Defrauding banks is taken so seriously in the US that there are many instances where it leads to longer sentences than murder. We will not go into such details in this article, but will discuss 3 fraudsters who worked different cons in the 19th, 20th and 21st centuries.

In one case, it led to banks shutting down and people losing their life savings. In another, the fraud was mostly just annoying because the man kept getting arrested, creating an undue burden of paperwork for cops and bank employees. However, a popular movie starring Leonardo DiCaprio was made about how his exploits would have gone had he not been terrible at them.

In the final one, we will briefly discuss Matthew Cox, on whom a bigger con was pulled when the finance industry blamed him for inflated housing prices in a Florida town.

Elizabeth Bigley: AKA, Cassie Chadwick

In the 1870s and ’80s, Liz Bigley could not open a bank account. However, she could get a loan, if she met the proper criteria.

She did not actually meet the proper criteria, so produced a document stating that she was to inherit funds from an uncle who recently passed. In one such instance, the letter said she’d get $15,000, which would be over $400,000 today.

Ms. Bigley would only borrow a few hundred to get her through to when her inheritance arrived. It was more than a female teacher’s annual salary, but completely appropriate for a young lady of means.

She would get a loan from one bank, then from another, and so on.

The motivation for the bankers was that they could charge higher interest to someone without an account, which she, as a woman, could not open. The bankers would also get a kickback for facilitating the loan. Ms. Bigley learned quickly that greedy men would hand over hundreds of dollars if she would give them a small part of it on the back end, or at least say she would.

This is called a kickback, which is a bribe.

For this early work, Ms. Bigley was arrested not for bank fraud, but forgery pertaining to the letters she claimed were from a law office. The reason she got caught was because she didn’t pay the loans back.

In later life, Ms. Bigley changed her name several times, ran a massage parlor, gave psychic readings, and married a few men. One was a widower named Dr. Leroy Chadwick. Dr. Chadwick was very well established in the city of Cleveland, Ohio, and well-to-do. As Mrs. Chadwick, Liz – now Cassie – had full reign over the home. She used credit extensively, and her husband paid the balances.

Running out of credit in the early 1900s, Mrs. Chadwick pulled off the con she would be famous for. She convinced someone she was the daughter of Andrew Carnegie, the richest man in the world, and the rumor spread among the finance community.

The documentation from her “father” guaranteed $1,250,000. A well-known bank manager maintained the documentation, and when Mrs. Chadwick was in New York, Pennsylvania, or another Ohio city and wanted to borrow money, a message could be sent to this banker, who confirmed that she was good for the loan. This meant another person would be let in on the scandal that Andrew Carnegie had a secret daughter, and it also meant another person had been given the confidence of these prestigious families – Chadwick and Carnegie – not to mention the currency one could spend in gossip.

The range of this con has been said to be between $2,000,000 and $19,000,000. Why the disparity? It could be that there is financial math including the lost interest income, but it could also be that some bankers hid other bad loans (or stolen money) in these files.

It’s possible that bankers capitalized on this scam to hide bad loans or stolen money they otherwise did not wish to report.

Some bankers gave more money than the bank had, and even furnished their personal savings as loans – possibly to earn generous interest on top of their fee, but perhaps to protect the deposits when Mrs. Chadwick needed more money, knowing she was good for it.

Again, the con blew up because she left people hanging. Had she made payments, or used one loan to pay another, she could have kept it going (possibly until her death, given that she only lived until 1907 and was arrested in 1904), but a failed bank inspection forced the matter into the public, which led many banks to reveal that they, too, were holding bad loans.

Some bankers clutched onto the belief that Andrew Carnegie would make them whole. Setting aside that logic would dictate if Carnegie didn’t raise his own child, why would he care about the bankers? Carnegie didn’t amass such incredible wealth by covering the gaps of others. In the end, he was amused, having even traveled from New York to Cleveland while ill to see this woman in the courtroom.

Cassie Chadwick’s work led to banking reforms, including updates to the National Banking Act of 1863, as set forth with the beginning of the Office of the Comptroller of Currency, and best practices in the state of Ohio.

She was sentenced to prison in 1906 and died a year later.

For more on this story, there is a poorly written book replete with typos called Greed in the Guilded Age. I’m not saying not to read it (I did); I’m just saying the author, editor, and anyone else involved half-assed the project, and if you can overlook that, you might enjoy it.

 

The Fake Story of “Catch Me if You Can”

The year was 2006. I was living in Jacksonville, North Carolina, trying to buy something at a thrift store, but my check was no good. Why? The movie “Catch Me if You Can,” starring Leonardo DiCaprio, had been on TV, and people thought they were onto my game – that I was trying to pass phony checks just like the kid in the movie! Except, the kid in the movie never did that.

And that’s the very best part of the movie: That the whole story is bullshit. That’s the real con.

Rather than explain this myself, and because I’m mad at Abagnale for the inconvenience he caused me, I’m going to let someone far more skilled get into the nitty gritty of just how bad he was at crime.

 

Thankfully for him, his best con was legal.

Matthew Cox: A Man of Great Credit

Today, Matt Cox runs a successful podcast that might do well to have a history student on to talk about famous frauds from the 1800s to today. We could talk about imposter scams, how the government hoodwinked a nation by equating a health food with crack, or about the time Ulysses S. Grant was scammed into total poverty.

Call me, Matt!

He’s also written some really good books, and is a talented artist.

Matt Cox was also a conman who did 13 years in federal prison for defrauding banks and individuals. The reason he could do this was because he worked as a mortgage broker and understood how to establish credit – including in the names of other people.

To establish credit for an identity, he would pretend to be conducting a survey of homeless people, and pay them in exchange for their information. With their Social Security Numbers, dates of birth, mothers’ maiden names, and other crucial details he could create IDs, build credit, and then use that to get credit cards and mortgages.

Once he bought a piece of property, he could 10x the fraud by getting multiple mortgages on it, which he explains better than I can in this 58-second clip.

Cox was accused of conning up to $55,000,000. In some cases, individuals had no idea their identity was being used. In others, he tarnished the credit of people who needed it.

In the cases of banks, some knew of his fraud and let it go. Others pressed charges.

With the potential to be sentenced to 125 years in prison, he was ultimately sentenced to 26 (later reduced to 15, for which he served 13), and ordered to pay $6,000,000 in restitution, which he currently is.

For the full story, you can read his book, Shark in the Housing Pool, or listen to the 6-hour episode of the Lex Friedman podcast, which I’ll vouch for.

Regarding a note in the introduction about the con that was pulled on him: Matt has stated that in Ybor City, Florida he could buy a home for $50,000 or less, but record the sale at $200,000. This was not done illegally; it was done through a process allowable by the city, and he paid a very small fee for this.

Why would Matt pay extra to lie about how much he paid for a home? Because when he did that half-a-dozen times in a neighborhood, he could refinance them. When the appraiser came by, he might see a home that looks bad, but with comps showing a neighborhood on the way up.

Ybor City, Florida was listed by Forbes as among the fastest growing RE markets in the US. To many on the outside, it looked like the kind of town Robert Kiyosaki was talking about in his made up stories about buying homes. It was on fire! Except it was all a con. Matt Cox circulated $11,500,000 in loans through properties around Tampa, including in Ybor City, which was ripe for the picking due to its extreme affordability.

How could I say that a con pulled on him? When the banking industry collapsed, then drained the Treasury, they were looking for people to blame. Would they consider their own faulty practices based on more-more-more lending? No need. It was the fault of Matt Cox. Because of Matt Cox, people in Ybor City were now much poorer. Their homes once comping at $200,000 were back to being worth $50,000. Everyone lost money because of Matt Cox.

Obviously, some people did lose money because of Matt Cox, as found in his restitution obligations, but while he owes $6,000,000, he was blamed for $55,000,000, and the bank bailouts were found by MIT to have a true cost of half-a-trillion. For context, there is $1 for every $9,054 for what Matt was blamed for compared what the banks did, and there is a $1 for every $83,000 for his restitution compared to what the banks will never pay back.

But that’s a fraud to discuss another day.