Elizabeth Bigley was born in Ontario, Canada in 1857. In 1879 she was arrested for forgery for passing off worthless cheques to merchants, but was acquitted on grounds of her age and insanity. She later worked in Cleveland, Ohio as a psychic, calling herself Madame Lydia DeVere. In 1889 she was again arrested and this time convicted of forgery and spent several years in prison before being pardoned by the then governor of Ohio (later President) William McKinley in 1893. By 1897 she was back in Cleveland, living under an assumed name, with her new husband Dr Leroy Chadwick. He married her believing her to be the illegitimate daughter of wealthy industrialist Andrew Carnegie.
What was the scam?
The now Mrs Chadwick claimed that Carnegie felt so guilty about not publicly acknowledging her as his daughter that he was willing to give her large amounts of money. After exhausting her husband’s fortune, she persuaded several local banks and wealthy individuals to lend her money. As collateral, she provided promissory notes signed with Carnegie’s name and an unopened package supposedly containing a trust fund of $7.5m ($207m in today’s money) in railroad shares and bonds. In reality, Carnegie was unaware of her existence and the notes were forgeries. The money funded an extravagant lifestyle, which enabled her to borrow even more.
What happened next?
Her generosity with money won her many admirers, but her creditors grew anxious and, by November 1904, banker Herbert Newton sued for repayment of a $190,000 ($5.63m) loan. Carnegie disowned both her and the notes, and her railroad bonds and shares were found to be worthless. Early in 1905 she was arrested carrying $100,000 in cash and sentenced to several years in jail, where she died.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lessons for investors
Estimates suggest Chadwick may have borrowed as much as $1.3m ($29.6m) backed by $12m ($355m) in forged Carnegie notes. Her creditors recovered only a fraction of this. The Citizens’ National Bank, which had loaned $240,000 ($7.1m), was forced into liquidation after its depositors withdrew their money, demonstrating the importance of doing proper due diligence. Even if Chadwick had been a genuine heiress, it was an incredibly irresponsible decision to lend a sum that was four times the bank’s actual capital to a single person.
-
Norfolk or Norway? Holidays you can afford with different-sized pension potsMany people look forward to taking more holidays when they retire. But what sort of trips could your pension buy you? We look at the holidays to match different retirement incomes
-
Q&A: Issac Thong – new lead manager of Aberdeen Asian Income Fund
-
Sachin Dev Duggal's Builder.ai – the first big bust of the AI boomSachin Dev Duggal's Builder.ai start-up claimed it could use artificial intelligence to build apps. Its revenues turned out to be equally artificial
-
Alex Karp: can Batman save America?The US governing elite needs to take on the bad guys, says Alex Karp, who sees himself as the caped crusader to lead the battle
-
In defence of Donald TrumpOpinion Doom-mongers thought the world would end with the election of Donald Trump. Think again, says Max King
-
Mira Murati: a trailblazer in AI goes it aloneMira Murati fled OpenAI to set up her start-up, Thinking Machines Lab. The firm just raised a record $2bn in a seed funding round and has grand ambitions
-
Ozzy Osbourne: the working-class Brummie who became heavy metal royaltyBlack Sabbath's frontman Ozzy Osborne, the people's 'Prince of Darkness', has died aged 76
-
Alexandr Wang: the AI wunderkind who takes his seat at MetaAlexandr Wang became the world’s youngest self-made billionaire by exploiting a niche in the AI market. Now Mark Zuckerberg has poached him for a record sum
-
Zohran Mamdani wows New York – what did the mayoral candidate get right?Zohran Mamdani, 33, has won the Democratic candidacy to be mayor of New York. That has energised his supporters and enemies alike – and terrified the rich
-
The true nature of economic growthOpinion The feds making a number go up is one thing; true economic growth is quite another, says Bill Bonner
