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Charles Ponzi was best known for the financial crimes he committed when he conned investors into giving him millions of dollars, and paid them returns with other investors' money.
The details of Charles Ponzi's early life are difficult to verify. It is believed, however, that he was born in Parma, Italy, and attended the University of Rome La Sapienza.
Ponzi arrived to Boston in November 1903 aboard the S.S. Vancouver. He later told the New York Times that he gambled away most of his money on the travel to America. "I landed in this country with $2.50 in cash and $1 million in hopes, and those hopes never left me." The young immigrant’s charisma and confidence would help him pull off one of the greatest financial schemes in history.
Ponzi started out working at odd jobs, including as a dishwasher in a restaurant. In 1907, he moved to Montreal, where he found a job as a teller at Bank Zarossi. The bank was formed to file the new Italian immigrant population, charging high interest rates.
He was imprisoned for three years in Quebec because he was caught red-handed falsifyin the signature of a client of Bank Zarossi. He was impriosoned again in 1911 in Boston because of a smuggling case with italian migrants.
Ponzi Scheme
Everything began when he received a letter from a spanish company that contained an international reply coupon (a coupon that can be exchanged for a number of priority airmail postage stamps from another country). Ponzi realized that he could turn a profit by buying IRCs in one country, and exchanging them for more expensive stamps in another country.
Not satisfied with running the profitable scheme on his own, Ponzi began to seek investors to turn even higher profits. He promised investors outrageous returns of 50 percent in 45 days, or 100 percent in 90 days. Ponzi paid these investors using money from other investors.
He took in $20 million in a few months, equal to $222 million in current dollar values, and six banks crumbled.
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