Wallace Groves

Wallace Groves (c. 1902–30 January 1988) was a prominent financier, who, after his release from federal prison in 1944, moved to the Bahamas and there founded and operated the free trade zone, resort, and casino development Freeport on Grand Bahama Island. Investigators of U.S. organized crime associate him with the Meyer Lansky syndicate operating offshore casinos from Miami Beach. These ties notwithstanding, he is credited with being a driving force in the development of the modern Bahamian economy.

Born in (or around) 1902, Groves made an early career in complex financial transactions on Wall Street. Virginia-born, he reportedly came to New York from Baltimore, where he was a bond salesman. His obituary noted that “as a young, flashy, and successful investor, he was involved in several businesses and had controlling interests in several others, including the United Cigar Store and the Wheelan Drug Store chain.” However, his transactions soon caught the attention of the Securities and Exchange Commission (SEC), and from 1933 until his imprisonment in 1941, he was frequently in the news for legal or regulatory matters.

In 1931, Groves began to assemble a collection of investment trusts and other companies through complex transactions following a certain pattern. He was then reported as having total net assets of $19 million. In 1931, Groves obtained control of Chain and General Equities by underwriting an offering to the stockholders of additional stock and then caused the election of officers of his choice to the board of directors, according to the SEC. Groves then sold to the company “642,517 shares of common stock of Interstate Equities Corp. for appr. $1,325,000 with a gross profit of $369,000 to said Wallace Groves.” The stock had “little or no asset value.” Numerous other suspect transactions of similar nature were revealed to the public by the SEC.

Two other companies, Interstate Equities of New York and Yosemite Holding of Detroit, also came under the control of Groves’s Equity Corporation, by December 1932, netting Groves the market value of these companies “with the expenditure of very small amount of money.” Stockholders filed suit against Groves and his associates In 1933, Groves sold his control of Equity Corp.

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