"Ponzi" project: In a word association game the name "Ponzi" typically triggers the reply "scheme."

Its namesake, Boston con man Charles Ponzi, found fame and fortune in 1920 through a pyramid scheme in which he stole as much as $15 million from gullible investors. Ponzi's name has lived on since then as a standard reference in news reports about today's big business scandals. At various times over the past 30 years, Ponzi's story has come close but never quite managed to reach the movie screen.

Ponzi's twists and turns as a movie project were the focus of my recent conversation with Donald Dunn, a former editor of Business Week, whose much-optioned 1975 hardcover book about Ponzi will be back in bookstores and on Internet book sales websites starting Mar. 23 as a Broadway Books paperback "Ponzi, The Incredible True Story of the King of Financial Cons." Originally published in hardcover by McGraw Hill as "Ponzi, the Boston Swindler," the book's film and television rights were optioned from Dunn by various producers over the years. Now with a paperback edition about to surface for the first time, Dunn again controls all rights to the project. Given the headlines that Ponzi-type con men have been generating lately in the business world, this could be perfect timing for a Dunn deal for a Ponzi feature or mini-series.

"The way it began is I wrote a Business Week story (in 1974) about some guy who had started with nothing and built a big company overnight," Dunn told me. "Lew Young, the editor in chief, called me into his office and said, 'This guy has shown amazing growth. Are you sure it's not a Ponzi scheme?' I said, 'Absolutely not. I've checked it out. His figures are good. Everything is fine.' He said okay and they ran the story. As I walked out of his office, I turned to another guy I met in the hall and I said, 'What the heck is a Ponzi scheme?' I had not heard the name. And the guy said, 'A Ponzi scheme is some kind of a swindle.' Within the next two weeks, every time I opened a newspaper or a magazine I saw the name Ponzi. Once you hear it, it jumps out of the page."

At that point, Dunn decided to look for a book about Ponzi to find out more about him. "Well, there wasn't," he said. "There were magazine articles. I'd already written the book 'The Making of 'No, No Nanette' (about the inside story behind the production of that hit Broadway musical). That ran in New York Magazine and was their first two-parter. Clay Felker, who started New York, said the story was too good to condense into one issue. That was in 1973. After that ran in New York Magazine, a woman called me up and said, 'Don, my name is Elizabeth McKee and I'm a literary agent. I work with the Harold Matson Company (in New York).' I could tell she was in her seventies. She said, 'I just read your wonderful piece in New York Magazine. Have you ever thought of turning that into a book?' I said, 'It is a book. What you read in New York is a condensation of the book.' She said, 'Oh, yes, I see the little footnote here. Well, if you ever come up with anything else, I'd like to represent you.'

"So I now had an agent. Now, I'm looking for a property. I see no book has ever been written about Ponzi. So I start doing research. Now this (story took place in) 1920 and I was here in 1975, 55 years later. I said, 'Who's alive? Whatever happen to this guy Ponzi?' I did research. He was convicted and all that. He had been married, but he had no children. I started calling people in Boston at random. If I found a magazine article and it mentioned the name of an investor or a prosecutor, I called them. Everybody would say, 'That's 50 years ago. I don't remember that.' Or, 'So-and-so died.' I was trying to find out whatever happened to Rose Ponzi, who was Ponzi's wife. Ponzi was 38 and he married this 19-year-old woman named Rose Gnecco. So I started calling every Gnecco I could find in the phone book. Of course, they'd say, 'I don't know anything about that. I'm not a Gnecco.' There were only a couple in the Boston phone book. Finally, I ran into one person who said, 'Oh, I think that's my Aunt Rose.' I said, 'Is she alive?' According to the research I had done, she had been divorced and had changed her name and never remarried. Anyway, I found out that Mrs. Ponzi from 1920 was alive and living in Florida. She was living on the island where Al Capone had retired to when he got out of jail."

Dunn had read magazine stories saying that that when Ponzi was arrested and deported to Italy the police had only been able to find $2 million of the $10 to $15 million he'd swindled investors out of. "So Ponzi might have hidden away millions of dollars," Dunn noted. "After a lot of trouble, I got in touch with this woman in Florida, who it turned out had remarried, and she did not have millions of dollars. She hated Charles Ponzi. For 10 years she'd been married to him. He had left her with nothing except a lot of bills and (having to take) care of his 85 year old mother. He'd gone off to Italy. She did not want to go to Italy. She had nothing good to say about him. He had taken from her, from her father, from her family. Everybody had been swindled."

Of course, that's what swindlers do -- they swindle. "He was a charming swindler," he observed. "She had married a guy who worked at a concession stand at a dog track in Miami. They lived in an apartment over a garage. She had worked at that concession stand for like 25 years. She refused to give me an interview."

Of course, Dunn didn't take her first no for an answer. "Once she came to visit somebody in Boston and I drove up there with my two little girls," he recalled. "And I said, 'Mrs. Ponzi, please give me an interview so my two little girls can go to college, maybe.' She finally relented, grudgingly. But she kept saying, 'It's all so long ago. 1920. I can't remember.' Okay, I write the book and it's published by McGraw Hill. It comes out and gets good reviews. Just about the time it's published, Mrs. McKee, my agent, calls and says, 'Don, I had a call from a Hollywood agent names Adams, Ray & Rosenberg and they think the book could be a movie. I don't know anything about a movie deal so I said we'll split the commission if they can do something with it. Is that all right with you?' I said, 'Yes, that's wonderful. Hollywood.'"

And with that Dunn began what turned into a series of options for film rights to his Ponzi book that provided him with a steady trickle of Hollywood money for many years to come. "The week before (the book was) published I got a call from Mark Rosenberg at Adams, Ray & Rosenberg. I have this on tape. He called me at the office and somebody said, 'There's a call from Hollywood.' I immediately switched on my tape recorder. Mark Rosenberg -- we had never met -- says, 'Don, we're handling your book out here. We've ordered 200 copies from McGraw Hill that we want to distribute, but they haven't arrived yet. Meanwhile, there's a producer named Gabe Katzka. He saw your book in the bookstore and he called us and he wants to make an offer.

"I said, 'Gabe Katzka? Who is Gabe Katzka?' He said, 'Well, he produced (a film) called 'Demon Seed' with Julie Christie and he's got a deal with Universal Pictures.' I said, 'Okay, that's good enough for me.' And he said, 'He's offering 50 against 150.' I said, 'What does that mean?' He said, 'Well, $50,000. That's for the option. And another $100,000 when the picture's made. Now why we're calling (is) to ask you, Do you really need the money now?' I said, 'Well, what do you mean?' He said, 'We think we can do better. We haven't had a chance to get the book around. The books haven't arrived yet. So there's three things we can do. We can wait till the books arrive and (then) we think we can get a bidding war going. Or we can take this deal as it is. Or we can go back to Katzka and say, 'We don't want 50 against 150. We want 150 now.' I said, 'Yeah, what do you recommend?' He said, 'Well, as I say, we think we can do better. Now there is the possibility he'll say no. There's the possibility he'll go up a little bit. We just wanted to discuss the options with you.' And I said, 'I think that's wonderful. You guys know the business out there and I don't. So I guess I'll rely on your advice.' He said, 'We'll get back to you. I think we're going to go and ask for 150 as a flat deal.'"

Two weeks went by and Dunn, having heard nothing else about the hot deal, called Rosenberg to ask what happened. The answer, according to Dunn, was, "'Oh, Katzka walked.' I said, 'What does that mean?' He said, 'Well, he just said forget it, he's got other things to do. But don't worry, so-and-so at Paramount is very interested in it. So-and-so over at MGM is very interested in it. Don't worry. We'll get back to you.' Another two weeks go by and I called up and if you name any top movie star from '75, they were interested in the book! Finally, three months later I get a call from Mark Rosenberg -- 'Don, we've talked to Katzka. He's willing to pick up the book for a one year option. He's willing to offer $5,000 against $15,000.' I said, 'This is the same Katzka who offered $50,000?' He said, 'Well, frankly, we've shopped it around out here and we couldn't get any interest. It's a costume picture. Nobody wants to make a costume picture right now.' I said, 'What's your advice?' He said, 'I think we ought to take it.' So I said, 'I have a great story here about a top Hollywood agent that sold a property for $45,000 less than they were offered.'"

Dunn explained that at that point he'd learned his lesson: "You take the money and run, as Woody Allen once said. From there on, Katzka came back. I have a letter here in front of me from (producer) Herb Jaffe. Katzka worked with Herb Jaffe. There was suddenly a big matter of getting Mrs. Ponzi to sign a release. She would not allow herself to be portrayed in a motion picture. I made another trip up to Boston where I begged and pleaded with her. She did not want Ponzi's name mentioned. She did not want anyone knowing that Mrs. Ponzi was still alive. People believed that she had their money, that Ponzi had given her millions and that she would get it back. She was getting phone calls (years earlier) and people were standing outside her door trying to get their investments back. She signed the release, promising that I would never reveal what her (new) name was. So I have the only release from Mrs. Ponzi allowing for her portrayal in the picture. She's dead now. She'd have to be. But (with) this release, she could be portrayed and T-shirts could be sold and all that.

"Anyway, Katzka and Jaffe paid the five grand. They (subsequently) renewed for a second year at $7,500. I have a letter here from Mr. Katzka to Mrs. Ponzi saying, 'I want to thank you for signing the release and let you know that the actor Peter Falk is going to play Mr. Ponzi. Everything will be portrayed factually' and all that. And I have a letter from Herb Jaffe (saying), 'On behalf of myself and Gabe Katzka I want to thank you for your efforts in obtaining the release from the former Mrs. Ponzi.' Anyway, Peter Falk was going to play it and, at one point, Patrick McGoohan was going to direct it. And every female name in Hollywood was going to play Mrs. Ponzi. Two years go by and they dropped it."

Two years after that, Dunn continued, "Two guys walk into my office and say, 'My name is Gary Richardson and I'm Richard Reber. We've done some television commercials in the mid-West. We saw your book. Has it ever been made into a movie?' I said, 'No, it hasn't.' They said, 'Well, we have no money. We're going to go to California. But if we have this property, we know we can get a deal. It's a wonderful property because the Ponzi name pops up every few weeks.' Ponzi is the only name that specifies this type of crime. You know, a bank robbery is not called 'a Dillinger.' A kidnapping is not 'a Lindberg.' But a swindle is a 'Ponzi scheme.' So they said, 'We have no money, but what we'll do is give you 10 percent of the profits.' I have now learned enough to know that movies have no profits. I didn't know that then. But after the Katzka thing I'd done some research. I said, 'Look, if you guys want the property, come up with $2,500, which is half of what it was sold for a couple of years ago.' They came up with $2,500 somehow. They went out there. Richardson and Reber. They had a production company. God knows where they went. They also renewed, I think, for six months. And they dropped it.

"It sits there and another Ponzi scheme explodes in the newspapers -- Homestake Oil. They come every few years, a creative Ponzi scheme. I get a call from a guy named Jeffrey Cohn (from Keystone Productions). Now where he is, I don't know either. I may have been in Zimbabwe (where Dunn's wife was then working for the United Nations Population Fund to set up an office in South Africa while Dunn, in his words, came along as 'a trailing spouse') when he called me. Somehow, people get to McGraw Hill and they track me down. He picked it up and renewed for a year. Nothing ever happened. He also paid $2,500. I said (to myself), 'I have an annuity here.'"

After returning from Zimbabwe, Dunn, who by then had retired from Business Week after spending 25 years there, got another call about his book: "The phone rings -- 'Don, this is Carol Dudley Katzka. I'm the widow of Gabe Katzka. I was going through his files and I found this screenplay for 'Ponzi,' which I still think would make a fantastic movie. But I no longer hold the rights to it, do I?' I said, 'No, you don't.' She said, 'I'd like to buy those rights again.' I said, 'All right.' She came up with $2,500. She held it for six months. We were going to talk to Stanley Tucci about it. And, oh, 'Roberto Benigni -- after ('Life Is Beautiful) is going to want to do another picture.' She (said a Ponzi screenplay that had previously been written) will have to be brought up to date. We'll have to work on that.' And, again, she still has all these Hollywood contacts. Two years go by. I got another $4,000 or $5,000 out of it, I guess, and nothing happened. Finally, she let it go.

"I got a call now from a guy named Michael Prescott from Hollywood, California. He's got (an idea for) a movie of the week -- 'Ponzi, great story! Can I have the rights to it?' He bought it. This was like the fifth time it's been sold. After two years, his option expired last August. He said, 'Can I have it for another six months? I'm so close on something.' I said, 'Well, I'd rather wait at this point. It's being reprinted by Random House (Broadway Books' parent company).' When I wrote the book, the copyright was good for 28 years. That's been extended now to 75 years. I had made a mental note to be sure to renew the copyright. About two years ago, some Ponzi story broke. I said, 'The book is a good annuity property. It can bring in option money for the rest of my life (even though) it may never make a big sale.'"

With that in mind, he added, "A couple of years ago I started contacting some other publishers. I said, 'Look, the book was never printed in paperback. It only was a McGraw Hill hardcover and McGraw Hill (which also published Business Week) at that time was more interested in text books than in regular books. They never promoted it. They had no subsidiary rights. So I started contacting other publishers about reprinting it as a paperback. I got turned down by a couple. Then the Enron case broke. It was during the hearings in Congress that Kenneth Lay, the former chairman of Enron, was called up in front of the committee. Senator Peter Fitzgerald (R-Illinois) said, 'Ken Lay, you're the most accomplished confidence man since Charles Ponzi.' That was the quote of the day in the New York Times. It was picked up in Time and Newsweek and everywhere.

"About an hour later, the phone rang and I had a call from Broadway Books, the paperback division at Random House. They said, 'You know, we've been talking about Ponzi for some time. We'd like to make you an offer on it.' So they bought the publishing rights and it's going to be the first in a series they plan to put out called the Library of Larceny. They were going to publish it last year, which made Mr. Prescott happy because he still held the (film) rights, but they put it off a year. It's coming out the end of March. When Prescott said he wanted to renew, I said, 'No, let me wait to see what happens. I think (I'll get) some other offers.'"

At this point, Dunn pointed out, "The film (and television) rights are available. I control them. I have no agent. It's already listed on Amazon.com and Barnes & Noble. Actually, there are still used copies of the original that are selling. If you go on bookfinder.com you can get the original 1975 edition for as much as $80. Somebody called me last year, some other possible producer, and said, 'Can you send me a copy?' I had to spend $15 to buy a used copy because I only have five to my name."

Of course, before long Dunn should have boxes of the new paperback edition at his home in Accord, New York. Besides its more descriptive title, the paperback also has a new and more contemporary introduction by Dunn with its reference to Enron. "The original introduction talked about Homestake Oil, which was the big Ponzi scheme at the time," he said.

Asked for a short course in exactly how a Ponzi scheme works, Dunn explained, "Rob Peter to pay Paul. A Ponzi scheme is a pyramid. The way it works is, I say, 'Give me $10 and I'll give you $20 next week.' You say, fine and give me $10. I go to two other people and say, 'Hey, I've got a guy who invested $10 because he's going to make $20 next week. Do you want in on that?' They say, yeah and they each give me $10. All right. Now I have $30 -- your $10 and their $20. Next week comes and I say, 'Here's your $20.' You say, 'Hey, that's a good deal. Keep it another week' and you give me the $20. That's usually what happens. Meanwhile, the other two people have told two friends about it. They call you up and say, 'Did he really pay you $20?' You say, 'Yeah. It was such a good deal that I told him to keep the $20. Next week he's going to pay me $40.' The thing that is amazing is that Ponzi did this -- starting with nothing (he had) $10 million in six months time. No advertising. No television. He did hire a PR man. (When) it starts getting big enough, you have to have somebody (to spread the news).

"This was in the first six months of 1920. At the end of that time he'd taken in $10 million. Word started getting out, 'How could he do this?' Supposedly he was investing in something called postal reply coupons. But actually he was investing in nothing. With all of these things, you don't ever invest. You know, you can tell people anything, but you don't invest in anything. There's no downside. It doesn't cost you anything. All the money is coming in. You're getting money from new investors to pay old investors. Some old investors take their money out, but they tell other people about it. And those people come rushing to give you more money. It is the simplest of all cons. The only thing is, you have to keep getting more people. When you reach the point where you don't have enough people and somebody says, 'Hey, I want my money,' you say, 'I can't pay you this week.' And that's when it crumbles. That's when somebody complains (and) goes to court and says, 'He took my money.' Then the government steps in and shuts it down and everybody loses."

Martin Grove is seen Mondays at 9:30 a.m., PT on CNN FN's "The Biz" and is heard weekdays at 1:55 p.m. on KNX 1070 AM in Los Angeles.