Nearly 80 years before the recession of 2008 brought down Tom Petters, the crash of 1929 toppled Wilbur Foshay—or at least shattered the illusion that he was the Midwest’s answer to Midas. By 21st century standards, of course, and even allowing for inflation, Foshay was a piker, his excesses fueled more by a Gatsbyesque hubris, it seems, than by the pathological greed of a Petters or a Bernard Madoff. Still, fraud is fraud, and Foshay’s rise and fall were as spectacular in his time as Petters’s have been today. For that matter, odds are that Petters—whose $3.5 billion fraud trial is scheduled to begin in October—will be long forgotten in another 80 years. Foshay, dead and buried already for half a century, still has his name atop a grand building.
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In fact, mainly owing to that building—the unique, 32-story Foshay Tower in downtown Minneapolis—Foshay has outlived every fraud, cheat, chiseler, and snake-oil salesman who’s besmirched the Twin Cities business community since the Great Depression. Who, after all, recalls without this prod the likes of Fred Ossanna, William Rubin, Janet Karki, Eugene and Michael Gruenberg, and Harold Greenwood, all of whom got crosswise with the law and made big news for business-related offenses? Among the happy ironies that accompany them to history’s dustbin is the gulf that yawns between the arrogance that led to their crimes and their virtual nothingness afterward.
None of the aforementioned miscreants had the good sense to build a 447-foot-high monument to himself in the middle of a major city, affix his name in 10-foot letters at its zenith, and commission John Philip Sousa to compose a march in its—his—honor. True, Sousa’s check from Foshay (for $20,000) bounced, and two months after the skyscraper’s dedication, Foshay’s businesses were cast into receivership.
As Time magazine, in its November 11, 1929, edition, noted, “Not the tower but the man who built it fell last week.” It would be another two and a half years before Foshay—plump, pleasant, ever smiling, the unlikeliest of crooks—would be convicted of mail fraud and sentenced to federal prison, leaving the locals, not to mention thousands of investors around the world, poring over worthless securities and scratching their heads. At least he left us with that building.
Charles Ponzi, a contemporary, is not mentioned in the headlines that cascaded out of Minneapolis during Foshay’s trials, but it was Ponzi’s infamous scheme that Foshay’s crimes allegedly resembled. Though Foshay was ultimately convicted of mail fraud—the feds’ trusty warhorse when prosecuting white-collar crime—what he did, according to the government, was peddle investments in overvalued properties and reward early investors with money deposited by later ones—until, that is, the bottom fell out of both his operation and the nation’s economy, and the money was gone.
Of Ponzi—much in the news again thanks to Madoff, Petters, and their cohort of swindlers—Ron Chernow wrote recently in the New Yorker, “He fooled others because he fooled himself.” The same could probably be said of Foshay, whose motto—this, remember, during the Roaring ’20s, when everything seemed possible—was “It can be done!” If we can believe his many admirers, Foshay didn’t have a felonious bone in his body.
Wilbur Burton Foshay may well have had every intention to make an honest fortune. Like Ponzi, he was a dreamer as well as a doer who made himself very wealthy and did the same for a lot of other people while he was at it. He enjoyed, for a time, the awe and esteem that investors bestow on a supposed financial wizard as they fork over their cash to him. “Get rich with Foshay!” was a popular rallying cry of the time. Both Ponzi and Foshay seemed, in Chernow’s words, to be “excellent mimics of respectability.” Only Foshay, from a middle-class New York family that dated back to the American Revolution, had less need for mimicry than did Ponzi, a postman’s son who’d immigrated to Boston from Italy.
Foshay’s biographies mention a Fouche (or Fouchee) who fought under Lafayette during the War of Independence, and another forebear who was a high-ranking official under Napoleon Bonaparte. If correct, the latter could help explain the Napoleonic “fixation” sometimes attributed to Foshay, whose father was a business failure. Foshay himself—born in Ossining, New York, in 1881—studied art at Columbia University and electrical engineering at the Massachusetts Institute of Technology before deciding to build an empire of his own.
He worked for the New York Central Railroad and a series of public utilities around the country until his middle 30s, when he relocated to Minneapolis (acknowledging the Mill City’s “growing importance” as a “business and financial center”). He set up shop in 1917 with a single stenographer as his only employee. Tireless, resourceful, and persuasive, he began buying utilities throughout the Midwest, typically making a small down payment, then covering the balance via the sale of company securities.
In less than a decade, he sold his holdings, estimated to be worth about $10 million (roughly 12 times that in 2009 dollars), to “Eastern interests” and moved on to other investments. Within a few years, he had a chain of gas, electric, telephone, and water companies, plus interests in banks, hotels, textile and rubber factories, flour mills, a steamship line, and sundry other businesses that made him a big shot in five countries and a dozen U.S. states. Foshay’s properties in the late 1920s were believed to be worth more than $20 million.
He was by then a pillar of the community. Well-married (to the daughter of a founder of Hutchinson, Kansas, where he once worked) and the father of two children, Foshay was a Mason and an Elk, active in the Boy Scouts and other high-minded organizations, with memberships in the Minneapolis Athletic Club, Lafayette Country Club, and St. Mark’s Episcopal Church. But those were only street-level connections; what he had in mind, and eventually commissioned, was the tallest building between Chicago and the West Coast (and the tallest in Minneapolis until 1971).
If he didn’t yet feel he was prominent enough in his adopted hometown, Foshay would remedy the situation with a towering obelisk in the likeness of the Washington Monument. The Foshay Tower, world headquarters for W. B. Foshay Company, cost $3.75 million. Its dedication—three days of speeches, prayers, parades, fireworks, brass bands, massed choirs, dancing nymphs, and gold watches for the hundreds of dignitaries and distinguished guests from around the world (in all, 25,000 people were reportedly invited)—cost more than $120,000, a whopping amount in 1929 for what was essentially a gaudy PR stunt.
Twenty-two years later, Josiah Brill of Brill & Maslon, the Twin Cities attorney who had represented Foshay during his subsequent trials, told the Minneapolis Tribune, “He conceived the building as a huge promotion for his electric utilities interests. ‘Look at all this free publicity,’ he once said to me. ‘If I had bought this much advertising space, it would have cost me far more than the tower.’”
Foshay’s self-congratulatory blowout would seem all the gaudier when the stock market collapsed two months later and downright criminal soon after, when his companies went into receivership. (“Foshay’s Folly,” while undoubtedly on the lips of countless local wags, does not appear in headlines of the period, maybe because, while the hoopla looked foolish in the aftermath, the building itself was, as it still is, a wonderful, landmark-quality structure.) “He went down with his ship,” Brill told the Tribune. “He was sure his company was sound, and he invested every cent he had in its common stock. After the crash, he didn’t have enough money left to pay for his court expenses.”
Foshay’s trials, in late 1931 and early 1932, were spectacles in their own right—which is saying something, considering that they demanded a close reading of stacks of ledgers and that many of the witnesses were bookkeepers and accountants. Journalist Jay Edgerton, writing in the Tribune more than 25 years after the fact, recalled a “near–football game atmosphere” on Third Street during the first trial.
“Each morning, in the bright fall sunshine, there was a parade down Marquette Avenue to the federal building,” Edgerton wrote. “Huge crowds gathered in the streets and in the corridors to see the defendants arrive. Police issued warnings about pickpockets working the crowds. Courtroom seats were at a premium. Only those with influence or business got in.” All eyes, he said, were on the amiable, “roly-poly” chief executive, impeccably dressed in conservative gray suit and trademark bow tie. Some days, there was a red rosebud in Foshay’s lapel.
The government contended that Foshay and company had lied to investors about the value of his company’s assets, which were not nearly as robust as portrayed by his sales agents. Initially, the feds, in the person of a prosecutorial bulldog named Fred Horowitz, brought charges against Foshay and six associates. The number of defendants was eventually narrowed to two: Foshay and his executive vice president, Henry H. Henley, who some observers, according to Edgerton, considered to be the brains behind the operation.
The first trial’s jury was notable for the presence of a woman—one Genevieve Clark, a Minneapolis wife and mother—and a majority of rural residents (“farmers,” the New York Times reported). Four weeks later, Clark was the lone holdout against conviction, her intractable position resulting in a hung jury. Unfortunately, she had neglected or decided not to tell the court that she had briefly worked for Foshay and knew “one or more” of the defendants, and that her husband had had business dealings with them. She was cited for contempt. Three days after she was supposed to begin her sentence, she, her husband, and the couple’s two young sons were found dead in the family car, victims of self-inflicted carbon monoxide poisoning.
Foshay’s response to this shocking collateral damage went unrecorded. In a second lengthy trial, he and Henley were both convicted of multiple counts of fraud by mail and given the maximum sentence: 15 years and a $1,000 fine. Both men appealed. But when the U.S. Supreme Court finally refused to review their cases, there was nowhere to go but prison. President Franklin Roosevelt refused to commute their sentences despite the pleas of reportedly 10,000 petitioners, and Foshay and Henley—penniless, disgraced, but refusing to admit guilt—were incarcerated at the Leavenworth penitentiary in Kansas.
In the Minneapolis Tribune’s review of the case published in 1951, attorney Brill—also without conceding guilt and presumably with a straight face—explained his client’s debacle this way:
“Foshay operated on a business formula. Public utilities, he reasoned, are monopolies and their rates usually are fixed on the basis of the appraised value of their assets. He would buy up public utility properties at less than the appraised values. He would have them appraised by top-flight appraisal companies, and get rates accordingly.
“Then he would issue securities on the basis of these appraisal values,” Brill continued. “If these values were greater than the cost of the property, he would figure the difference as profit . . . . Foshay’s error was that he should have indicated the cost of the assets as well as their ‘value’ in selling the securities. But, of course, he would not have sold as many.”
On May 7, 1934, an Associated Press dispatch from Kansas described Foshay and Henley beginning their federal confinement. Foshay was in “high spirits and joking with his guard.” Henley was reportedly not so chipper. While Foshay did not wish to comment on the trials or sentencing, he did say that “friends in St. Paul still were making an effort to obtain his freedom, and asserted that he and Henley were innocent of the mail-fraud charges.”
Whether it was due to those St. Paul friends or some of Foshay’s other long-time connections in government and industry, in January 1937, FDR finally commuted the sentences of both Foshay and Henley to five years, and, with time allowed for good behavior, made them eligible for parole. Ten years later, President Harry Truman granted both men a full pardon, meaning they were, in the law’s eyes, innocent of committing a crime.
Foshay resettled in the mountain West, where he’d gone to run a granite mining operation after his Minneapolis-based empire collapsed. He worked for the chamber of commerce of Salida, Colorado (population then less than 5,000). According to aChristian Science Monitor story, Foshay made $1,800 a year on the chamber job—and earned every dollar.
He was much appreciated for the welcoming highway signs he put up on the edge of town and for creating the locally famous legend of the fur-bearing trout. Seems Foshay saw to it that important visitors to Salida received plastic models of the fish “clothed from gills to tail in brown ‘fur’” to remind recipients of the local snow-fed streams, so cold a trout’s scales weren’t sufficient to ward off the chill.
Small wonder that, according to the Monitor, Foshay, the inveterate promoter, had offers to “move to larger towns” and to launch his own public relations firm—though he apparently never did.
There is, in such accounts, a benevolent, almost comically lovable quality about Foshay. There are no references—as there are in spades in the coverage of the Petters and Madoff scandals—to betrayed friendships, ruined retirees, and gutted charities, though those surely existed in Foshay’s wake. Genevieve Clark and her family are the only fatalities mentioned in the faded newspaper clips.
Indeed, it could be argued that whatever damage was inflicted on civic pride and business confidence, Minneapolis benefited from Foshay’s prideful overreach. Never mind that the venerable tower, 80 years old this summer, was billed as a “monument to the integrity and reputation” of its original occupant. Never mind, for that matter, the phallic assertiveness of a little guy who may have fancied himself the Napoleon of public utilities.
If Madoff and Petters are sharks, Foshay was—well, how about a fur-bearing trout?
Contrary to urban legend, Foshay did not commit suicide by leaping from the upper reaches of his tower. True to form, he seemed to live his post-conviction years a cheery man, brimming with optimism and promotional hokum, surrounded by friends and admirers if no longer eager investors. Perhaps the cheeriness faded after his wife died, in Colorado, in 1955.
What brought him back to Minnesota in the summer of 1957 is not part of the record. We don’t know if, as an older and wiser man, he stood on the corner of Eighth and Marquette and gazed up at the cream-colored icon with his name still gracing its crown (it was still the tallest building in the city) or rode one of the elegant elevators to the executive suites where the view was once only blue sky. Newspaper reports say he died alone that August, at the age of 76, in a north Minneapolis “convalescent home,” exactly 28 years after his most durable achievement was dedicated downtown.
For several days, while authorities attempted to track down his son, who was believed to be out of town on vacation, Foshay lay unclaimed as a nonpaying guest of the Hennepin County coroner. Sic transit Gloria. In the words of a newsman who had covered Foshay during his imperial years, he was now only “a little old man in the morgue.”