Episode 97: Dummy Accounts
One couple deals with more betrayal when litigation publicly reveals financial secrets.
#CobinaWright, #Ponzischeme, #Ponzi, #litigation, #settlement, #dummyaccounts, #fraud, #cheating, #affairs
September 23rd – October 27th, 1932, William May Wright, aka “Bill,” returns to New York to deal with litigation involving his former stockbroker firm. Cobina Wright hopes that they will be able to rekindle their relationship, but other troubles arise from the lawsuit as their financial troubles are announced in the press.
Other people and subjects include: Lil Cobina Wright, Jr., Doris Duke, Nanaline Duke, Walker Inman, James H.R. Cromwell aka “Jimmy,” Jessie Woolworth Donahue, cheating, affairs, Wall Street Crash of 1929, Wright, Slade, & Company, Shields Company, stockbroker, Ponzi scheme, pyramid scheme, dummy accounts, shell game, accounting, fraud, Casa Cobina, tracking down past details, 1932 court case, cheating, affairs, different language and wording, losing home to IRS, parental divorce, Savings and Loan, Arthur Anderson, Enron, other losses, cycle of history
Archival Music provided by Past Perfect Vintage Music, www.pastperfect.com.
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Publish Date: October 29, 2023
Length: 24:12
Opening Music: My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands
Section 1 Music: A Foggy Day by Carroll Gibbons, Album Sophistication 3
Section 2 Music: Nightfall by Benny Carter & His Orchestra, Album Nightfall – Sophisticated Jazz Classics
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 097 – Dummy Accounts
Outline
Litigation
Ponzi scheme
00:00
[Music – My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands]
AS THE MONEY BURNS is an original podcast by Nicki Woodard. Based on historical research, this is a deep exploration into what happened to a set of actual heirs and heiresses to some of America’s most famous fortunes when the Great Depression hits.
Each episode has three primary sections. Section 1 is a narrative story. Section 2 goes deeper into the historical facts. Section 3 focuses on contemporary, emotional, and personal connections.
00:28
Story Recap
Rumors fly around the world involving another Mdivani divorce and Stotesbury financial troubles. Rumors that are quickly dismissed yet still might be true.
Now back to AS THE MONEY BURNS
Title
00:46
Dummy Accounts
[Music Fade Out]
Episode Tag
One couple deals with more betrayal when litigation publicly reveals financial secrets.
01:00
[Music – A Foggy Day by Carroll Gibbons, Album Sophistication 3]
Section 1 – Story
[Music Fade Out]
01:15
Sipping coffee, overly ambitious Nanaline Duke reads the newspaper and nearly chokes. The newspapers announce a litigation settlement with a stockbroker firm. One with which she had been so interested in investing. Now many lost fortunes in the stock market, but could she have lost a bulk of her independent fortune to a Ponzi scheme before the Crash occurred? Did her friend’s husband betray those closest to them? Nanaline is unwilling to out her own losses. She has other cards to play and another fortune in sight.
01:51
Last fall 1931, supreme hostess and coloratura soprano opera singer Cobina Wright opened the Sutton Club, a dinner and entertainment establishment. It is an immediate hit with clientele and performers. Only the overly generous Cobina has a hard time charging guests for what she once did for free in her home and private life. Every year she threw the elaborate Circus Ball to celebrate her blueblood stockbroker husband William May Wright, aka Bill.
When the Crash wiped them out, Cobina immediately put her Oregon pioneer spirit to work trying to find ways to salvage what they had and build anew. Bill flounders more, slipping into melancholy and becoming more distant. His head not accepting realities and pulling it together.
02:40
But now he’s taking a new swing. Earlier this year 1932 he opens the Professional Security Association, a company to finance people needing business operations. He heads West to prospect for various gold mines. Back in New York, Cobina is on the fence. She loves and wants him to thrive, but the threads in their marriage have been fraying.
And though she puts on a show of devoted and loving romance, she is plagued with fears, mostly of rumors and tidbits of his cheating from even before the Crash. Their own grand love affair turning bland and lifeless.
Recently, Bill didn’t send back any gold but a letter that for Cobina seemed better than monetary gains. In the note, Bill professes his love for Cobina and that he is falling all over again in love with her. A renewed passion and fire. Her gallant knight ready to make it all better.
03:42
September 23rd, 1932, New York
Bill appears in Manhattan as Cobina returns from Europe. They head out for dinner among other notables like Mrs. Sailing Baruch. Will Bill and Cobina put on a show as a seductive and passionate couple dancing the night away at El Patio?
Oh, Cobina remembers their past former glamorous life. Might it all return again?
Those days when Cobina would work on her affairs at a folding table in the limo while the chauffeur negotiates traffic. She is featured in countless magazines giving advice, like hosting a few large dinners a year versus several small dinners which were more troublesome. For clothing, she recommends better to have 2 large shopping trips a year versus helter skelter purchases here and there. Articles discuss their furnishings, their homes, and her fashion. Once Cobina wore a mirror dress by Allan Kramer, tiny little glimmering pieces held together by green chiffon underneath as she walks in and out. A dazzling life indeed for all the world to see.
04:52
Then there are the other articles. The ones in the gossip rags. One female claiming to share an apartment with Bill and suing for aid afterwards. He waived it off as a blackmail attempt after a poor stock trade.
On a previous European trip, a note came for Bill. Curious, Cobina took a peek to see it was from a woman who came all the way to the same city to see Bill. Someone he wanted and expected.
In another incident, their daughter Lil’ Cobina caught him kissing her governess.
Then there was that little accounting snafu, the one when Bill and the executives at Wright, Slade, & Company furiously poured over the books late into the night until they found the $100k error ($2.2 million in 2023).
05:41
All before Tuesday, October 29th, 1929 and the Wall Street Crash.
Some Friday around then, Bill called to inform Cobina they had lost everything. They soldiered on and gave the Last Party that same evening with their friends including richest girl heiress Doris Duke. A night of unease and confusion as everyone wonders who was wiped out and who survived the Crash.
06:09
After that so much has and hasn’t happened since…
Now her fabulous jewels mostly gone pawned to raise the funds for their expenses. Cobina manages to only keep a few that were the most personal of gifts. Large checks from Doris Duke and Jessie Woolworth Donahue were not large enough to last the duration of the financial downturn. The Sutton Club too gone as the small space in their home wasn’t enough to really bring in a profit.
Never one to give up, Cobina switches back to her entertainment roots with the Cobina Wright Dance Orchestras and Gypsy Ensemble assisting with teas, debutante parties, and other social functions. She performs behind the scenes duties for a private debutante event before the annual Tuxedo Ball in 1932. For the hostess services, Cobina charges 10%, which amounts to nothing since such events have nearly vanished in the wake of the Crash.
Amidst all this, Bill briefly returns to New York City to attend to a few pressing matters, mostly litigation involving Wright, Slade, & Company.
07:17
October 27th, 1932
The New York Times announces several embarrassing financial details in relation to the settlement from the day before.
Several former clients and partners are upset and wanting financial restitution. Bill used the firm’s cash and credit without the other partners’ knowledge and approval. Most damning, there seems to be several dummy accounts pointing to Bill defrauding the company around $800k (yep roughly $17.9 million in 2023). Bill agrees to the repayment of $950k (for 2023 a little over $21.3 million) in relation to his former firm.
But how? Well different ways… The dissolution of the dummy accounts,…
08:06
And then more at deeper personal costs…
Like the Wrights’ lovely pink stucco home out in Sands Point, Long Island. Unfortunately, Cobina previously signed a form a few years ago making Casa Cobina collateral. In court, Cobina claims her innocence to salvage the property, but the surmounting costs mean the property is seized. One of the places she loved most now gone. Rumors had already started to percolate that it was going to serve as a nightclub like their Manhattan townhome. Casa Cobina is estimated to be worth $250k (or roughly $5.6 million in 2023), which means more is due for the larger balance.
08:45
Worst and the most painful of all, is the account marked for little Cobina Wright, Jr. The “Little Cobina account” is only worth $4,013 (about $90k in 2023), but it seems to be one of the only accounts that increased while all others were depleted. Thus it too is seized and is to be distributed among the creditors.
Cobina fights back the tears over losing the cherished home, but it is a bitter taste to see her daughter’s future so quickly wiped out. Couldn’t Bill have done a better job at protecting their baby?
09:22
Bill shakes off the settlement claiming they will be back in good standing soon enough from his operations in California. He pours the sugar onto Cobina, and she confusingly soaks in the affection after months of starvation and isolation.
News of their financial predicament hits the newspapers. Only they don’t stop at just the financial losses. Some also suggest a divorce is eminent. Bill dismisses the divorce rumor publicly reminding that papers once predicted the Wrights would divorce early in their marriage which has now lasted 13 years.
Oooh, if the humiliation only ended there…
10:07
[Music – Nightfall by Benny Carter & His Orchestra, Album Nightfall – Sophisticated Jazz Classics]
Section 2 – History & Historiography
[Music Fade Out]
10:20
How do you unravel the past? Language changes, attitudes change, social rules change… So many things to consider when trying to analyze what might have happened versus what was presented in the record, any form of record for that matter.
That is as much true in what happens today and even more so in the past. We are only left parts of a record and not the whole situation. Information lost to time whether not recorded, accidentally lost, intentionally destroyed, or merely lack of interest or understanding.
10:58
I originally learned of Cobina Wright because her name kept appearing in accounts of Doris Duke and James “Jimmy” HR Cromwell’s love affair. I was trying to dig out other surrounding characters and any additional information. In finding Cobina, a plethora of information came out, and her own story was so good. I kept her in my mind and pocket and slowly worked her into the list of additional people to flesh out.
An opera singer with a colorful past and one of the more dramatic and immediate downturns from the Wall Street Crash. It took a few more years as I was constantly revising my tv series pitch to suss out more information.
11:38
And one question eventually arose as to what happened with Wright, Slade, & Company? When going through so much, that would be an easy thing to overlook – a seemingly simplistic end. Nope, there was a gnawing feeling that meant I had to do my due diligence.
And oh my, that led to a fantastic storyline discovery. Much like those stories I would watch on American Greed, so much out in the open and so much hidden underneath.
If I went on face value of Cobina’s autobiography I Never Grew Up, one would assume it was just bad luck and another victim of the Stock Market Crash. Only, that’s not what really happened.
12:24
I managed to uncover a 1932 court case document and then a news article that did not explicitly state at the time but gave all the evidence pointing to a Ponzi scheme. The term is not used directly in the sources, especially not then. I have previously explained the history of Charles Ponzi and his activities leading to his name coined on the pyramid scheme. In the 1930s, Ponzi would never have been used to slander a legitimate business and especially not a blueblooded elite. Today, we are much more cavalier and readily assign the term Ponzi to schemes that so clearly fit the definition.
13:05
Instead, I read through the case and recognized the telltale shuffling of money. The acquiring of new funds that are not then applied as promised. I have a small accounting assistant background from work about a decade ago, so I know how to read certain transactions. However I don’t understand stock trade gibberish. But long before I knew formal accounting, I knew how people destroyed their business in bad transactions, and I can spot shell games on instinct. Plenty surrounded me while growing up, and as previously mentioned the Savings and Loan scandal was prominent in my psyche as my dad’s business associates went down and Houston took a long time to recover. Ironically, Arthur Andersen expressed some interest in me for consulting when leaving the University of Chicago – two years prior to Enron. Both situations involve mismanagement of funds and fraud.
14:02
But reading that court case and then the money shuffle in a New York Times article describing a separate litigation settlement, it is clear Bill (*William May Wright)wasn’t the great stockbroker Cobina claims in her autobiography. In the court case document, there is reference to the founding of the Wright, Slade, & Company in September 1927, the death of Slade in December 1927, and the leaving of the original partners pre-1929 Crash. Thus Bill is the sole founder and head of company though he did expand partnership to others. But he is at the helm. The accounts in question involve “Sanders A. Wertheim Special” and “Maplehurst Farms” and hint at money issues pre-dating the Crash. The litigation in the New York Times article deals with internal company politics and the recoupment of money misappropriated by Bill. The money tabulated after a review of company accounts when the firm is sold to and liquidated by Shields Company, a financial institution. Bill sold their trading seat, and he himself had the only one on the floor, and closed Wright, Slade, & Company in May 1931. The later discovered dummy accounts point to Bill defrauding the company by eh-hem misappropriating around $800k (once again $17.9 million in 2023).
15:19
For what purpose is not clear. Was he deliberately altering the books? What about that night when he and Cobina waited for the accountants to discover the bank error shortly before the Crash? Did he fall into the trap of many in shuffling money to hide losses, with the amounts an ever-growing imbalance, then trapped in the cycle.
Nevertheless, intentional or unintentional, it all catches up, especially when the money stops flowing in. Things like the Stock Market Crash are good at making those mistakes apparent. Already we have Ivar Kreuger and Sam Insull’s companies facing those issues on a much larger scale.
15:59
Now here is one begging question left to ask, could Nanaline Duke have invested with Bill and that is how she lost some of her money? We know she lost a bulk of the money she invested, but she won’t admit it out loud. She was attempting to give an equivalent or greater fortune to her son Walker Inman, who was not a Duke and thus not an heir like his sister Doris Duke. Regardless, Nanaline has more cards to play in the game of fortune.
Remember this is a very intertwining tale, and we might never know how truly tangled it all became in the end.
16:42
[Music – Top Hat, White Tie and Tails by Carroll Gibbons & Boy Friends, Album Sophistication – Songs of the Thirties]
Section 3 – Contemporary & Personal Relevance
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17:04
Up above I described my intellectual & academic research process in uncovering facts, but let me here explain a very personal revelation and how I emotionally relate to the stories I am telling, especially this one.
Growing up I had 3 life defining events that have had the biggest impact on me in chronological order 1) my parents’ IRS audit, 2) parental divorce due to dad’s cheating & concurring simultaneously with the audit, and lastly 3) my brother’s death to cancer.
As for the impact, it’s the reverse order. The death is the biggest of course. Parental divorce definitely complicated as I entered adolescence and struggled socially with the changes. By far, my mom was most upset over the cheating aspect, and she warned me to be cautious in whom I tell. Mostly wanting me to be quiet so as not to spread the humiliation. There’s way more to unpack on that and will save the discussion for some later time. Lastly, the IRS audit was excruciatingly painful.
18:11
For now, I will explain the financial downturn more in relation to the psychology on a young person.
Frequently, I was warned to be prepared that one day I might come home to people either itemizing and tagging our possessions for auction or to have them already sold. Three years of agony in waiting for an outcome I had no way of controlling. The knowledge that the only home I ever knew was about to be gone.
18:37
As my parents split up, I switched from a private elementary school to a public middle school. I had friends in the older grades, but my actual classmates didn’t know me. How was I going to resolve starting off relatively “rich” only to know it was likely to vanish overnight? Years up to that point, my brother had bragged to his classmates, many whose siblings were in my grade, so the other kids were curious to see if I might confirm that reality. No one knew the emanating truth. Additionally, our parents constantly battling against each other was even more emotionally painful. I became withdrawn.
19:17
Dad was still flush in 6th grade but far from it in 8th. We lost our home – something my brother was very angry about even years later. For me, the worst was moving away from beloved neighbors. Though one and closest family has remained in touch to this day. As for material possessions, I vowed to never grow attached to anything that could be so easily lost.
An upheaval, 2 betrayals – familial & financial, then the trials and tribulations of middle school, especially trying to establish new friendships among pre-teen and teenage girls in their mean girl phase of life.
All this made it hard to open up and trust a new group of people.
After all isn’t adolescence difficult enough without the specter of financial ruin?
But such is the randomness and triviality of life.
20:20
I want to digress for one moment to discuss modern world events. We are living in a bizarre time and era. We have collectively experienced major life and culture changing events that while they do occur somewhat cyclically over spans of time, we are at a moment when they are happening near simultaneously.
Great Depressions happen roughly every 75 years, minor depressions / recessions like in the 1970s every 30 years, even smaller ones about 10-15 years. Major plague type epidemics about every 100-110 years. A major war, civil or bordering neighbors, every 75 – 100 years. Certain extreme weather patterns every 500 years (storms, droughts, fires,…) every 500 years. Massive migration (Huns, Slavs, Mongols, Turks across Asia & Europe, the Americas) every couple hundred years. The seemingly anachronistic shattering event inducing hysteria confined to one time period and a particular issue, the Crusades, the Salem and various worldwide witch hunts, the Inquisition, the Holocaust,…
21:32
All things spread out just enough that contemporary people tend to forget what patterns led to the more preventable situations. At the core of our current issues is people holding onto long ago grudges trying to right past wrongs in the present while ignoring that other things are now happening and more wrongs are surmounting. Will there be retribution for these current situations too?
21:56
I know it seems so trivial to study the lives of dead rich white people from long ago who have no immediate function in our daily lives. But this is a study on people who were touted, glamorized, villainized, and torn down during their lifetimes. It’s a re-humanization of people for whom there is a large proclivity to hate due to envy over one detail, in this particular case – money. It’s so easy to build hate and instigate the will to destroy. Far, far too easy.
Hopefully, we can all get past our hurts, our pains, and anything that might make us susceptible before those frustrations lead to more and very real dangerous results.
22:47
The holiday season is upon us. First with Halloween then Thanksgiving, Christmas, and ending with Valentine’s Day. If you are interested in having some fun apparel and items for either gifts or just to perk yourself up, check out MonsterGal Designs Lab at Etsy. This crazy lab is constantly making new creations with fun monster themes.
Links in the notes and transcript. That’s MonsterGal Designs Lab on Etsy.
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Hook
23:21
[Music – My Heart Belongs to Daddy by Billy Cotton, Album The Great British Dance Bands]
Next when we return to AS THE MONEY BURNS…
When one door closes, another opens. How might an eviction lead to a brand new life in a luxury hotel?
Until then…
Credits
23:40
AS THE MONEY BURNS is an original podcast written, produced, and voiced 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.
Please come visit us at As The Money Burns via Goodpods, Twitter (now known as X), Facebook, or Instagram. Transcripts, timeline, episode guide, and character bios are available at asthemoneyburns.com.
24:10
THE END.