Stranger Than Fiction

September 2021

The Ponzi of Paris: The Jazz-Age Scams of Marthe Hanau

By Dean Jobb

When he tracked her down in the winter of 1931, the trappings of her once-vast wealth—seaside villas, jewels, a fleet of fast cars—were gone. Roger Normand, billed as “an eminent French authority on law and finance,” found Marthe Hanau in a spartan apartment on the fifth floor of a run-down building in Montmartre that, he was dismayed to discover, had no elevator. The interview was conducted in a room that served as her office, furnished only with a writing desk, typewriter, and a leather chair that, like its owner, had seen better days.

Her defiance and sangfroid—the traits that catapulted her into the financial stratosphere before reality and allegations of orchestrating a massive fraud brought her crashing to earth in 1928—remained intact. “I owe a few hundred millions (of francs). What of it?” she said, peddling the only asset she had left—her limitless self-confidence. “I can and will repay every sou.”

Hanau was one of the most forceful, polarizing, and headline-grabbing figures in 1920s France. She built a financial empire that controlled hundreds of millions of francs that poured in from investors across the country. Her newspaper, La Gazette du Franc, promoted peace, prosperity, and her dizzying array of investment syndicates. France’s top financiers, it was said, sought her favor and advice. So did French politicians. And U.S. President Calvin Coolidge, Italian dictator Benito Mussolini, and other world leaders did not object when she brazenly published their signed photographs to lend credibility to her schemes.

She met with Normand in the midst of her long-delayed and seemingly endless trial on charges of swindling and breach of trust. She was accused of establishing a network of fake companies and using investors’ money to pay profits and dividends, in a French version of the scheme the infamous Charles Ponzi operated in Boston in 1920. Investors were promised annual returns of up to forty percent, doubling their money in less than three years. But her only crime, Hanau insisted, had been to defy the “moneyed powers” in a heroic battle to free hardworking men and women from the “bondage” of the banking system. “I wanted to fight the professional financiers on behalf of the money-saving masses,” she explained, “who are logically entitled to share in the profits their money was making.”

Would the woman the French press dubbed a “money marvel” and the “Ponzi of Paris” win her new battle in the courtroom? Normand emerged from her Montmartre apartment convinced this magnetic, indomitable, “self-taught financier” might just pull it off.     

Nothing in Hanau’s early life hinted at her meteoric career as a financial guru. She was born in 1884 in Paris, where her mother owned a store that sold baby clothes. She excelled in mathematics in school but abandoned plans to become a teacher. She was twenty-four when she married Albert Lazare Bloch, the son of a businessman in the northern city of Lille. In 1912 they opened a Paris perfume shop with a small factory at the back, where Hanau concocted her own fragrance, Garden of Murcia. They sold the business during the war and began marketing tubes of a rum-coffee mixture that troops could consume in the trenches, until it was banned when the authorities discovered the Tube du Soldat contained neither coffee nor rum.

Hanau went back to selling perfume and soap. The couple divorced after the war but remained friends and business partners. “I was no longer her confidant,” Bloch later explained, “but she valued my advice and I remained in her pay. It was purely a question of business between us.” Hanau, who was cold and aloof, admired her ex-husband’s outgoing personality and ability to ingratiate himself with potential customers. He was “the kind of fellow who could sell peanuts to the Pope,” he once admitted, and this was a skill set that would prove invaluable as Hanau embarked on a new business venture. “M. Bloch failed me as a husband,” she told friends, “but as a businessman I never had grounds for doubting his fidelity. Hence the severance of one partnership and the continuance of the other.”

Hanau began trading on the stock market and founded her newspaper in 1925. The Roaring Twenties were known as les années folles—the crazy years—in France, but the country was a latecomer to the stock-buying frenzy of the money-mad decade. La Gazette du Franc, under the motto “Honest business is the only business,” urged readers to invest in French companies, and many of the stocks Hanau recommended proved to be winners. Soon she was selling shares in her own companies and a web of subsidiaries. “She discovered the secret of using patriotism as sucker-bait,” as one journalist put it. People who had never thought of investing in the stock market—schoolteachers, clergymen, retirees, widows, small-business owners—entrusted her with their savings. With her bobbed hair and penchant for wearing businesslike black suit jackets, she projected an austere, matronly image that inspired confidence. The back-slapping Bloch, meanwhile, traveled the country to drum up business and recruit agents in smaller cities and towns. He hosted dinners and banquets for local worthies and spent thousands of dollars a week on the Cuban cigars he handed out to prospective clients.

By 1928 Hanau had built an investment empire with an impressive marble-walled headquarters, four other Paris offices, a staff of 450, almost 200 agents, and a network of branches that reached into Belgium. Some 60,000 investors pumped almost 220 million francs ($135 million U.S. today) into her coffers. She worked fifteen-hour days as the money rolled in, tearing herself away to try her luck at the casinos of the Riviera and other resorts. She reputedly kept a balance of at least a half-million francs in her bank account and splurged on jewelry, houses, and fine automobiles. She often set out with another driver following in a second car—if her vehicle broke down, she could switch without wasting her valuable time waiting for repairs.

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Fraudsters Marthe Hanau and her ex-husband Albert Lazare Bloch were exposed and charged in 1928, wiping out the savings of thousands of investors. (Manchester Guardian, December 5, 1928)

Hanau’s success was her undoing. She made powerful enemies. Banks lost business as customers closed savings accounts to invest. Newspapers that opposed La Gazette’s pacifist stance and free-market politics began asking questions about the viability of her companies. French politicians and government officials who’d been featured in her pages became nervous, fearing her downfall could become theirs. There were rumors that Bloch had been handing out bribes, as well as cigars, to squelch investigations. Finally, in December 1928, police raided La Gazette’s offices and arrested Hanau and Bloch on fraud charges. Her sprawling operations, with cash and assets to cover only a fraction of the millions of francs she owed to investors, were declared bankrupt. A crowd of shocked investors surrounded her offices, begging for their money back. In towns across France, at least a half-dozen who lost everything took their own lives. Others continued to have faith in their financial messiah, including one victim who offered to invest more money to help Hanau “weather the storm.”

Hanau, unrepentant and undeterred, insisted she could cover her staggering liabilities and seemed convinced she would soon be back on her feet. “It is nothing at all,” the New York Times quoted her as saying within hours of her arrest. “I work by American methods and in the United States it is no disgrace for a banker or business man to go into bankruptcy three or four times.”

Police, prosecutors, and the courts spent months combing through a mass of seized business records as they tried to untangle Hanau’s convoluted finances. Like Ponzi, she had used money flowing in from new investors to cover the interest and profits she owed to existing clients. The result was a bubble doomed to burst when the cash flow dried up—as it did the moment the authorities shut her down and exposed her financial fantasy. And she had done almost all of it single-handed. Hanau’s employees had believed the business was legitimate and many had invested part of their salaries in the enterprise, making them victims as well. Bloch claimed that he, too, had been duped. La Gazette editor Pierre Audibert, a former political operative who used his government contacts to expand the paper’s distribution, and Count Bernard de Courville, a retired industrialist Hanau used as a figurehead to attract investors, were also charged.

Imprisoned and frustrated with the glacial pace of the prosecution, Hanau staged a three-week hunger strike. Transferred from prison to a hospital to be force-fed, she knotted bedsheets into a rope and escaped through a window. After a few hours of freedom and visiting a post office to send a letter of complaint to the Ministry of Justice, she took a taxi back to Saint-Lazare Prison and turned herself in. The caper embarrassed the government and she was soon freed as she awaited trial; a group of loyal investors opened their wallets to help post her bail.

Hanau founded a new financial newspaper and promised to repay her victims in full within five years. She was soon facing an additional charge of publishing confidential government information—a leaked report of the police investigation into her crimes.

The trial finally opened in December 1930, long after the Wall Street crash had brought the world back to economic reality. It was part theater, part circus. Hanau dominated the proceedings, loudly denying the allegations against her. “Justice is rotten,” she declared at one point. She interrupted expert witnesses to correct their calculations and deftly extracted the documents she wanted from the stacks of records entered as evidence. It was “a brilliant pyrotechnic display of memory. Facts and figures rippled on her tongue,” noted Roger Normand. “She juggled sums with the agility of a vaudeville performer.”

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A 1930s tell-all feature on the rise and fall of the “Ponzi of Paris.” (Minneapolis Star Tribune, January 25, 1931)

Hanau and Bloch were convicted in March 1931 and sentenced to two years in prison. The court tacked on a modest fine—roughly $9,000 U.S. if imposed today. Count de Courville was acquitted, as was La Gazette’s former editor Audibert, who died of a heart attack only hours after the verdict. Hanau appealed. It was a risky move—under French law, a higher court could impose a more severe sentence, and she was ordered to serve an additional year for being “disagreeably aggressive” and “seeking to use her court hearings for publicity purposes.” Three more months were added for the offense of publishing confidential documents.

When the Paris police finally turned up at her home in February 1935 to take her back to prison, she pulled a gun from her handbag; she was quickly disarmed and appears to have intended to shoot herself, not the officers. She died in prison that July after taking poison that was somehow smuggled into her cell. Janet Flanner, The New Yorker’s Paris correspondent, followed the case closely and offered a fitting epitaph. “She was,” Flanner wrote, “the greatest, brainiest, most convincing and comical confidence woman France ever produced.”

Hanau, of course, would have demanded the last word. “I’m sick of money—money has crushed me,” she declared in a final letter to her lawyer. “Today I know absolute peace, the peace of renunciation. . . . And so adieu.”

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