Episode 05: Membership Has Its Privileges
Hindsight is 20 / 20, but can be a little late. More importantly, how’s your foresight?
Everyone wants in, but membership comes at a price. Amongst our wealthy, two stockbrokers vie for new clients, but one is running a Ponzi scheme. More recent schemes come to light both in relation to Broadway’s Hamilton and Nascar. Even Warren Buffet is not immune.
Archival music provided by Past Perfect Vintage Music, www.pastperfect.com.
Publish Date: June 11, 2020
Length: 19:24
Opening Music: My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands
Section 1 Music: Nightfall by Benny Carter & His Orchestra, Album Nightfall – Sophisticated Jazz Classics
Section 2 Music: These Foolish Things by Benny Carter, Album Perfect Blues
Section 3 Music: Top Hat, White Tie and Tails by Carroll Gibbons & Boy Friends, Album Sophistication – Songs of the Thirties
End Music: My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands
AS THE MONEY BURNS
Podcast by Nicki Woodard
Episode 005 – Membership Has Its Privileges
00:00
[Music – My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands]
AS THE MONEY BURNS is a deep exploration into the lives of actual heirs and heiresses to some of America’s most famous fortunes and what happens when the Great Depression hits.
Each episode has three sections. Section 1 is a narrative story told with some creative license. Section 2 goes into the historical facts behind the scenario and analysis of sources. Section 3 focuses on contemporary, emotional, and personal connections.
Now back to AS THE MONEY BURNS
00:30
Title
Membership Has Its Privileges
[Music fade out]
Episode Tag
00:37
Large amounts of money always come with those scheming to get it. And anyone, young or old, can be prey or predator. That’s why the company you keep and trust is most important.
Hindsight is 20 / 20 but can be a little late. More importantly, how’s your foresight?
00:56
[Music – Nightfall by Benny Carter & His Orchestra, Album Nightfall – Sophisticated Jazz Classics]
Section 1 – Story
[Music fade out]
01:05
Back in Newport, Rhode Island, while the young cavort at the beach and tennis courts, the adults busy themselves with their teas, card games, and yachts.
In the summer of 1929, Barbara’s father Franklyn Hutton is applying to join the Ida Lewis Yacht Club. Here the stratification of old money versus new is even more striking. Remember everyone battles the pecking order in Newport.
Engrossed in conversation, Nanaline Duke strolls around with the illustrious Cobina Wright, as conspicuously rich as they come but exudes a warmth and joviality that sets her apart.
Franklyn nurses his whiskey while his wife Irene sips her tea. She’s still wide eyed and starstruck when mixing among the elite. Despite the seemingly jolly air, there’s little room for error in this pool of bluebloods. He urges her to mingle.
Irene protests, “You can’t turn around and not bump into a Vanderbilt or Rockefeller.”
02:01
Crossing within earshot, ever the quick wit Cobina interjects, “Everyone changes marital partners like dancing partners these days. It makes it awfully hard on the guest lists and invitations.”
Irene welcomes the first sign of acceptance in an unaccepting crowd. Nanaline attempts to move forward, but Cobina stays planted. Her equally showy husband, the prominent golden curly-haired stockbroker William May Wright, aka Bill, comes up and pecks her on the cheek.
Bill hands her a refreshed drink, “Lively crowd today.” As the reigning Society couple, Cobina adores these moments when he is so merrily charming.
Accepting the drink, Cobina nudges, “There’s Bob Goelet. With money to burn now that his mother’s passed on.”
The happy go lucky older heir Robert “Bob” Goelet struts about wearing a silly old style admiral hat. Any stockbroker worth his salt would be chomping at the bit. Bill and Hutton exchange looks.
03:00
Throwing the gauntlet, Bill challenges, “Ready to go in for the kill?”
Hutton muffles a contemptuous snort. “What’s this I hear you’re buying the Mayflower?”
Confused Irene asks, “The actual Mayflower? Can that sail?”
“No silly, the presidential yacht.” Hutton is not amused at his wife’s glaring stupidity. Irene remains lost. Cobina, Bill, and Nanaline avoid eye contact to stifle laughter.
Unable to resist the urge to brag, Bob comes over. “Purely for sentimental reasons, never should have left the family.”
Always a kiss up, Bill encourages, “When is the champagne re-christening?”
Bob laughs and throws up his hand in false cheers. As he toddles off, the two stockbrokers practically salivate.
Bill chases after Bob. Hutton stays with the ladies. He knows the game well. Then again, he rethinks it and catches up to the men.
03:54
Irene sighs, “I guess they’re off to compare bank accounts and stock shares.”
Nanaline scowls over the idea of missing a juicy stock tip. She bristles, “It’s impolite to discuss business at these affairs.”
“With all this money, that’s surprising.” Irene huffs.
Humored by the new interpretation, Cobina inquires, “And how is that?”
“Well, I figure how else would anyone know their status.” Yes, Irene is fairly clueless.
Nanaline snaps, “Status is not based on as crude as matters as amounts.” If only, Nanaline could be that lucky.
“Oh,” Irene sheepishly fidgets worried she’s offended her new friends.
04:35
Warmly, Cobina interjects. “The actual amount of wealth is arbitrary compared to when accumulated. Fortunes pre-Civil War are more important than post.”
Chipperly, Irene exclaims, “The Woolworths like the Dukes have been wealthy for a while, so they must be pre-Civil War.“
“Post Civil War.” Nanaline corrects through clenched teeth. Oh, how she hates the reminder.
“There are several factors to consider. Once you figure out the system, it becomes clearer how to navigate.” Cobina relays, “Tier 1 are those born into a dynasty – the Astors, Vanderbilts, Van Alens, Goelets… Additional access granted by marriage only. Tier 2 are those who have spent time in the system, maybe lesser old money or newer wealth that have proven themselves. Tier 3 new money that needs some time to learn the ropes. Talent, skill, or marriage may elevate one up from a lower level.”
05:32
From afar, Cobina spots Daisy Van Alen making her way around the room. “One of the best ways to get on the ladder is to score an exclusive invite. Have Doris and Barbara been invited to Louise’s debut?” Both Nanaline and Irene demur a no. “Well, we must remedy the situation immediately. Daisy’s approval would be a great boon for both girls.”
While Nanaline delights at the idea, Irene is in utter terror. Sugarily sweet, Nanaline suggests, “Maybe you should refresh your drink. You look a bit flushed.” Nervously, Irene recuses herself.
Hooking her arm into Nanaline’s, Cobina conspires, “You know a Duke – Van Alen match would be wonderful.” Nanaline smiles at the notion.
06:17
A bit later as the afternoon begins to wind down. Daisy politely says goodbye to Nanaline and Cobina as Bill rejoins them.
“How did it go, dear?”
“We’re going on a Mayflower excursion within a week.” He beams that million dollar smile.
Both quite tipsy, Bob and Hutton chummily leave the lighthouse. Left behind, Irene hustles out the door to catch up with her husband. Hutton – 1, Bill – 0.
To his female companions, Bill shrugs and downs his scotch. “How can one join a yacht club without having a yacht? Don’t get me wrong the Huttons are brilliant stockbrokers, but their success has been mostly due to marrying up.”
“There’s nothing wrong with marrying up. I certainly did.” Cobina toys with her necklace.
07:01
“My dear, you fell from the heavens. A shining star on the stage and on my arm.” Cobina playfully slaps her husband, who catches then kisses her hand. “Doesn’t she sparkle?” He shows off her jeweled hand to Nanaline, who nods in agreement.
“As for Hutton, who rents in Newport? Makes me fear for poor Barbara. What will be left when she comes into her inheritance? Nanaline, Doris is so fortunate she has you looking out for her interests.”
07:34
[Music – These Foolish Things by Benny Carter, Album Perfect Blues]
Section 2 – History & Historiography
[Music fade out]
07:48
The 1920s was a time of excess and exhuberance. And 1929 is plenty more of the same, during that summer the bull market hits record highs. The rich need to stay rich and that means their money needs to be earning more money.
And there is no better way than through investments. Thus we feature two prominent stockbrokers making their way by making money for others.
Franklyn Hutton was not born of the silverspooned set, far from it. His father left the Ohio farm and moved to Manhattan but died in 1885, leaving his widow with 3 young children. In abject poverty, the family scrambled to make ends meet. Still determined and hardworking, they found ways to continue their education. Upon finishing school in 1904, Franklyn joined his older brother Edward Francis, more popularly known as E.F., on the New York Stock Exchange. Within a couple short years, they would form their own independent brokerage firm.
08:45
E.F. was insistent on having an office in San Francisco – the first one on the West Coast and they installed a direct telegram line to New York. This became an essential part of their success and downfall. The 1906 San Francisco earthquake and the subsequent fires were devastating, but E.F. sent word to New York liquidating all West Coast assets and protecting their clients. Something that would take nearly a week for the rest of the country to catch up.
But the damage was too much, and the firm was struggling and about to close. Only, Franklyn had made an advantageous marriage to Edna Woolworth, and his father-in-law Frank W. Woolworth, guru behind the five and dime mercantile store, loaned him the money to bail the company out. The brothers then did the hard work of learning from failure and building a successful Californian firm and making it one of the most prestigious on Wall Street – E.F. Hutton brokerage firm.
09:38
Franklyn’s marriage to Edna was not as successful. They had a child Barbara, and Edna would tragically die in 1917 pre-deceasing her parents. When Woolworth and his widow eventually passed away over 7 years later, Edna’s portion of the inheritance went all directly to Barbara, with Hutton managing the funds.
Franklyn was an odd man in his own right. He loved his alcohol and women. A serial philanderer. He could also be extremely tight fisted, never spending his own money when possible. Avoidant of adding unnecessary ongoing expenses, he would borrow his brother’s yacht and rent the Beach Mound estate in Newport.
As a father, he took very little interest in Barbara but was extremely focused on her estate. Since Society membership required certain items, on Barbara’s behalf he would petition for court approval to purchase a luxury railcar, townhome, or whatever else large expense as the trust required. The kicker – every expense would be times 2. Whenever Barbara got something, the poorer Irene needed to get the equivalent. Barbara’s invite to join the Social Register also meant it was time he could apply for membership at the Ida Lewis Yacht Club, despite not owning a yacht himself.
10:51
His brother E.F.’s second marriage in 1920 was to Marjorie Merriweather Post, an exceedingly wealthy heiress to the Post Cereal fortune – $250 million in 1914 (today over $2.5 billion). With E.F.’s assistance, Marjorie would buy out rival companies renaming the company General Foods in 1929. The couple led a very conspicuous and lavish lifestyle.
From Society’s perspective, the brothers’ success in the stockmarket was nothing compared to their marital conquests.
11:22
Golden boy William May Wright was a whole other breed. His name reveals it all. His paternal last name Wright is not of much note, and his father abandoned the family very early on without financial impact. For it is the “May” where the connections lie. On his maternal side, the Mays were beautiful, famous, and prestigious with deep ties to Newport. Generations upon generations of wealth. Several relatives married into the various royal houses in Europe. Illustrious and glamorous.
Not content to merely be a wealthy heir. He set out to make his own through the stockmarket and did more than quite well for himself. He had an advantage in that he already knew the bluebloods, being one himself, and association with him was definitely top tier.
12:07
Adding to the allure, Bill’s second marriage was to Cobina, a talented coloratura soprano opera singer (the top soprano with highest vocal range, think Maria Callais or any noteworthy soprano is a coloratura). She left the stage to be his doting and dedicated wife becoming one of the best Society hostesses. They had a curly headed blonde child Cobina Jr, and the couple dazzled everyone with their luxurious homes and fabulous parties. For while Cobina married up, she never forgot her entertainment friends, and she was a mix master at bringing a group of people together. Everyone would come – the rich wanted the stars and the stars wanted to hobnob with the rich. The Wright parties would last well into the night.
Ever hear of the Circus Circus Ball? One of the biggest ongoing events in New York City… That began as Cobina’s annual homage to her husband. Elaborate & fanciful, everyone wanted to attend in the full costumed regalia.
It is very important to get in good with the Wrights all around.
13:08
Remember Nanaline is desperate to give her son Walker an equitable fortune to Doris’s. For that insurmountable task, she needs better investments. She wants sophistication, social status, and lots and lots of money. Hutton has a competing interest as there has been a Duke – Hutton rivalry among the parents since the girls’ births.
But Bill won’t take just anyone and doesn’t need to. Nanaline needs to play her cards right to win both money and prestige.
13:36
[Music – Top Hat, White Tie and Tails by Carroll Gibbons & Boy Friends, Album Sophistication – Songs of the Thirties]
Section 3 – Contemporary & Personal Relevance
[Music fade out]
13:55
But whether boom or bust, there is always ALWAYS a financial scam happening. Ponzi schemes feed on boom and get exposed during bust. So the only question we have, is what is about to be exposed and what is about to begin?
Tragedy has no effect on the greedy. For them, it’s merely an opportunity.
14:22
Almost immediately, the United States federal stimulus package has been linked to fraud attempts. This week while working on this exact episode, someone posing as an old family friend messaged me regarding my winning the Facebook lottery, another phishing scam.
To reconstructing the scam starting in this episode, I will rely on my own personal experiences along with modern news stories to flesh out personalities and patterns.
14:47
In time we will cover Bernie Madoff and other frauds like the Fyre Festival. By the way due to the current health crisis, Billy McFarland requested a compassionate release from his 6 year prison sentence in April 2020 to protect himself. His request was denied.
But for now I want to highlight two more recent Ponzi schemes:
15:06
In April 2018, Joseph Meli was sentenced to 6.5 years in prison for a classic shell game with a twist. He purported to have an inside track to resell unsold tickets to the popular Broadway hit Hamilton, later adding Harry Potter and The Cursed Child, Adele, Justin Bieber, Katy Perry, Ariana Grande, among other musical events to the list. Overall, he defrauded 138 investors out more than $97 million dollars in a classic shell game, from which $51 million went to fund a lavish lifestyle – an East Hampton house, 2017 Porsche, private schools, camp tuitions, and casinos. Not so surprisingly while still serving time, Meli was caught again in May 2019 trying to again sell Broadway and boxing tickets. Busted via an errant email.
15:57
In January 2020, SEC filed charges against a Californian couple, little known auto mechanic Jeff Carpoff and his wife Paulette. From 2011 to 2018, their company DC Solar claimed to build and lease over 17,000 mobile solar power generators. Providing clean energy and tax benefits. It was a legitimate business in 2009, and it quickly grew, and within 2 years problems arose when interest far outmatched current production capabilities.
16:29
The scheme ran up to $910 million, the money mostly went to their lavish lifestyle like having rap star Pitbull perform at their 2018 company holiday party and included Nascar Xfinity series, both hosting the Las Vegas DC Solar 300 race in September 2018 (since renamed) and sponsoring with Chip Ganassi Racing a team that quickly ended which temporarily cost driver Ross Chastain a ride. Kyle Larson’s winning Camaro was put on auction to recoup costs. Though not an investor, Nascar took a brunt hit. Days before the February 2019 Daytona 500 over 3 dozen of their generators failed. Nascar is now in lawsuit with SunTrust bank over unpaid rental fees. AT&T would be another customer left with defunct product.
17:22
Now if that doesn’t sound crazy enough – the nearly 1 billion came from only 17 investors. 17!!! How? Well, it was a very elite set of investors – paint manufacturer Sherwin-Williams ($77 million), Progressive insurance ($156 million), and Berkshire Hathaway with subsidiary Geico suffered a $377 million loss, mostly due to an IRS charge correction to their amended tax returns in the wake. Yep, you heard right – Berkshire Hathaway, the supreme investor of all time — Warren Buffett.
If the Sage of Omaha can get sucked in, do you really think you are immune?
18:04
Oh, and don’t forget the IRS will always get its money. Though back when our story begins, it wasn’t even an entity. But it will soon make its mark. Death and taxes are the only guaranteed things in life.
Broadway, racing, taxes, and scams,… so much to cover, but we have plenty of time.
Would love to know your opinions and speculations on with whom you would trust your money… Please come to any of our social media and tell us your guess. You can find us at As The Money Burns on Facebook, Twitter, and Instagram, links available via the website too.
Hook
18:33
[Music – My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands]
Next when we return to AS THE MONEY BURNS…
Games for fortunes often involves games over the heart, and some of those best players can be found on the polo fields.
Until then…
Credits
18:45
AS THE MONEY BURNS is an original podcast written and produced by Nicki Woodard, based on historical research. Archival music has been provided by Past Perfect Vintage Music, check out their website at www.pastperfect.com.
19:23
THE END