Past Episodes

E4: SCAMMER! The Amazing Rise and Devastating Fall of Wilbur Foshay

 

Before there was a Bernie Madoff, who conned hundreds of millions of dollars out of unsuspecting investors, there was Wilbur Foshay.

 

He was a dreamer and a doer who made a fortune in the utility industry while living in Minnesota. Unfortunately, his riches were the result of a pyramid scheme and when the scam collapsed, countless lives were ruined, and Foshay ended up in federal prison.

 

Wilbur Foshay began his path to redemption in Colorado, leaving a mark that is still visible on the mountain overlooking the town of Salida and is even part of the city marketing slogan.

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SCAMMER! The Amazing Rise and Devastating Fall of Wilbur FoshaySteve Chapman
00:00 / 01:04
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EPISODE 4

SCAMMER!

The Amazing Rise and Devastating Fall of Wilbury Foshay

Before there was a Bernie Madoff, who conned hundreds of millions of dollars out of unsuspecting investors, there was Wilbur Foshay.

 

He was a dreamer and a doer who made a fortune in the utility industry while living in Minnesota. Unfortunately, his riches were the result of a pyramid scheme and when the scam collapsed, countless lives were ruined, and Foshay ended up in federal prison.

 

Wilbur Foshay began his path to redemption in Colorado, leaving a mark that is still visible on the mountain overlooking the town of Salida and is even part of the city marketing slogan.

 

Sit back, turn up the volume, and let’s explore the amazing rise and devastating fall of Wilbur Foshay.

 

Welcome to History Does Rhyme. I’m your host, Steve Chapman. You can find every episode right here and for free on HeartOfTheRockiesRadio.com and HistoryDoesRhyme.com. You can contact me on Facebook at History Does Rhyme. Each week, we’re going to chat about the past, diving deep into stories you only thought you knew, and exploring a few tales you’ve never heard.

 

Wilbur Burton Foshay is born December 12, 1881, in Ossining, New York. He graduates from the Mount Pleasant Military Academy and attends Columbia University’s Art School but drops out when his father’s business fails, and he can no longer pay tuition.

 

In his mid-twenties, he bounces between jobs, working as a timekeeper, gas piper, and electrician for the United Gas Improvement Company of Tarrytown, New York. He takes courses in electricity, mechanics, and engineering to advance his career, now firmly directed toward utilities.

 

In 1906, Foshay is hired to manage a power and light company in Hutchinson, Kansas. A year later, he marries.

 

In 1911, he manages a utility company owned by a subsidiary of General Electric where he learns how the world of big money works.

 

Visionary is one good word to describe Wilbur Foshay. Utilities are a new and rapidly growing industry in the early twentieth century. Electricity and indoor plumbing are still relatively modern in most of the United States, especially in rural areas.

 

Those living in small towns are eager to embrace the latest appliances and conveniences city folk enjoy but to get those items they need access to electricity. The entire nation will not become electrified until the 1940s.

 

In 1915, Foshay and his wife settle in Minneapolis. It is here that he puts his creative talents to work in the world of business, buying local utility companies, consolidating their operations, and providing efficient and consistent energy to most large cities in the northern mid-west.

 

Quickly learning the inner workings of the utility industry, Foshay realizes the real money is in controlling companies not in running them. In other words, creating a holding company to buy controlling interest over a vast network of utilities becomes his master plan.

 

And it works. In fact, it succeeds on a stupendous level.

 

He begins his venture in 1917 with a single employee. Foshay first buys an electric company in Nebraska with a $6,000 loan, about $150,000 today.

Wilbur Foshay is a master salesman, a jovial individual that businessmen love.

 

Tireless and persuasive, he begins buying utilities throughout the Midwest. This part of the world has, for the most part, been left out of the national rush toward electrification. He almost always purchases with the smallest possible down payment, and then covers the balance by selling the company securities.

 

In less than a decade, Foshay’s holdings are over $10 million, around $150 million in today’s money.  On paper, that is. His worth is completely tied to the value of his company stock.

 

Foshay now owns a chain of gas and electric companies, a telephone business, and water companies, and has extensive holdings in banks, factories, a steamship line, and a variety of other firms in five countries and a dozen States.

 

By the late 1920s, his worth has doubled, to around $300 million today.

 

Is Wilbur Foshay a business genius or a scam artist decades ahead of his time? Stay tuned to find out.

Persuasive is another proper word to describe Wilbur Foshay.

 

For two decades, he seems to have the golden touch, and investors flock to him, throwing money in his direction because he is seen as a financial wizard. “Get rich with Foshay!” is the popular cry of the time.

 

By 1928, Foshay is beyond wealthy, at least on paper. His company now owns utilities in 30 states, the territory of Alaska, Canada, and several Central American nations. He is soliciting money from investors with promises that ‘no investor has ever lost money with a Foshay company.”

 

With these new monies, he pays off earlier investors and keeps his empire and reputation growing because he seems incapable of failure.

 

Wilbur Foshay has an ego to match his financial touch and decides someone as amazing and accomplished as he deserves a memorial. So, he begins constructing just such a thing.

 

Modeled after the Washington Monument, the 32-story art deco monolith, named Foshay Tower, is the tallest structure ever built between Chicago and the West Coast. The building is a monument to excess with nine gold faucets in the tower master suite bathrooms.

 

Many Minneapolis business leaders consider his structure an insult and a threat. He uses all-union crews in the construction, something new for the city which is historically an open shop. The scale of the structure is considered by many as out of scale with the rest of the conservative, Midwestern city.  A large number feel the structure is an insult to their values because even the bathtubs are gargantuan and the Foshay coat of arms decorate the cabinets.

 

The tower costs $60 million in today’s money. The funds primarily come from Foshay stockholders. For Wilbur Foshay, the building is a marketing tool as much as it is a tribute to himself.  He is a master promoter, and opening the largest building ever is a moment unlike any other.

 

But building a massive tower isn’t enough. Something this epic needs a celebration to match, so over Labor Day weekend, 1929, Wilbur Foshay holds a three-day celebration—to himself. This will be his last grand party and it costs over $2 million in modern worth.

 

Foshay Tower has his name affixed on all four sides in 10-foot letters. He hires composer John Philip Sousa to write a special march for the event. The composition, called Foshay Tower Washington Memorial March, is played for over 25,000 guests along with seven other marches directed by Sousa.

 

Foshay provides all-expense-paid trips to hundreds of distinguished guests, including the governors from all 48 states, cabinet members, senators, and congressmen, and the Secretary of Defense.

 

Half-nude dancers entertain the crowd's fireworks shoot off the top of the tower, the military gives a 19-gun salute, and John Philip Sousa conducts music. Hundreds of special guests even receive a gold pocket watch.

 

After the concert, Foshay makes a big presentation, giving Sousa a check for $20,000, around a half-million bucks today.

 

Of course, it is all a stunt, designed to promote the name of Wilbur Foshay. He comments that he could never have afforded the publicity the event provided.

Early on, Wilbur Foshay learned that appearing wealthy attracts wealth, so he uses stock in his own company to fund payouts to investors so that he can draw in even more investors and expand his holdings.

 

Foshay’s scheme is simple. Sell one company at a profit to fund the purchase of the next one. It is a shell game, but investors don’t care as long as their dividend checks arrive on time. To be fair, that’s how things are done in many business circles in the Roaring 20s and it appears Foshay truly believes in his plan and feels there is no limit to the money he can generate with this approach.

 

For a while, he is correct.

 

The first sign that his financial ruin is in progress occurs when the check he gave John Philip Sousa bounces several days later.

 

When the stock market crashes on October 29, 1929, less than two months after the dedication of his tower, Foshay’s empire collapses. His company files for bankruptcy a month later. At the time, Foshay has only $1,000 to his name and $3,000 in debt. Everything else is a stock mirage. He is 48 years old.

 

Attempting to rebuild his life, Foshay quickly accepts a job offer from a friend who is a major investor in the Mountain Cross Granite Company of Salida, Colorado. The friend hires the former financial wizard to turn around the failing company.

 

You see, the granite industry saw a huge drop in earnings following the stock market crash because granite headstones are a luxury item and times are now tough, financially.

 

The investor, Charles R. Walgreen, founder of the Walgreen drug stores, hopes Foshay can help the operation become a profitable one. Walgreen has around $200,000 invested in the company, in the neighborhood of $5 million today.

 

But Foshay is unable to save the struggling granite firm.

 

At his peak, Foshay had a financial interest in dozens of companies, including Otero County Gas Company which provided gas to La Junto and Rocky Ford, Colorado among others. Foshay has numerous business and personal friends around the world, and many attempt to help the man get back on his feet.

 

But just as it seems the worst is over, Wilbur Foshay’s real troubles begin.

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The period immediately after the Roaring ’20s and the beginning of the Great Depression are, for many, an opportunity at payback.

 

In 1931, the United States Department of Justice indicts Wilbur Foshay. His attorney posts a $15,000 bond, a half-million today, and Foshay remains in Salida until his trial.

 

Wilbur Foshay offended many with his lifestyle and, most certainly, made powerful enemies when his stock pyramid collapsed. The government comes after him with intensity, but the only charges they can justify are those of mail fraud because he used the postal service to advertise and sell stock in his company.

 

Foshay’s trial is the most major public spectacle of the time. Huge crowds gather in the streets every day to see the famed man. Only those with influence can gain a seat in the courtroom. Reporters describe a near football game atmosphere each morning when Wilbur Foshay arrives for the proceedings. Ever the showman, Foshay arrives impeccably dressed in conservative gray suits, a bow tie, and sometimes even sporting a red rosebud in his lapel. 

Foshay attempts to explain his way out of the charges, claiming he is color blind and couldn’t tell the difference between the red marks and the black marks in his accounting books. In actuality, no colors were used in the accounting, but lots of symbols were. The symbols indicated which entries were artificially inflated.

 

The trial lasts six weeks, but the jury cannot reach a unanimous verdict. All eleven of the male jurors vote to convict Foshay, but one woman, Genevieve Clark, holds out, resulting in a mistrial. It is later discovered that Mrs. Clark once worked for Foshay and that her husband had business dealings with the scam artist. Clark is charged with contempt of court and sentenced to six months in jail.

 

A second trial is ordered, and this time Wilbur Foshay is convicted and sentenced to 15 years in jail.

 

The day he is to turn himself into federal authorities, May 4, 1934, Foshay takes a taxi to the prison. The trip costs 50 cents. Foshay had one dollar on him and the driver didn’t have change. Recognizing his passenger, the taxi driver said, ‘Buddy, you need this more than I do. The ride is on me.”

 

Nearly three years into his jail term, being served in Leavenworth, Kansas, the governor of Colorado requests that President Franklin Roosevelt pardon Foshay. The president refuses a pardon but agrees to commute 10 years from Wilbur Foshay’s sentence because of "good behavior." President Harry Truman grants a full and unconditional pardon in 1947.

 

Following his pardon, Foshay needs a job, anything to cover his bills, and is hired by the Salida, Colorado Chamber of Commerce as secretary. Foshay receives $1,800 a year for the job, around $30,000 today.

 

Foshay shines in his new role and appears to embrace his rebirth. Calling on his artistic skills and creative imagination, Foshay sets out to make the town of less than 5,000 people a regional tourist attraction.

 

In many ways, Wilbur Foshay is a carnival barker. He is brass and bold and understands people want to believe in happy endings and magic.

 

Embracing that philosophy, he turns an old national legend into lasting local lore—the famed fur-bearing trout of Salida’s Arkansas River.

 

According to the 1939 Foshay-created-story, the furry fish was first seen when Zebulon Pike explored central Colorado. Reportedly, these special trout grow fur to keep warm in the frigid winter waters. He claims the fish shed the fur each summer.  

 

As a prop, Foshay takes a trout, glues fur all over it, and sends photographs of this fur-bearing trout around the country to tout this amazing, one-of-a-kind specimen. He also makes sure visitors to Salida receive a plastic model of the fabled critter to take back home. Colorado Governor Carr even visits to check out the mythological fish.

 

Although myth is quickly discounted by reporters who make the trek to see the fish oddity, the legend grows, making Salida a tourist destination.

 

The story lives on today. In 2014, the television program, Mysteries at the Museum, dedicated a segment to the fur-bearing fish of Salida. You can now find similar fur-covered fish throughout the western United States as well as postcards of nature’s mystery creation.

 

Foshay continues growing his national reputation while in Salida.

 

Ernie Pyle, a famous WWII American journalist, calls Foshay “a human dynamo . . .” and says that “as he whirls around, he ejects sparks which dance and twinkle and then form themselves into the golden word ‘Salida’ across the heavens. Mr. Foshay IS the Salida Chamber of Commerce.”

 

One Colorado newspaper wrote that when it came to obtaining publicity Wilbur Foshay is tops.

 

What makes Foshay especially famous, and enduring is creating one of the most memorable marketing campaigns ever.

 

Foshay starts an advertising program with scantily clad local pin-up girls holding a yellow heart bearing the slogan, Follow the Hearts to Salida. These signs are plastered along 4,000 miles of highways in Kansas, Nebraska, Wyoming, Utah, and New Mexico.

 

Each year, new ‘sweethearts’ are photographed, and between 1939 and 1941, over 75,000 postcards and stickers of the Follow the Hearts pin-up girls get shipped around the country.

 

The gimmick is a triumph.

 

Foshay also uses the idea to sell war bonds with the tag, Bring Our Boys Back to Salida. Soldiers from the 10th Mountain Division, stationed in central Colorado, keep the pin-up publicity photographs around their barracks.

 

Today, Foshay’s original idea, calling Salida the Heart of the Rockies, is the slogan around which the city centers its marketing and identity. If you visit the town, be sure to go outside at night. You’ll see a lighted red heart covering the mountain that overlooks the town, a lasting symbol to the publicity genius of a convicted felon.

 

Despite Wilbur Foshay’s shady financial dealings, people are drawn to him. One person describes the man as a loveable buffoon, and many believe Foshay was more a hopeless dreamer who believed his own press than a criminal and scammer.

 

Foshay receives multiple offers to move to larger towns and launch a public relations firm but he never does. He also never again chases wealth and drives what many consider to be the most beat-up old car in town.

 

In 1945 he begins bouncing around, from Alamosa, Colorado, where he worked in a similar chamber of commerce position to Rocky Ford, Arizona, and later Fort Collins, but he never recaptures the accomplishments of Salida, and he never re-enters the world of big business.

Always a visionary, it is Wilbur Foshay who first pushes for a highway from Cortez, Colorado to the four corners area and into Arizona. Foshay pioneers the route, first driving it by horse and buggy then later automobile, and he works tirelessly to promote the hundreds of miles that will eventually connect multiple states.

 

When his wife passes away in Colorado in 1955, Foshay loses his cheeriness and returns to Minneapolis to be near his son.

 

A former employee, distressed after seeing his old boss and realizing he was barely surviving on a social security pension, arranges with the current Foshay Tower owners for Wilbur to have a comfortable place to live. But for some reason his son, William nixes the offer and has his father move in with him. Wilbur Foshay has a stroke two years later and dies at the age of 76.

I leave you with a few final notes on the amazing rise and devastating fall of Wilbur Foshay.

 

Genieve Clark, the woman who perjured herself as a member of Foshay’s jury never makes it to prison to serve her six-month sentence. She and her family disappear before she is to surrender to authorities. Clark, her husband, and their two young boys are later found dead from intentional carbon monoxide poisoning.

 

The John Philips Sousa composition, Foshay Tower Memorial March remained unpublished for almost 60 years. Sousa clearly liked the music, as he retitled it from another paid composition he had yet to deliver, but the march is virtually unknown. Sousa never received a dime for the music and never again played Foshay’s march.

 

The Foshay Tower is still one of the most visible structures in Minneapolis, and Wilbur Foshay’s name remains at the top. The building was the tallest in the Midwest for 48 years and is now on the National Register of Historic Places. You can visit the skyscraper and view the entire city from the observation deck.  

 

The remnants of Foshay’s third company became the basis for Citizens Utilities Company which still runs today. 

 

When Wilbur Foshay dies in 1957, authorities have a hard time finding his son, who appears to be on vacation. Foshay’s body lays unclaimed for days at the county coroner. He is simply referred to as ‘a little old man in the morgue.’ Only 40 people attend his funeral.

 

That wraps up this episode of History Does Rhyme. Thank you for listening. Next week, I'll be

back with another story from the fascinating past of Colorado.

 

If you liked this podcast, please share it with others. To stay in touch, connect with History Does Rhyme on Facebook. If you enjoyed this episode, you'd probably like the 'Salida Sam' historical book series. Each book covers two years in Salida history, and there are now four volumes on local bookshelves. You can purchase the books online by visiting HistoryDoesRhyme.com and clicking Shop on the menu.

Until next week, remember the words attributed to famed writer Mark Twain, "History does not

repeat itself, but it does rhyme."

 

History Does Rhyme is a copyright production of Salida Walking Tours, LLC. No part of this podcast can be copied, shared, or transmitted without the expressed written consent of the owner. History Does Rhyme is written and produced by me, Steve Chapman, Caleb Burgraff is co-producer and technical advisor, Alex Johnstone performed the original music, and the entire episode was recorded and mixed at the studios of Heart of the Rockies Radio in Salida, Colorado.

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Welcome!

History Does Rhyme is a weekly podcast exploring the fascinating past of Colorado. 

Together, we'll do a deep dive into the stories you only thought you knew, uncovering the amazing true tales of the men, women, and battles that shaped the Centennial State.

I'm your host, Steve Chapman, historian/founder for Salida Walking Tours and Buena Vista Walking Tours. I also write the best-selling 'Salida Sam' historical book series and write/produce the award-winning A Salida Moment in History radio program and A Buena Vista History Flashback.

So, yeah, I'm a history nerd--with a passion for engaging storytelling.  Join me every week and learn why famed writer Mark Twain is attributed with this quote: "History does not repeat itself, but it does rhyme." 

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