Although many people think that it was Carlo Charles Ponzi who invented the Ponzi scheme, William “520 per cent” Miller and his Franklin Syndicate scam may have given Ponzi the example for such kind of fraud.
Little is known about his youth years. He was an office-boy and clerk, trying to make money in the stock market but failed. The Franklin Syndicate was founded in March of 1899 with partner Edward Schlessinger. He promised 10% per week returns on all money invested, claiming that “the way to wealth is as plain as the road to the market”.
His first clients were his Sunday school friends. Very quickly people flowed to Miller’s Syndicate hoping to get rich fast. Miller even initiated an advertising campaign placing ads in 800 newspapers. To increase his credibility, Miller hinted that he had “an inside pull” and “a sure thing” on Wall Street, and that he regularly went to New York City to consult with brokers. But rather than “invest” the funds, Miller and Schlessinger simply divided the money between them. In the end of 1899 there were 12,000 depositors with daily money inflow worth $ 60,000, Miller and Schlessinger were rolling in it. The stream of gold became a rushing torrent. Every Monday morning the Floyd Street house was crowded with depositors who drew their interest, added to it, deposited it again. Depositors received checks for their interest drawn upon “The Franklin Syndicate,” together with printed receipts for their deposits, all signed “William F. Miller”.
However, Schlessinger, who was more realistic, demanded his share to be paid in cash daily. Schlessinger carried his off in a bag; Miller took the rest, cash, money orders and checks, and deposited it in a real bank.
Another problem presented receipts bearing Miller’s name. The third partner, Col. Robert Ammon, offered a solution to the problem. They informed depositors of incorporating The Franklin Syndicate, proposing them to exchange their receipts for stock certificates.
Alarm bells began to ring when there appeared articles about Miller’s scam in mass media. But officials couldn’t find any depositors to testify against Miller. fearful of being drawn into a possible scandal, the Broadway Bank in New York as well as the Hide and Leather Bank closed Franklin’s account. Partners of the Franklin Syndicate thought over escaping. The “Franklin Syndicate” had collapsed on November 24th, 1899, when, under the advice and with the assistance of Ammon, Miller fled to Montreal, entrusting Ammon almost all the money he collected, approximately $ 250,000. Eventually he was caught and sentenced to 10 years in prison. Ammon represented Miller in caught as an attorney and in return for Miller’s silence about Ammon’s involvement in The Franklin Syndicate the latter offered to pay $ 5 weekly to Miller’s wife and daughter.
While still serving out his sentence, Miller witnessed in court against Ammon, who was himself on trial for receiving over $30,000 in stolen money from the Syndicate. Due to Miller’s testimony, Ammon was convicted of receiving stolen money and sent to prison in 1903.
Edward Schlessinger was never caught but was rumored to have fled to Paris, where he presumably lived on his con gains.