Charles+Ponzi

CHARLES PONZ I


 * Background **

He arrived in Boston in 1903. Having gambled away all his money, he has $2.50 in his pocket. "I landed in this country with $2.50 in cash and $1 million in hopes, and those hopes never left me," he later told The New York Times. He quickly learned English and worked at odd jobs to make enough money to live. Soon enough he found himself to be a bank manager. While at the bank, Ponzi wrote himself a cheque for $423.58 using a director of the company’s signature. He was confronted by the police about this cheque and he instantly plead guilty. He spent three years in jail and upon his release he returned to the United States. He then got involved with an illegal immigrant smuggling project. He was caught and spent two more years in jail.


 * The Scheme **

Ponzi, who swindled the gullible out of millions by 1920, invented what came to be known as a Ponzi Scheme, a scam in which early investors are paid with money from new investors (similar to today's "pyramid scheme"). The con game had been around for years, perhaps centuries. But Ponzi played it on such a grand scale, with such flair, and in full view of the media and the world, that he earned a prominent place in criminal history. Some historians have described Ponzi as "a celebrity." The most notorious "Ponzi Scheme" took place when he began to trade postal reply coupons in 1919. Plenty of Americans in other countries could include such a coupon in a letter, to be redeemed at the post office for enough money to send a reply. Ponzi used his Securities Exchange Company as a front to trade the coupons and make a 200-percent profit. That was not how he continued his business, however. He eventually moved to Florida to pursue new schemes. After authorities caught up with him in Florida, he fled to Texas, where he was apprehended and sent to jail. Upon his release, Ponzi's wife divorced him and he was eventually deported to Italy. At the age of 52, he had to start over again.


 * Later years **

Ponzi became an English translator while in Rome. Benito Mussolini offered him a position with Italy’s new airline and he served as the Rio de Janeiro branch manager from 1939-1942. Ponzi discovered that several airline officials were using the carrier to smuggle currency, and Ponzi wanted his share. When the smugglers laughed at him, he tipped off Brazilian authorities — leading to the arrest of three top airline officials. World War II brought about the airline’s failure, and Ponzi soon found himself without a job again. Charles stayed in Rio de Janeiro with hopes of "finding his way" financially. After trying to run a Rio lodge (which failed), Ponzi found himself either collecting Brazil unemployment insurance or giving English lessons — a far cry from the millionaire that he had become just a decade earlier.

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