In the summer of 1934, Clarence Saunders had seen his second fortune vanish with the bankruptcy of his “Clarence Saunders Sole Owner of Name” stores. A well-dressed, suave, continental gentleman with impeccable manners and letters of introduction approached him with an intriguing story. The man, Armgaard Karl Graves, was a well-known celebrity of sorts who may or may not have been originally named Max Meinke, who was also known as Peter Gunther von Kanitz and Dr. Louis Clement. He was born in Switzerland in 1877 and trained as a chemist. He fought in the Boer War until he was jailed for breaking military code. He then was recruited by the German Intelligence agency and sent to Great Britain where he was caught transmitting coded messages in Scotland and sentenced to prison. While there he was recruited by British Intelligence as a double agent and sent back to Germany. From Europe he sailed to the U.S. and became a sensation, publishing two books on his life as a spy and about the Hohenzollern royal family whom he regarded as usurpers.
He blackmailed the wife of German Ambassador to the United States with information so sensitive that the case was dropped. He was arrested for impersonating an official of the state department, and he claimed that a famed Hollywood actress had information to back his claim that the Hohenzollern family were frauds. He talked investors into backing his plan to make synthetic gasoline, and he was a suspect in the sensational “Torch Murder” of a Park Avenue governess.
Graves was urbane and never ruffled. He was often seen with vaudeville starlets such as “Musette, the Dancing Violinist.” When confronted with his crimes, he often hid in plain sight, writing letters to the police professing his innocence and sometimes walked into the police station on his own. When accused of deceiving investors in his chemical company, he performed a dramatic mixing of chemicals for the police and produced a substance that could run two cars but would cost more than gasoline. And while there were doubts about his claims (he was often referred to in newspapers as the “self-styled” German spy), he never had trouble in charming new investors.
In August 1934, Graves came to Memphis to meet Clarence Saunders. According to Saunders, Graves had a letter of introduction from Wall Street genius Jesse Livermore who Saunders knew from his attempt to corner Piggly Wiggly stock in 1923. In Saunders own words, Grave told “a brilliant story.”
Graves claimed that during WWI the German cruiser Emden was carrying millions of dollars in gold in the Caribbean. As allied ships closed in, the ship’s carpenter built teak boxes to hide the gold in the shallows and jungles of Haiti. Graves claimed that he had already recovered some of it and was putting together an expedition to get the rest. Saunders, in his own words, was sold. Saunders gave Graves $1,500 in cash and sent his son Lee to New Orleans with Graves to test out the new diving suit that would be used in the expedition. Graves slipped away once the two arrived in New Orleans..
Saunders had him tracked to Texas and brought back to Memphis to face charges. Even in custody in Memphis, Graves maintained his cool charm. “I talked to him this morning and I am convinced he was trying to rob me,” Saunders said, “he denies everything…” Saunders had discovered that Graves had used this same trick several times and had a telegram from a man in St. Augustine that said that Graves had bilked him of $1,400 with the same story. “I asked him if he wanted me to show the telegram to [the police] and he said go ahead.” Saunders was bemused. “He is like a ball of putty. You can squeeze him anyway, but you can’t make anything out of him,” Saunders said.
As he was led away, Dr. Graves told Saunders, “They are going to give me a bath; I wish that you would buy me some clean linens…underwear, socks and so on.” Saunders placed his hand on Grave’s shoulder. “I’ll do that,” Saunders told Graves.
Graves was convicted of the theft and sentenced to three years in the state penitentiary. As Graves was taken away, Saunders shook his head and mused, “I suppose I had better add that linen to the $1500.”
Quotes from the August 27, 1934, front page of the Memphis Press-Scimitar.
The idea for this post comes from a brief mention of the incident in Mike Freeman’s book, Clarence Saunders and the Founding of Piggly Wiggly: The Rise and Fall of a Memphis Maverick. History Press, 2011.