The Fake Stock Exchange.
Based on descriptions by Len Reamey to Van Cise in Fighting the Underworld
The Fake Stock Exchange, known as the rag, was one of the more complicated cons run by Lou Blonger and company. As befit the raging market of the twenties, chumps were lured into the game with the promise of quick, handsome profits on an inside stock tip with no initial investment.
For many at the time, "investing" in stocks was much the same as betting a pony for a quick turnaround, not unlike contemporary day traders, and the action took place in storefronts that could just as easily have been off-track betting parlors.
A variation on the stock exchange theme, called the wire, did in fact use a fake OTB, a familar notion to those who have seen the fairly accurate depiction of it in the The Sting. Paul Newman's character was an homage to Chicago's Gondorff brothers, and their crew would have fit right in with Blonger's crew.
The Sucker: A well-heeled tourist or visiting businessman.
The Fixer: At the top of the pyramid was the Fixer. He greased the palms at City Hall, the courts and at the precinct, and bailed you out if the cops felt forced to look like they were doing their job. His word opened the store in the spring, and shut it down in the fall, and he had final say over who could work the Store.
The Manager: Rented the rooms, hired and fired, divided the money, and even held classes for the new talent in town.
The Roper: Referred to as a Steerer in Underworld, swarms of Ropers roamed the streets of downtown, sizing up passerby, looking for a mark worth taking to the next level.
The Spieler: Has the "inside tip" that's going to make the Sucker rich.
The Bookmaker or Clerk: Presides over the fake exchange or betting parlor.
The Tailer: Once real cash comes into play, the Tailer shadows whoever has possession, to guard against embezzling or robbery.
Boosters: Extras used in the exchange for the sake of realism.
The real action involves the complex choreography between the the Roper, the Spieler and of course the Sucker. Following the play can be difficult at times, but every step is designed to guarantee the cooperation of the Sucker, all the while encouraging him to think he's acting of his own free will and in his own interest.
And that interest is greed, a fact not lost on the grifter. Pit greed against greed, and the money belongs to he who can get his hands on it. And the grifter always has the advantage.
Two things every grifter knows:
- Everybody Wants Free Money
- It Takes More Muscles to Doubt Than It Does to Believe
The Game Board
Denver in the summer, Florida, California, or even Cuba in the winter.
The Big Store: A protected town, open for business. Leave the locals alone, and give the cops and politicians their tribute. Confidence men were rarely arrested in such towns, and if they were it was never for long and probably just to keep up appearances. In the early 1900's, hustlers all across the country considered Lou Blonger's Denver the "Big Store of America".
The Store: Fake stock exchange or betting parlor. A suite of three connected rooms preferred. The Bookmaker maintains a set of props used to simulate a stock exchange branch, such as a desk, phone and an easy-to-carry blackboard made of oilcloth to post stock prices.
The Lookout: An office upstairs, facing the street, was used by the Manager to oversee business, and watch for signals from Ropers in the street below. Ropers would come to the Lookout only when they arrived in town, then phone when they had a Sucker on the line.
Frequenting hotels, depots, parks and museums, and cigar stores Ropers try to pick out the tourists. Very Important: Local chumps are off-limits; they are more likely to have political connections or otherwise stir up trouble for municipal officials on the take. Taking graft is one thing pissing off one's voting public is quite another.
Well-dressed men buying out-of-town newspapers are prime quarry. The Roper might ask a visitor about some local street or building. If the visitor doesn't know the answer, he might then inquire if the visitor knows anyone in town. If not, the Roper claims to be a tourist as well.
The Roper asks about the visitor's line of work. If the stranger is "well-fixed", the Roper is ready to play.
The Roper tries to convince the visitor they should take in the sights together. If he agrees, the Roper will use the time to ask more questions and determine a target amount for the con.
At some point, they stroll past the Lookout. The Roper raises his hat. From the Lookout, the Manager or another Watcher sees the signal and sends down a Spieler to start the next phase.
The next Spieler up is summoned and trails the Roper and the Sucker to a park or quiet spot. Getting ahead, the Spieler drops a pocketbook on the sidewalk. Inside the wallet are a fake bond issued in the Spieler's name by a large eastern firm to confirm his trustworthiness and a fake newspaper clipping detailing an anonymous stranger's uncanny windfall at a stock exchange in another city. Also included might be letters of credit, fake checks and other papers to indicate the Spieler is a man of great financial responsibility.
The Roper and Sucker find the wallet, and examine and discuss its contents. Here the Sucker's education begins. Lesson one: the Spieler has the credentials to move large amounts of money, and he is in fact quite good at it.
The Spieler returns in search of his wallet, and introduces himself. The Roper claims to have seen him before, in Kansas City, after the Spieler made the big killing mentioned in the article. The Roper mentions a common acquaintance, a judge (of course), who praised the Spieler as a straight-shooter and upstanding citizen, as well as being a whiz at the market.
The Spieler confesses that he is indeed the subject of the article, then asks for assurance that they won't tell anyone he's in Denver. No problem, they say, we're just visiting anyway...
The Spieler says he must be going, that he must make a trade for his office. The Roper then asks for a hot tip before he goes, something for a little cigar money. The Spieler reluctantly agrees.
The Spieler is given ten dollars to make a quick trade. He leaves for a few minutes, and returns with a ticket for some stock. The stock has to go up one point to win, at which point the ticket will fetch twenty dollars.
The Spieler also shows them a $5000 ticket for a trade he made for his company. He implies that his company has inside information that makes the trade a sure thing.
The Spieler then produces the newspaper clipping, and the bond, which the Roper and Sucker examine (again). He states that an auditor travels with him, and that under the terms of the bond he is not to divulge company information or trade with his own money.
The Spieler says that instructions are sent from his company to his auditor via coded telegram, and then given to him to execute the trade. He produces a coded telegram, and explains it's meaning in detail.
Now the Spieler leaves to cash the ten dollar ticket, and returns with twenty dollars. Lesson two: There Is A Free Lunch.
The Spieler starts to say goodbye, as he has more trades to make. The Roper asks for another tip.
The Spieler now suggests the men might make some real money, with no investment on their part, if they can keep their mouths shut about it. The Roper agrees, and even if the Sucker doesn't, they ask him to tag along anyway (he will likely change his mind later).
The Spieler will put up the money, if the other two will make the trade for him for twenty-five percent of the winnings.
So far, nothing has been required of the Sucker. He has simply been an observer, and more often than not, he has concluded what most of us would conclude under the same circumstances: that he is being told the truth. And why not? To this point, nobody seems to want his money.
Now the Spieler finds an opportunity to phone the Bookmaker. Arrangements are made for the Store to be open for business when the three of them arrive.
On arriving at the Store, the Spieler introduces himself and his companions to the Bookmaker, and states that his friends are "established" and would like to make a few trades. A key phrase. The Spieler insinuates that his companions are members of the local stock exchange, and have established accounts on which to make trades.
The Store itself is pretty sparsely appointed. A desk, a phone (fake), a blackboard with stock prices. But there's a bit of bustle with boosters in and out, making the place seem busy enough.
Requesting a private room, the Spieler, Roper and Sucker retire to discuss their plans.
The Spieler says he'll make a trade for his company first. He leaves, and shortly returns with a stock ticket for five or ten thousand.
He gives the Roper and Sucker each $500, with the instructions to buy General Motors on a one-point margin, open at 100 and close at 102. They then go to the Bookmaker and place the orders.
After just a few minutes, the Sucker is told to go see if the stock has acted. While he's gone, the Spieler and Roper agree on how much to take him for. Maybe $20,000.
The Sucker returns with the news that the stock is up a point or more. So, the Spieler first leaves to "cash in" for his company. When he returns, he sends the others to cash in too.
At this point, the Bookmaker uses a phony telephone to pretend to call the main exchange. The exchange "okays" the payoff, and and the Bookmaker gives the Roper and Sucker each $1000 for their $500 investment. They take this money back to the Spieler.
It worked. The Sucker saw it with his own two eyes.
Now, the real deal. The Spieler has one more trade to make, then he's got several days off. Seems his company doesn't want him trading every day, to avoid suspicion. Time to make some real cash. He tells them to take the $2000 in hand ...and how would you like to trade the dinette set for what's behind door number two? and take an option on 20,000 shares of Mexican Petroleum on a two-point margin, making $40,000 profit.
If the Sucker doesn't agree, the Roper agrees for him, an important function of the Roper throughout the process. The Roper is the ally and sidekick, the tempter and enabler.
So, first the Spieler goes and executes his company business. He returns with the ticket.
He then tells them, specifically, to have the Bookmaker take a $2000 cash option on 20,000 shares of Mexican Petroleum stock on a two-point margin, open at 174 and close at 176 1/8, and to give him their names, just their last names, but not their initials.
"I'm sure all he'll ask you for are your last names. Tell the Bookmaker you want the stock in both names."
Fatal Flaws are vital to this kind of con. An exact instruction, inexactly followed. Observe...
They give the Bookmaker the $2000, and he makes out the ticket as they requested. The men retire to the private room, and all three get excited about all the cash they are about to make. The Spieler tells them they'll get ten grand a piece, and to never tell a living soul. All with no investment on their part!
Now the Spieler goes to cash in his company ticket. The Spieler returns and says that, because this is an option buy, he'll have to make out a credit order for each of them. Just a formality. Basically, he's taking a loan out in the Sucker's name to make the trade, with the intention of paying it back after the profit is made. The Sucker is not meant to realize the importance of these credit orders until later.
He takes two blank orders from the table, fills them out for $20,000 each, and uses the Roper's last name on one, and the Sucker's last name on the other. He then asks them their initials, and writes them down, but switches one man's initial for the other's. Hmmmm.
Should the Sucker miss this mistake, the Roper doesn't. But there is no time to fix it, because the market is closing soon. If he doesn't stop the Spieler in his tracks, right now, the Sucker becomes complicit in his own demise, having let those tranposed initials stand uncorrected.
The Roper and Sucker take the credit orders to the Bookmaker and request a statement in return. They take the statement back to the Spieler, who okays it, and then sends them back to cash in on their trade. Ask for large bills, he says, and don't ask for the credit orders back.
By submitting the credit orders, the men have claimed that they have an account at the main branch of the exchange, and enough money in that account to cover any trades. Of course they do not.
His last instructions are explicit: the Bookmaker will likely give them the cash without giving them back their credit orders. Bring the $62,000 back to the room, then go back and pay off the $20,000 credit orders. That then leaves $40,000 profit to divide.
So the Sucker goes to cash in his statement, and asks for large bills. The Bookmaker makes another phony call to Main Exchange. The payoff is OK'd.
Now the Bookmaker takes some fake bundles of money, with real bills on the outside (the Boodle), and ceremoniously counts them out and hands it over to the Sucker. 10,000, 20,000, 30,000, 40,000, 50,000, 55,000, 60,000, and yet another 2000... What seems to be $60,000 might actually be less than $5000 real money. No one ever gets the chance to realize the truth.
As the Sucker tries to leave with a fortune in his hands, the Roper suddenly asks to pay off the credit orders then and there contrary to the Spieler's instructions.
Basically, they have made a bet using a check written to an account that doesn't exist. The Roper is now taking the winnings in cash, and trying to use it to get his check back. This is the "blunder" that will allow the con men to begin adding complications to the task of getting out the door with money in hand.
The Bookmaker declines to return the credit orders. He says it will be deducted from their accounts at the main exchange. "You do have an account, don't you?"
The Roper replies that they don't have accounts here in Denver. They have accounts back home.
A misunderstanding. The Bookmaker says he was given the impression that they had accounts in the Denver office. He has to pay them all right, but still must confirm that they could each have covered the $20,000 loss had the stock gone south.
They call in the Spieler who testifies for their character and that they are upright gents in good standing, etc. The Spieler says he'll vouch for them with his own account. He agrees to sign his name to the two outstanding credit orders. The Bookmaker says, okay, he'll pay out the $62,000, and deduct the $40,000 for the credit orders from the Spieler's account. No, the Spieler says, his account is a joint account and he'd rather not do that. (Of course not!)
What would they have done if the stock had gone down? Write a check, of course. So the Bookmaker asks the Roper and Sucker to each write a check for $20,000 to cover their credit orders. He'll make sure the checks are good, then pay out the $62,000.
The Bookmaker takes back the cash, and the three excuse themselves to their private room.
Now the Spieler wants to know what happened. The Sucker, of course, says "I had the money in my hands, heading out the door, and then he asked for the credit orders back!"
The Spieler berates the Roper for his "blunder". The Roper apologizes, and the Spieler tells them not to worry. It will just take a couple of days to get their money. He will wire his uncle, and have him send $40,000. The Spieler will give $20,000 each to the Roper and the Sucker, they'll show the Bookmaker that they are good for the money, and he'll release the cash.
They return to the Bookmaker and ask him if cash in hand will prove their creditworthiness. The Bookmaker calls the home office to check. The home office says there is no need to bring in the cash. Just deposit it locally, then we'll call the local bank and verify the deposit. That should be proof enough.
The Spieler agrees. They can probably have the money by tomorrow. No worry, says the Bookmaker. It's a thirty-day option, so they have a month. But sooner is better.
As they leave, the Spieler takes the Sucker aside. "How long have you known this guy?" he asks. "Not too bright, is he?" The Spieler emphasizes the value of discretion in these matters, and asks the Sucker to get a hotel room with the Roper, the better to keep an eye on him. The victim now willingly "takes charge" of the criminal.
The Spieler bids them goodbye for the evening, says he'll have the money tomorrow, and to just keep quiet till then.
The next morning, a distraught Spieler shows the men a fake telegram saying his uncle is away from home on business and can't be reached. "I can't raise the money in time," he moans. "And the money is already won! I guess I'll just have to confess to my home office and see what happens. There's no way we can get the money now." A tear stains his face.
The Roper then says that surely they can raise the money somehow. Taking the Sucker aside, he says he has $20,000 in the bank, and his brother does too. His brother would probably do it, for a share of the Sucker's take.
And by the way, the Spieler had said he'd put up all the cash. If they're putting up the $40,000, the Roper says, shouldn't they get more than 25%?
The Spieler agrees to split the profit three ways even, but doesn't want the Roper's brother involved. How can he trust him? Isn't there another way?
At this point, the Sucker can be counted on to respond in one of two ways: he can write a check for the amount (rarely), or he can go home and make arrangements to get the money. The Roper will always respond the same.
Before leaving for home, the Sucker is told to be quiet, get a certified or cashier's check, and send a telegram when you have the money. The telegram should state only that the Sucker has conducted his business and when he will return. The telegram is to be sent to the Spieler's hotel, though in fact he does not live there. The hotel posts telegrams received in the lobby.
The con men put the Sucker on a train home.
Some time later, the Sucker will usually return with the money, having told no one about the deal and covering his tracks.
The Roper and Sucker get a room again. The Spieler tells them to deposit their money in different banks. It will then take about a week for the checks to clear. The Sucker complies, and the Roper appears to do the same.
The Sucker and Roper are told to stick together for the next few days, and the Spieler will check in with them daily.
Eventually, the Sucker's check clears, and amazingly, the Roper's check has just cleared as well.
Time for the Spieler to call the exchange. He asks about the $62,000 Mexican Petroleum deal with Sam Bradford and Ray Peterson. The Bookmaker says he only has an account for a J. Bradford and a J. Peterson. Hmmm.
Seems that money in the bank for Sam Bradford and Ray Peterson won't do it. The names aren't right. The Spieler got it wrong, and didn't take the time to change it, and now things are all screwed up.
The Bookmaker agrees to let them bring the money in cash to testify to their liquidity and satisfy the credit orders. So, the Spieler sends the men to withdraw their money, and meet him downtown.
The Spieler takes the Sucker to his bank, and fingers him for the Tailer. The Tailer is heavily armed and won't let the cash-heavy Sucker out of his sight.
The Roper and Sucker return to their hotel. The Sucker carries his cash, and the Roper has his boodle, fake bundles of cash from the Lookout.
The Spieler checks the money, then says he's been called away that afternoon, but has a few trades to make first. They should head down to the exchange straight away.
They proceed to the exchange, with the Tailer following. Upon entering, the Tailer discreetly joins the Manager in another room, and the Spieler, Roper and Sucker approach the Bookmaker.
The Bookmaker checks their money, gives the men their credit orders, and places the money on the table. He says "I wish you'd called earlier. I need the record sheet of that day's business to close the deal." The Bookmaker calls the home office and requests that the sheet be delivered, then tells the men they might have to wait an hour or so.
The men ask for a private room again, and the Spieler says he has trades to make. He'd like to use some of the money they have coming for his trades. The Bookmaker agrees, stamping the Spieler's statement "OK". He can now use it to trade as if it were cash.
The three men go for a cold drink, leaving the cash behind. A boodle package is made up to replace the Sucker's cash, which is promptly spirited away by the Manager to a bank safety deposit box. The Tailer keeps an eye on the Manager as he goes to the bank.
Now the men return to the exchange. Their money seems to be right where they left it as they retire to their room.
The Spieler pretends to make a trade for his company, then tells the Sucker to make a trade too. Trade $1000 out his statement, and sell Standard Oil open at 60, close at 58. Sell, of course, means that you are betting the stock will go down.
The Sucker makes the trade. A few minutes later the stock has acted. The Sucker cashes in for a $1000 profit, which the Bookmaker hands him.
The Spieler makes another big trade and returns to the room with a sell ticket.
Now he turns to the Roper and tells him to make a trade with $5000 out of the statement, plus the $1000 cash that the Sucker just made. "Tell the Bookmaker you want to sell Studebaker open at 84, close at 80."
But the Roper screws up again, getting a buy ticket instead of a sell ticket.
The Roper returns to the room and announces he has made them a fortune, that he has bet all the profit, all $40,000. The Spieler rebukes him for betting with everybody's money, though of course they won't lose it. He asks to see the ticket.
The ticket, of course, is all wrong, and they are about to lose all their money. They rush out, desperately hoping to change the ticket, but the stock has acted, down ten points.
The Spieler attacks the Roper, and they wrestle. The Bookmaker threatens to call the police. He tells the men to go have a seat, and that he'll call the main office to have the men investigated. Soon after, the three men rush from the building.
At this point, the Spieler says he must leave town, but if the Sucker wants to come to San Francisco, they can make a few trades there and get his $20,000 back. The Roper, however, can fend for himself.
But the Roper wants another chance. Seems he can get another $5000 to $10,000, but he'll have to go home to get it. The Spieler agrees to meet the Roper in San Francisco if he brings the money.
The Spieler gets a ticket home for the Roper, and puts the Sucker on a train to San Francisco. He will be taking a different train, he tells the Sucker, to allay suspicion, and that they should meet at a certain hotel.
The Sucker will never see either man again.
A telegram finds the Sucker in San Francisco telling him to meet the Spieler in Chicago. In Chicago, another telegram says the Spieler has been called back to New York, and to meet him there. Finally, a telegram tells the Sucker to return home and wait.
At this point, he may go home and sulk quietly, or return to Denver and contact the police.
Should he do this, he'll be escorted around town by a couple of crooked cops, who, at the Fixer's request, do their best to confuse him. In the meantime, the Manager gets the guilty cons off the street. The evidence is gone.