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In the late 1870s, a woman named Sarah Howe started a bank called the Ladies Deposit Company. Customers at the Ladies Deposit were given a book with the bank's rules printed inside. It read, The Ladies Deposit is a charitable institution for single ladies, Old and Young. Sarah Howe didn't advertise her bank in newspapers. She asked new customers to tell their friends. So she started off with word of mouth advertising. I got people to, you know, it brings somebody else. We were right at the very beginnings of the industrial revolution. People were just starting to trust putting their money in banks. This is Robin Holesard, a professor in forensic accounting. One woman described the bank as sympathetic. Another elderly customer said at other banks, the tellers would grab her money and throw a passport at her without a word. But at the Ladies Deposit, she was given a seat and kindly thanked for her business. A Boston newspaper wrote that the furniture at the Ladies Deposit was a poll-stured and raw silk with gold-figured patterns and that all the ornaments are rich and in good taste. Not much is known about Sarah Howe. She told the Boston Globe that she had been born in Alexandria, Virginia in 1826 and that her father was named David Chase. She said she was an only child and that she had been married twice. Before Sarah Howe opened her bank, she worked as a fortune teller and was also reported to be a, quote, female physician. She had no experience in banking. Banking in the 1800s was almost completely unregulated. This is George Rob, a professor who studies 19th century business and finance. Anyone really could set up a bank, put a shingle outside your home and call it a bank and if you could attract depositors, you could be in business. There were a lot of savings banks at this time but they would have been run by men. So a bank run by women for women was completely unique. One Ladies Deposit customer told her a reporter, I am perfectly well satisfied with the security of my own money as well as that of my friends. And what did she promise those women who were depositing money? She guaranteed them, I love this, this is my favorite part of the whole story. She guaranteed them 8% interest per month, paying them the first three months ahead of time. So the math of that is when you gave her $100, she was going to give you $24 back, okay, $8 a month times three months. But the big payout is if you left your deposit in through maturity which was one year, at 8% per month you would be getting $96 for every hundred you put in. There was another banker who in 1919 offered incredible returns to his investors. He promised a 50% return on their money in 45 days when he paid out the first returns, word spread. Six months later he had 20,000 investors who had given him about $10 million. His name was Charles Ponzi. The problem with the Ponzi scheme is Ponzi schemes are destined to fail because unless you have a consistent influx of new money, you don't have money to pay out. In 1920 the Boston Post revealed that Charles Ponzi was not investing anyone's money. Instead he was paying out returns with investments from new customers. In eight months he'd taken an inenestimated $15 million. Later he wrote in his memoir, we are all gamblers, we all crave easy money and plenty of it. If we didn't, no get rich quick scheme could be successful. Charles Ponzi made this kind of fraud famous, but Sarah Howe was doing it in the same city before he was even born. I'm Phoebe Judge, this is criminal. Tell me what was the thought about women in money in the late 1800s? Well most people in business circles, business men, almost all business men, felt that women were not suited to pursue careers in business or finance. They were too emotionally fragile, they were too delicate. Their purity was best protected in the home and if they pursued careers in business that this would contaminate their purity. In the early 1800s it was against the law for married women to own property, manage money, or sign their own contracts. And as soon as you got married you ceased being an individual. You became what's called film covert which means that you were like the property of the husband. In 1855 the state of Massachusetts made it legal for a married woman to own property, make a will and have full control over her money. By 1887 two thirds of the US had passed similar laws. But even after that judges often ruled that a wife's earnings were her own only when she was abandoned by her husband or he was proven to have misspent the family's earnings or to be unable to support the family. Meanwhile single women were allowed to invest their money how they liked. The ladies deposit only took single unmarried women and widows as customers. Sarah reportedly dressed in her best clothes. And she sold that to them under the guise of and you can be just like me. And so it became like a sorority for all intents. So what she did was she went and created this air of exclusivity in this club. This has been done over and over and over. Bernie made off with tell people you had to give me all of your money to get into our club. She just did it in 1880. I think Sarah how is very clever because in targeting women she could say to them as a fellow woman I understand your situation you can trust me. I won't cheat you the way that men often cheat people in business. And there's this general expectation that women were more honest that women were more or less superior to men. So I think she played upon that. She played upon women's insecurity about what to do with their money. And she promised very extravagant returns as well which was very appealing to a lot of the women who gave her money to invest. And was she taking deposits from women just in Boston? Originally the bank was operating only in Boston but it seems really quickly women from all over the country were sending her money. And since she wasn't advertising it's hard to know how that came about. But probably what happened is that women would write to friends and family members in other parts of the country and tell them about this wonderful opportunity in Boston and they would send money in. Most of the women who put money in the ladies deposit were mostly women from we would consider a working class or a lower middle class background. Domestic servants there were some school teachers so there was a kind of informal behind the scenes network of women sharing information with other women. For a while Sarah how's bank operated without much attention. But then in January 1880 the Boston heralds and a reporter to the ladies deposit. The paper wanted to know how she was able to offer such a high return on her customers investments. The reporter wanted to go in to the deposit and you know investigate it. Well of course they weren't going to let him in. And then after that what he did was he dressed up like a woman and went back and when he went back dressed up as a woman he was led in. They told him what they told their other customers. You know they would say stuff like well we don't solicit your money. You don't have to deposit unless you want to you know giving them that out. And the journalist wanted to know if he could have references. They told him that they don't give out references. And so what he did was he just wrote an article. The article was titled How's This For High 8% a month paid by a South End Bank for women only. How this remarkable enterprise is conducted. And in it he called Sarah how a fraud. Another article in the Boston herald included an interview with her. She claimed the bank was part of a Quaker Aid society. She said that it was really a charity and that wealthy Quakers in the city were financing this. And this was a charitable operation to help women of humble means. She objected to the newspapers coverage of her business in a letter to the editor writing that her only offense was refusing to explain herself to prying reporters. In her letter she implied that the herald articles were libelous and that she was prepared to sue them for it. And so what happened was the newspaper decided to back off because they didn't want to be accused of malice. The coverage only seemed to make the ladies deposit more popular. The Atlantic reported that the bank gained nearly 600 depositors after the heralds articles came out. The deposit was doing well enough that Sarah how moved the bank to a new location in Boston so then. She bought a $50,000 mansion, paid $20,000 of that $50,000 in cash which was deposit money obviously. And if you think about it that's $5 million in cash in today's dollars. So yeah I'm going to say she lived pretty lavishly. She reportedly threw a party for her husband's birthday where she invited total strangers so she could have a crowd to see the presence. But it's still a little mysterious how she spent that kind of money. Of course part of the money that she's collecting she is also paying out to people to draw more money in. So it's a complicated juggling act that's going on. We always have enough money to pay the deposits she said. And if every one of our book holders should come in this afternoon and demand the principal it should be paid to the utmost dollar. Then in September 1880 the Boston Daily advertiser published a series of articles about the ladies deposit under the headline, a mysterious bank. The stories ran every day for three weeks. The newspaper said that the ladies deposit was a fraud. They said Sarah how was paid paying long time depositors with the money coming in from new customers. They started by saying she wasn't really a bank and the newspaper wanted to make her out to be you know this wicked witch of the west and they went through and they found all of her like quote unquote past crimes like that she made her money telling fortunes. They also reported that she had been committed to an asylum in 1865 and that she had been arrested for fraud a decade later. Sarah how wrote a letter responding to the articles. She said that the reporter was floundering like a bat in the fly trap trying to prove the bank was a fraud. When the articles appeared customers began withdrawing their deposits from the bank. She said that she was going to make good on the principal but the principal was $196,000 at that time and she didn't have that kind of money. She was always going to run out of money if she had to pay everybody back and so it went downhill very very quickly. One of the bank's employees Susan Crandell said that she was sometimes paying out $40,000 per day. Today that would be the equivalent of $1 million. The Boston Globe reported that Sarah how tried to raise money by mortgaging her own house in furniture. On October 4th she started to run out of money and then on October 16th she was arrested. She'll be right back. In October of 1880 Sarah how was charged with obtaining money under false pretenses? Many women had put their entire life savings in the bank so there was a lot of panic. There are historical accounts of women who were ostracized for bringing their friends in and so once it went bad it went bad in a hurry and there was just not much left at the end. One woman told the Globe, I wanted the interest so badly that I placed a mortgage on my furniture to secure the principal to deposit. I wish I had it now, for I shall have my good sold from under my head. There were women who didn't want to believe that this had happened to them. There were people who continued to think that Sarah how I did nothing wrong that this in fact had been a scheme by jealous men to destroy her business. The Globe published an account of a woman who went to the bank to deposit $192 in gold, even though Sarah how had already been arrested. They also reported that a group of depositors raised funds for her defense. The women told the reporter that they were not the ignorant deluded women they have been represented to be and that Sarah how was a persecuted woman. Some women who had invested early probably got all their money back. Some of the early investors hadn't lost their money as the later investors who did the worst. A list of customers was published in the newspaper. It took up an entire page and included women as far away as Illinois, Pennsylvania, Maine, and England. Was there any way for these women to recover the lost money? There wasn't. There were cases in the 19th century where businesses failed and there would be relief efforts set up charitable relief efforts to try to help some of the people who had lost their money. That did not happen in this case. Once the bank collapsed, there was not as much sympathy towards the women who had put money in the bank than we might expect. Some of the commentators blamed the women. Well, this is what you get for being so ignorant. Who but a woman would be so stupid as to think she could make $96 on $100 over the course of a year. There were other people who said for a woman to give money to another woman to invest is a huge mistake. If you have money to invest, give it to a male relative, give it to a man of business to invest. This is just what you get for thinking that you as a woman can make decisions about how to invest your money. One wrote a letter into a newspaper to say that the success of Sarah Howe's fraud proved that we must despair of teaching the female sex business principles. Initially Sarah Howe was very defensive and claimed that she was running a legitimate bank and that jealous men had destroyed her business. But once she was arrested and once she was facing trial, then she tried to distance herself from responsibility. She claimed she wasn't the person who started the ladies deposit and told a story about having been a customer of a branch in her hometown of Alexandria, Virginia. She said that she got hired after a few years and had been put in charge of the Boston branch. She also said she only earned $100 a month and never handled the dollar of the customer's deposits. She said she was sure a man named Mr. Gardner was angry with her for refusing to lend him $100. She said he and a certain lawyer have stirred up the banks and papers against us. When she was arrested, the banks' accounting books were missing. She claimed that someone had stolen them. Her trial began on April 20, 1881. The trial was covered all over the United States. So Boston in particular was widely covered. But newspapers all over the United States covered the case. It was considered quite a sensational and interesting trial, the fact that a woman had to come up with a scheme like that. There are many trials of men who've defrauded people out of money in the 19th century. But this is the first high-profile case of a woman who had done something like that. So for a woman to commit a crime of any kind needed some special explanation. It wasn't seen as something that a woman would normally do. Reporters tried to figure out what kind of woman could do something like this. They looked into the details of her marriages, debating whether she'd been married two or three times. They printed rumors that she'd been married to two men at the same time. They really focused a lot on what they saw as a depraved sexual character. She had three husbands. Having one or two divorces was a very unusual thing for women in the 19th century. So that was something that later was brought up as an example of Sarah Howe being a more a woman. Rather than just let her be somebody that built these women out of money, what they did was they spent days publishing stories about how she was ugly, you know, how she couldn't put two cohesive words together to make a sentence, how she had deplorable manners, you know, and they just went after and they just shamed her and shamed her and were relentless. And so it was difficult for anybody to fill much compassion for. The newspaper was, I guess, what we would call the social media of the time. How much money did she end up getting from the scam? It was at least $250,000, which would be the equivalent of many millions of dollars today. But because Sarah Howe was not keeping careful books, it could have been much more. There is speculation that she defrauded as many as 800 people out of about a half a million dollars and in today's dollars that would equate to about 13 million. During the trial, the prosecution called on Frances Miller, a quaker who used to live in Alexandria. He testified that they had never established a charitable fund for a woman's bank. A former lady's deposit customer testified that when she tried to withdraw her interest, Sarah Howe told her that she would have the money for her later that week. But when she returned, the bank refused to let her in. On April 25, 1881, Sarah Howe was found guilty of obtaining money by false pretenses. And what was her sentence? She was sentenced to three years in prison, which seems a fairly light sentence for defrauding people of such a large amount of money. After three years in prison, Sarah Howe was released. And then, she opened a new bank. We'll be right back. When Sarah Howe was released from prison in 1884, she opened a new bank in Boston. Quite surprisingly, she set up another one of these Ponzi scheme banks. And she did this for about a year before the authorities caught on to it. It seems incredible that in the same city where she had committed this first fraud and it was so highly publicized that she could get away with it again. Partly, there were some women who had invested in the first bank who didn't lose money and who still had faith in her. But also in a city like Boston in the 1880s, every year there were hundreds of thousands of immigrants coming from all over the world, many from Ireland. So there would have been three years after the first fraud, there would have been a lot of new people who would not even have known about the first fraud and who saw this as just a great investment opportunity. When her second bank was discovered, she got out of Boston before anyone could press charges. She moved to Chicago and she opened a third bank called the Ladies Provident Aid. When newspapers discovered her, she went back to Boston. She was arrested again on December 8, 1888. Was it common for people in the late 1800s who were doing these types of financial scams to be caught? When financial scams unraveled, you could have veiled just as fairly easily if you got out of town before the police arrested you. So I mean part of the reason that Sarah Howe was able to get away with this or other frauds were able to get away with this is there was no fingerprinting, there was no good form of criminal identification. So you could change your name, you could change your identity, you could move from one town to another and operate a very similar kind of scheme. And it was very difficult for the police to share information about these crimes from city to city. Why do you think she was successful so many times? I think there were a lot of Americans who didn't understand business principles very much. And I think there were a lot of people who were desperate to make money and it seemed like a good thing to them. And there were very few opportunities for women to make very good money in the 19th century. So this seemed to be something that was being done by a woman to benefit other women. It was a very well executed affinity fraud. It was very well executed in that she so closely identified with her target market. These women that weren't married were thought to be not necessarily in the best social situations and everything. And because she identified so closely with them, she knew exactly how they thought and what they were looking for. And she manipulated that to her advantage to the tune of $500,000 over less than a year. It was carefully orchestrated. She knew exactly what she was doing. The problem is she never thought the money would run out. And she thought that she had protected herself because she had coistered these women away from men and men are the ones that at the time had the business and acumen to figure out that this was never going to work. These things still happen. In 2008, Bernie Madoff was arrested for defrauding investors out of an estimated $17 to $20 billion. In what's been called the largest Ponzi scheme in history. A few years ago, a woman named Johanna Garcia started a company that promised investors a 10% return on their money in a year. Investments were supposedly loaned to small businesses who needed startup money. Once the businesses were doing well, they'd pay back the loan with interest, which would go back to the investor. This also turned out to be a Ponzi scheme. In 2021, she was charged with defrauding investors out of nearly $200 million. Before her arrest, she described herself as mother Teresa because of how many small businesses she had helped. After her third bank was shut down, Sarah Howe returned to fortune telling. She died in 1892 in Boston. The New York Times reported in her obituary that she died penniless, renting a room in a boarding house. The chief her own up to the fraud? No. No. In fact, when she was living in the boarding house and living on a government subsidy, people periodically would track her down to try to talk to her about the ladies deposit. To her dying day, she maintained that it wasn't her that it was her husband's brother's wife that did that. At one point, Sarah Howe told the Boston Globe, there's another Sarah Howe mixed up in this matter, and if I was allowed to tell you all I know, I would soon clear myself. We didn't use the word con at the time, but she was nothing more than a con artist. She went and found jobs that she was no more prepared to do than a man in the world, and nobody has ever given any rhyme or reason on why she would do it. She just was a con and would try it all, and it was always trying to get rich. She must have had a lot of confidence. Well, you know, fraudsters do. One of the traits of a fraudster is that they can do no wrong, and they're the smartest person in the room. What she did was she went out and she just sold a story. Criminal is created by Lauren Spore and me. Nadia Wilson is our senior producer. Katie Bishop is our supervising producer. Our producers are Susanna Robertson, Jackie Sajiko, Libby Foster, Lily Clark, Lena Silason, and Megan Canaine. Our technical director is Rob Buyers, engineering by Russ Henry. Julian Alexander makes original illustrations for each episode of Criminal. You can see them at this is criminal.com. We're on Facebook and Twitter at Criminal Show, an Instagram at Criminal underscore podcast. We're also on YouTube at youtube.com slash criminal podcast. Criminal is recorded in the studios of North Carolina Public Radio, WNC, report of the Vox Media Podcast Network. Discover more great shows at podcast.voxmedia.com. I'm Phoebe Judge. This is Criminal.