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Editor's Note-Cons and Pros

A thought or two about Tom Petters, Clifford Irving, and the techniques of swindlers.

Of all of the ironies of 2008, few were as stark as the revelation that Tom Petters, the operator of the biggest criminal conspiracy in Minnesota history, had endowed a chair in “ethics development” at Miami University and funded the university’s “Center for Leadership, Ethics, and Skills Development.”

The promotion of ethical practices is a rare attribute among swindlers. We will let Miami University officials wrestle with the moral ambiguities of using stolen money to advance ethical conduct among their students.

I normally like to use this space to comment on stories in the current issue, but there isn’t a story about Petters in this issue, although we expect to have one next month. I am mentioning Petters now in part because it allows me to encourage you to visit tcbmag.com, where three times as many readers are drawn to news stories about Petters than to stories on any other topic, and in part because it allows me to segue into the ironies of an earlier hoax, involving a billionaire named Howard Hughes and a writer named Clifford Irving.

Hughes was a business builder turned recluse—someone who had developed a major airline, produced motion pictures, purchased the largest casino in Las Vegas, been a nearly constant companion of movie stars, and become a subject of public curiosity. By the early 1970s, however, he had not been seen in public in years. He had avoided for so long being seen by anyone—former friends, relatives, business associates, and subordinates had all been forbidden direct contact with him—that many doubted that he was alive.

Clifford Irving, a mediocre novelist, announced that Hughes was not only alive, but alert, active, and interested in having his life story told, but only by Clifford Irving. He claimed to have been contacted by Hughes and to have interviewed him.

The story seemed doubtful. Why would Hughes suddenly come out of self-imposed seclusion, and why would he pick a second-tier writer like Irving to tell his story? Although officials of major publishing companies were skeptical, few wanted to miss one of the biggest opportunities of the decade. McGraw-Hill eventually paid $750,000 for the Hughes biography, the largest advance ever paid for a book until that time.

James Phalen, who described the negotiations leading up to the transaction in a 1982 book called Scandals, Scamps, and Scoundrels, called Irving a “great” con man. An average con man, Phalen wrote, would hone his story to letter-perfection, so he could tell it over and over again without deviating from any of its details. An above-average investigator, however, would look with suspicion upon a perfectly told story, recognizing that details often vary in the retelling of a complex story by an honest person, who has no reason to iron out minor discrepancies.

Phalen wrote that when Irving described his supposed meetings with Hughes, he often contradicted himself in minor detail and then acted concerned that the contradictions impeached his veracity—thereby giving the impression of being candid. Few con men, Phalen wrote, are so good at being devious.

He was not good enough. Irving’s story was proven to be false after Hughes himself came out of seclusion to expose it, launching Irving quickly toward jail and McGraw-Hill executives into acute embarrassment.

The company went through another round of embarrassment a few weeks after the hoax became known, when it moved into new headquarters in midtown Manhattan. The main floor of the building was a branch office of one of New York’s big banking companies. Many McGraw-Hill employees were surprised to discover that to get into their offices, they had to walk beneath a large entryway sign that read: The Irving Trust Company.

When he was finally released from jail—a situation Tom Petters might never face—Irving resumed his writing career, producing nine novels, the latest published in 2008. Unable to complete a fake autobiography, Irving instead wrote a book about his attempts to sell a fake autobiography, called The Hoax. In 2006, a movie version of The Hoax was released, with actor Richard Gere playing Irving. Irving’s The Autobiography of Howard Hughes was published in Britain in 1999 as a novel.

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