Charles Ponzi

Charles Ponzi ( March 3, 1882 in Parma, Italy Carlo Pietro Giovanni Guglielmo as Tebaldo Ponzi, pseudonyms Charles Ponei, Charles P. Bianchi, Carl and Carlo; † January 18, 1949 in Rio de Janeiro, Brazil) was an Italian immigrant in the U.S. and one of the greatest swindlers and scammers of the U.S. history. In the English speaking world his scam, the term " Ponzi scheme" ( German as: " Ponzi trick" ) is known.

Charles Ponzi's " fame " as a cheat is still not faded today - Customers who invested $ 150 million in today's money value, have been cheated out of her fortune. For an individual, this is a considerable amount still.

Beginning in the U.S. and Canada

Ponzi emigrated in November 1903 with $ 2.50 in the U.S. a. He worked in a restaurant, after he had learned English quickly. First, he slept on the floor of the restaurant and could soon work their way up to the waiter. After he was discharged scams.

In 1907, he moved to Montreal in Canada. As a bank employee, he saw, like his patron, the banker Luigi Zarossi, Italian newcomers with six percent annual interest attracted, twice the then customary rate. However Zarossi got into trouble and paid the interest due by plundering the accounts of new investors. With the win itself Zarossi put down to Mexico.

Charles Ponzi was living in the household of the abandoned Zarossi family. Ponzi was planning his return to the United States. For the purpose of financing, he went to the office of a former Zarossi customers and stood there unobserved in the name of the boss a check in the amount of $ 423. For this he was sentenced to three years in prison for fraud. His family, he wrote that he had found a job as assistant to the prison guard.

Because people smuggling was serving Ponzi after his release another prison sentence, this time in Atlanta ( USA), and there was actually a wizard of the prison guard. He translated letters, received by the Italian gangster Ignazio Lupo, and became friends with this one. The also arrested in Atlanta prisoners Charles W. Morse swallowed soap chips, fell ill and was convinced that he would die the doctors - he was released early. This inmate was for Ponzi role model.

Ponzi and his trick

Ponzi began after discharge first order, industry books for sale, but the company went bankrupt soon.

Once he received a letter from a company in Spain that was interested in a catalog and the letter were annexed an International Reply Coupon. Initially, the monetary value of such a reply coupon was still linked to the currency; However, as the European currencies began to dramatically lose value at the beginning of the 20th century, you could purchase a scratch ticket in Europe for a fraction of the normal price in USA. Ponzi recruited staff, who bought those tickets in Europe just to then resell them in the U.S.. In 1920 you could buy in Spain for the equivalent of one U.S. cent a reply card that was worth even 6 cents in the U.S.. However, the time long postal delivery times and the bureaucracy in international postal traffic prevented a profitable business.

As a result Ponzi recruited customers, invested the money in this reply coupons. To this end, he founded the company in Boston "Securities Exchange Company ". Ponzi promised 50 % return in 45 days or doubling the invested money in 90 days. Because the business was so dazzling - he paid, if someone wanted to see his prize - not demanding the credulous customers their income and had their "profits" reinvest. Many people pledged their house and belongings to become rich after the Ponzi method.

In a few months of the year 1920 Ponzi increased his fortune from a few thousand dollars to millions. In its heyday, he took daily up to one million dollars; the money was stored and stacked in drawers, in bins and on the ground.

But when a furniture dealer in Ponzi unsuccessfully demanded money, the media became aware of his wealth. The customers demanded their money back, and Ponzi satisfy their demands. But investors were troubled. As the Tax Office finally took his fortune under the microscope, was found in his possession only a few reply coupons. We calculated that 160 million of such notes he would have to buy for the money raised - but were in circulation at that time only 27,000. When the press reported on his criminal record, investors realized the fraud and demanded their money back. Overall, Ponzi had been entrusted by about 40,000 customers $ 15 million; during the search of his office only 1.5 million were seized.

Ponzi was sentenced to five and in addition to between seven and nine years in prison.

Ponzi scheme

In the United States, his scam was the term Ponzi scheme known and sometimes incorrectly used as a synonym for snowballing. However, the Ponzi scheme differs in several points from a Ponzi scheme:

• In a Ponzi scheme, the incentive is usually that one is after a single payment at the distributor of a product and profit from the recruitment of other distributors acquired while in the Ponzi scheme, the incentive is to obtain high interest rates means an investment.
• In contrast to the snowballing no other persons must be recruited, because the interaction is generally carried out solely directly with the founder of the fraud system.
• In snowballing each participant is aware of where the money comes ( from recruited by him people), while the source of money is obscured in the Ponzi scheme.
• A Ponzi scheme requires an exponential growth to remain stable, and therefore breaks compared to the Ponzi scheme together faster.

A fraudulent new beginning

After his release, he dabbled in Florida again in the fraud, this time in the land trade. Under the name of Charles Borelli he bought land at $ 16 per acre, divided the land into 23 parts and each sold for $ 10. He promised the customer a miraculous multiplication of money of 10 dollars to 5.3 million dollars within two years. That the terrain was swampy and mostly under water, he concealed.

After flying up this scandal, he was again sentenced to a prison term. After payment of a bond, he was released again, but fled in 1926 in the direction of Texas. In the Port of New Orleans, he was arrested and sent back to Boston. A petition to President Calvin Coolidge, to replace the term of imprisonment by a deportation abroad was rejected.

Italy and Brazil

After seven years in prison in Boston, he was set on October 7, 1934 on a ship to Italy. From the public, he was still regarded as a hero, and especially among the Italians - whether in the U.S. or in Italy - had his worship accepted an almost mythical proportions. In Rome, he first worked as a translator. Benito Mussolini entrusted him with the management of the Brazilian branch of the Italian state airline Ala Littoria; his employment in Rio de Janeiro lasted from 1939 until 1942., when he discovered that employees in the aircraft to smuggle foreign currency Ponzi demanded a share of profits. When they refused this, he betrayed her by the Brazilian government.

After his release from the airline - the Second World War, the airline business had ruined - he tried his hand at various jobs. After he had failed as a hotel manager, he lived on unemployment benefits and a small additional income by teaching English.

Ponzi died in 1949 in the poor ward of a hospital in Rio de Janeiro after a stroke - he was almost blind and his left half of the body was paralyzed. A man took over Ponzi's funeral; $ 75 from the state old age pension cover only the funeral expenses.

Credentials