop, to celebrate their success.
With a showman’s flourish Koretz unrolled maps showing the oil wells sprouting on the syndicate’s lands. Shareholders gathered around his mahogany desk to pore over blueprints of the pipelines, piers and other facilities being built to bring the oil to the U.S. To celebrate, Koretz produced bottles of scotch and vintage wines from a stash he had prudently assembled before Prohibition outlawed the sale of booze in 1920. His grateful investors toasted their success and the man they nicknamed the “Oil King.”
In June 1922, 17 of Koretz’s loyal investors gathered in a ballroom at the Drake for a testimonial dinner honouring the man who was making them rich. The centrepiece on the banquet table was a scale model of the Panama Canal Zone, the menu featured Bayano duckling and Panama salad-oil dressing. A booklet prepared for the occasion included a tongue-in-cheek biography that described Koretz as “Our Ponzi.” It was supposed to be a joke; no one in the room suspected their benefactor was a crook.
Charles Ponzi had operated his get-rich-quick scheme for less than a year before he was arrested and put out of business in 1920. He was a flash in the pan. By then, Koretz had been running some form of ponzi scheme for almost two decades without attracting suspicion, missing a single interest payment or slipping up. If he had not been so good at what he did, if his crimes had been exposed before Ponzi’s arrest, the rob-Peter-to-pay-Paul scam might have been christened a koretz scheme, in honour of its first true master.
His followers were devout; it was a religious devotion
Koretz’s performance was unmatched until 2008, when Bernie Madoff’s multi-billion-dollar investment fraud was exposed. Like Koretz, Madoff kept his swindle going for a couple of decades. Both preyed, for the most part, on people who were already wealthy. Both were selective and turned away many would-be investors, ensuring the chosen ones who handed over their money were grateful and loyal. And both Madoff and Koretz committed an “affinity crime,” exploiting their Jewish faith and community ties to build trust and attract victims. Unlike Madoff, however, Koretz worked alone, personally attending to every detail of his elaborate con.
Banks and investment firms are sometimes described as too big to fail. The Bayano fraud became too big to survive. To prop up his house of cards and keep fresh investment money flowing in, Koretz ramped up the hype. His biggest lie was a whopper. John D. Rockefeller’s Standard Oil conglomerate, he claimed, had offered a jaw-dropping $25 million — almost a half-billion dollars today — for a small stake in the Bayano goldrush. He said he had rejected the offer, assuring his shocked investors they would make more money if they kept control of the entire operation.
Then, the inevitable happened. A half-dozen investors organized a trip to Panama to tour the Bayano oilfields and facilities they had heard so much about. Koretz stalled them for several months, but they set off in late November 1923. He offered to pay their expenses, told them to “live like kings,” and seemed to be glad they were going. “He told us he wanted us to see things for ourselves,” recalled Henry Klein, one of the syndicate’s largest investors. “He said we would be surprised.” They took a train to New York and boarded a steamer for the week-long voyage to Panama.
Koretz saw them off at a Chicago railroad station and cleaned out his bank accounts. He distributed $175,000, or more than $3 million today, to family members who had invested in his scam. He had sold some of their shares on their behalf, he explained, at a tidy profit. He crammed another $175,000 into a briefcase for himself. He left Chicago on Dec. 3, 1923, supposedly for a quick business trip to New York.
* * *
“No oil, no wells, no pipelines, no organization.” The terse, eight-word telegram, sent by the investors’ group from Panama City, reached Chicago a few days after Koretz fled. They had made inquiries and had scoured deeds and other records but found no trace of Koretz’s landholdings or his oil empire. “We were staggered,” recalled Milton Smith, an accountant for a meatpacking firm. “No one knew anything about a great Bayano syndicate.” It took five days for the truth to sink in: they had been conned. “There was nothing there,” Klein noted glumly, “and never had been.”
Exposure of the massive fraud made headlines across America. OIL SWINDLE NETS MILLIONS, the Chicago Tribune announced. Cook County State’s Attorney Robert Crowe, who had once worked alongside Koretz in a Chicago law firm, ordered raids on the Drake hotel suite and the fraudster’s other haunts to scoop up evidence. Among the discoveries was a collection of small bottles labelled “Oil,” apparently used to convince investors that Bayano was pumping crude in Panama. The dark liquid inside, it turned out, was whisky.
“This is the greatest swindle in the history of Cook County,” declared one of Crowe’s prosecutors, “and people call Chicago the wickedest city in the world.” Koretz was indicted on state charges of theft, fraud and operating a confidence game. Federal charges of using the mail to defraud victims soon followed. Catching him, however, would not be easy – Koretz had a head start of several days. Airfields and steamship lines were asked to be on the lookout, in case he tried to leave the country. His description was broadcast on radio stations and circulated to police forces across America, including Canada and Central and South America.
The Chicago press exposed Koretz’s outlandish claims, his lavish lifestyle, the “love nest” he had rented for his mistresses. It was a salacious story worthy of the talents of Jazz Age reporters with a nose for scandal. Bayano investors, many of them experienced lawyers and businessmen, were ridiculed for their gullibility. One newspaper quipped that Koretz was Chicago’s “leading financial laxative … he works while you sleep.” Some investors were wiped out, losing their lifesavings or retirement nest eggs. Others, however, who had bought shares years earlier and collected the generous interest Koretz was paying, recouped their initial investment and emerged with a profit.
Most of Koretz’s relatives, despite losing heavily on their investments, refused to keep the money Leo had distributed and turned it over to the authorities. Mae Koretz, betrayed and left almost penniless, was forced to testify in bankruptcy court and insisted she had no idea where her husband might have gone. Reporters, prosecutors and the scam’s victims wanted an answer to the same question: Where was Leo Koretz?
* * *
After fleeing Chicago, Koretz rented an apartment off New York’s Fifth Avenue for several months. He adopted a new name, Lou Keyte, pronouncing the surname keet, and keeping the initials L.K. so he could continue to wear his monogrammed clothing. He grew a beard, to make it less likely someone would recognize him from photographs in the newspapers and pretended to be a retired businessman and lover of literature. He bought a bookstore on the Upper East Side to burnish his credentials as a literary critic and hired a New York writer, Temple Scott, to run it.
While browsing at the Abercrombie & Fitch sporting goods store a few blocks from his apartment, Koretz mentioned he was interested in buying a country retreat, an escape from the city crowds. One of the clerks, who summered in Nova Scotia, knew just the place: Pinehurst, a lodge on a lake near the village of Caledonia. It was inland from Liverpool, a port town on the province’s South Shore, and not far from present-day Kejimkujik National Park. Koretz slipped across the border into Canada early in 1924 to look over the 40-hectare property. A long winding lane connected it to the main road and the surrounding forest shielded it from passersby, making it a perfect hideaway for a fugitive from justice. He bought it for $17,500. A brief item announcing the purchase by “L. Keyte, of New York, a critic of note in that city,” appeared in Caledonia’s weekly paper.
An army of tradesmen transformed Pinehurst into a palatial, 15-room country estate fit for a man the local press christened a “prince of entertainers.” There was a music room equipped with a piano and gramophone and a dining area large enough to accommodate both a pool table and a mahogany dining set. The living room was filled with antiques and a moose head stood guard over the stone fireplace, a nod to the building’s past life as a hunting lodge. Guests walked on gleaming oak floors and carpets imported from England, and relaxed in plush chairs upholstered in Spanish leather. If they were staying over, they had their pick of three upstairs bedrooms, each with a private bath.
Outside, landscapers levelled the grounds to install a tennis court and a croquet lawn. There was a garage for Koretz’s car — a Franklin, a luxury model rarely seen on Nova Scotia’s backroads — and an on-site, coal-fired power plant to supply heat and electricity. The most ostentatious feature of the rebuilt lodge, however, was an octagonal, three-storey turret erected at one end of the building. Koretz’s bedroom was on the second level, but it looked more like a watchtower than a private retreat. Someone standing at the windows that encircled the top floor could spot any unwanted visitors coming up the lane as they emerged from the forest.
Thomas Raddall, a bookkeeper at a pulp mill, was at a dance in Liverpool when he met the American newcomer everyone was talking about. Koretz was charming and jovial, the life of the party. And generous. He ordered plates of sandwiches, sweets and coffee from a nearby restaurant, enough for everyone on hand. “This,” Raddall noted wryly, “made him popular at once.” An accomplished dancer, he foxtrotted with “the prettiest girls in the room.”
It was a spring evening in 1924. Raddall, who had just turned 20, and Koretz, who was more than twice his age, hit it off. He was “a city type,” Raddall noted, and “well spoken and affable in a suave sort of way.” The white vest and matching spats he wore made him “an odd sight” in small-town Nova Scotia. Koretz was obviously wealthy and mentioned in passing that he had made “a good deal of money in land speculation” in the U.S. His thick, well-groomed beard, Raddall thought, made him look more like a naval officer than a businessman.
They discovered they shared a love of literature. Koretz boasted that his reviews and support had “practically made” Zane Grey, the author of yarns set in the Old West and one of the most successful novelists of the time. Raddall dreamed of being a writer and would one day be among Canada’s most prolific and acclaimed authors, a three-time winner of the Governor General’s Literary Award who published 25 historical novels and non-fiction books in his lifetime. After his father was killed in the First World War, Raddall had left school at 15 to support his family and had spent several years at sea as a wireless operator before moving to Liverpool. His favourite author was Joseph Conrad, “a man who knew sailors and the sea.” Conrad, Koretz said, was one of his favourites as well.
The “jolly millionaire,” as Raddall took to calling him, soon assembled a new circle of friends. On a May weekend Koretz hired taxis to deliver Raddall and a dozen other guests to a private party at a hotel in Bridgewater, a short drive from Liverpool. Koretz paid for everything — gifts of chocolates and cigarettes, a three-course meal with fried salmon or roasted stuffed chicken as the main course, the illegal booze smuggled into an upstairs room. He brought along a band to play at an after-dinner dance in the town’s Masonic Hall.
And Koretz resumed his philandering ways. “Keyte had a fickle and insatiable appetite for women,” Raddall recalled, and lived “at a furious pace . . . passing from one woman to another like a hummingbird in a flower bed.” Charm and money compensated for his middle age spread, his pasty complexion and the tired eyes behind his thick-lensed glasses. He was a catch and, as far as anyone in Nova Scotia knew, a bachelor. He finally set his sights on Mabelle Banks, the twenty-something daughter of the publisher of Caledonia’s Gold Hunter and Farmers’ Journal. Her parents approved of the match, “flattered with the notion,” as Raddall put it, that she might marry a millionaire.
Koretz soon became a familiar figure in Halifax, where he spent many weekends at the city’s best hotels. He joined the exclusive Royal Nova Scotia Yacht Squadron, mingled with Nova Scotia’s elite, and was often spotted in shops, restaurants, and dance halls. When American actress Edna Preston performed in Halifax that summer, Koretz treated her 18-member entourage to a gala dinner washed down with gallons of champagne.
This is the greatest swindle in the history of Cook County, and people call Chicago the wickedest city
That August, Koretz hosted a housewarming bash to show off the new Pinehurst. Raddall, in a diary he kept, described it as “a magnificent ‘bachelor’s hall.’” Invitations went out to more than 100 people, including local politicians and businessmen. Raddall, of course, was among those on the guest list. One Pinehurst regular described it as “a brilliant party that astonished everyone.” Koretz set up a bar in his bedroom and recruited musicians from a seaside summer resort to perform. The Halifax Herald, one of the province’s largest dailies, took note of the affair. “Dancing,” it reported, “was the chief entertainment.”
The lodge was a blaze of lights. A factory owner and the proprietor of a Liverpool hotel drank too much, Raddall recalled, and “proved rather a nuisance on the dance floor.” The local member of the provincial legislature, George S. McClearn, climbed onto a table and made an impromptu speech. Couples wandered the darkened grounds, seeking secluded spots, as music drifted from inside. It was reminiscent of the glittering, booze-fuelled parties F. Scott Fitzgerald was imagining for his classic novel of 1920s excess, The Great Gatsby, which was written that summer.
After midnight, as the party wound down, Raddall and Koretz retreated to the veranda steps for a chat. They compared notes on the antics of the guests, but it was clear to Raddall that his “jolly millionaire” was lonely and had something to get off his chest.
“I come from Chicago, and I made most of my money in land deals,” Koretz began. He described the rice farms he had developed and the profits he had made for his shareholders. “Then everybody wanted me to find another piece of land like that and make another haul … they pushed their money at me.” He sounded bitter as he portrayed himself as the victim of greedy investors. He had found another property, he said, “down on the Bayano River in Panama. After that I retired. I had enough, and I didn’t want people pestering me anymore.”
It would be months before Raddall realized the significance of what he was hearing. Koretz had come perilously close to revealing that Lou Keyte was a fraudster as well as a fraud.
* * *
On the evening of Nov. 23, 1924, someone rapped on the door of Koretz’s room in the Halifax Hotel.
“What’s wanted?” he called out.
Two men burst through the door. “You are wanted — in Chicago,” replied Rainard Scriven, Halifax’s deputy sheriff, as Malcolm Mitchell, the warden of the city jail, grabbed Koretz’s wrists and slipped them into handcuffs.
“All right, boys, you don’t have to worry with me,” he said. “I’ll go quietly. I’ll give you no trouble.” Mabelle Banks was in the room with him, but they allowed her to leave. “For God’s sake,” Koretz pleaded, “don’t get her name into this.”
The prisoner was escorted to the county courthouse, a few blocks away, where two assistant state attorneys from Chicago were waiting to question him. Horace Flemming’s letter to his colleagues in Chicago, inquiring about the name tailor Francis Hiltz found on the label of a suit jacket, had sparked a flurry of activity. A wanted poster was mailed to Halifax and Flemming and Hiltz confirmed that the clean-shaven man in the photograph was Nova Scotia’s bearded big spender, Lou Keyte. States Attorney Robert Crowe was notified and dispatched two of his staffers to Halifax by train to take him into custody.
“He was very calm about it all,” said John Sbarbaro, one of Crowe’s top prosecutors. “As he talked to us about his finances, he merely expressed surprise that he had not been caught sooner.”
“Biggest Confidence Man in U.S. Captured in Halifax,” declared a front-page headline in the next day’s editions of the city’s Morning Chronicle. The Chicago press sent a squad of reporters to Halifax to dig up dirt on Koretz’s scandalous life on the lam. Reports of the arrest appeared in papers across North America and as far away as Paris and Australia. In Singapore, readers of the English-language Straits Times learned of the capture of America’s “newest criminal sensation.”
Koretz announced he would not fight extradition and asked to be taken back to Chicago as soon as possible. He was seriously ill with diabetes and his frenzied social life had worsened his condition. Canadian researchers had recently discovered that insulin could control the disease, but the drug remained rare and expensive; for many diabetics, a diagnosis was still a death sentence. Once Nova Scotia authorities determined he had committed no crimes on their turf — he had told plenty of lies during his 10 months in the province but had resisted the urge to swindle his new friends — he was shipped back to Chicago.
He arrived by train on the first day of December. As many as 2,000 people showed up at the station to catch a glimpse of the brains behind the Bayano swindle. Police officers kept the crowd at bay as he was whisked to Crowe’s office. He dictated a confession and later testified at a bankruptcy court hearing, where he described how he had devised and engineered the oil swindle and his earlier scams. Investigators had been unable to find much of his loot, and Koretz insisted most of the money was long gone — paid back to investors as profits over the years or squandered on his millionaire’s lifestyle. He tried to deflect some of the blame for his crimes onto his victims, “people who had wealth and demanded something for nothing.”
After scheming and stealing for the better part of 20 years, Koretz seemed relieved that his life of deception was over. He had told so many lies about his oil empire for so long that sometimes, he admitted, he had trouble separating truth from fiction. “It is rather hard for me to explain just how I began to believe in the thing myself,’ he testified, “but I did.”
On Dec. 3, Koretz pleaded guilty to charges of theft and running a confidence game. The judge took his declining health into consideration and sentenced him to serve the minimum sentence for the crimes, a term of one to 10 years in the Illinois State Prison in Joliet. “That means death,” Koretz predicted. “I’ll never come out alive.”
Back in Nova Scotia, Thomas Raddall was at a loss to explain why a wanted man had made such a spectacle of himself. “Had he chosen to live quietly and inconspicuously at Pinehurst,” he reasoned, “he might have evaded capture for the rest of his life.”
* * *
Leopold Koretz, inmate No. 9463, wound up serving a little over a month of his sentence. His health deteriorated during the first week of the new year. A doctor administered shots of insulin, but it was too late. He died in the prison infirmary on Jan. 8, 1925.
Days later, prison officials revealed that someone had smuggled a three-pound box of chocolates into Koretz’s cell. He devoured the sweets – for a seriously ill diabetic, it was akin to taking poison – and the sugar hit finished him off. Diabetics crave sugar, to replace the glucose their bodies cannot process, and it was unclear whether he had eaten the chocolates to satisfy his cravings or as a bizarre means to commit suicide.
It was fitting, perhaps, that a man who lived a lie and dreamed up a phantom empire of oil riches would be the victim of a real-life death by chocolate.
True crime writer Dean Jobb tells the full story of Leo Koretz’s spectacular swindle in his award-winning book Empire of Deception. His latest release, A Gentleman and a Thief: The Daring Jewel Heists of a Jazz Age Rogue, is a New York Times Editors’ Choice and a Canadian bestseller. Both books are published by HarperCollins Canada. Find him at deanjobb.com.