Charles Ponzi

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Charles Ponzi (born Carlo Pietro Tebaldo Ponzi; born March 3, 1882 – January 15, 1949) was an Italian swindler and con artist who worked in the United States and Canada. Charles Ponci, Carlo, and Charles P. Bianchi were among his aliases.

He was born and raised in Italy and became well-known in the early 1920s as a swindler in North America for his money-making scheme. By purchasing discounted postal reply coupons in other countries and redeeming them at face value in the United States as a form of arbitrage, he promised clients a 50% profit within 90 days. 1 In reality, Ponzi was paying earlier investors using the funds of later investors. Although this type of fraudulent investment plan was not invented by Ponzi, it has since been identified with him that it is now called a "Ponzi scheme." His scheme operated for more than a year before it fell, costing his "investors" $20 million.

Ponzi may have been inspired by William F. Miller (also known as "520% Miller"), a Brooklyn bookkeeper who in 1899 used a similar deception to raise $1 million (roughly $35 million in 2022).

Early life

Charles Ponzi was born in Lugo, Emilia-Romagna, on March 3, 1882. He said he came from a family in Parma, according to The New York Times. Ponzi's ancestors had been well-to-do, and his mother continued to use the term "donna," but the family had to deal with difficult times and had no funds. Ponzi began working as a postal worker early on, but he was accepted into the University of Rome La Sapienza shortly after. The university was a "four-year holiday," according to his richer friends, who then followed them around to bars, cafés, and the opera. Ponzi spent all his money, but four years later, he was broke and without a degree. During this period, many Italian boys were migrating to the United States and returning to Italy as wealthy citizens. Ponzi's family pleaded with him to do the same, thereby returning his family to its former glory.

Prison and later life

Ponzi was charged with 86 counts of mail fraud and faced life term in two federal indictments. Ponzi pleaded guilty on November 1, 1920 to a single count before Judge Clarence Hale, who announced "Here was a man with all the duties of demanding large sums." He concocted a scheme that defrauded both men and women upon his counsel's admission. It would not do to have the world know that such a scheme exists... without receiving a significant punishment." Ponzi was sentenced to five years in federal prison.

Ponzi was released after three-and-a-half years and was practically arrested on 22 state charges of larceny, which came as a surprise to Ponzi; he believed he had signed a deal requesting that the state drop any charges against him if he pleaded guilty. He sued, arguing that if Massachusetts had effectively retried him for the same offenses that had been spelled out in the federal indictment, he would face double scrutiny. The lawsuit, Ponzi v. Fessenden, made it all the way to the U.S. Supreme Court. The Supreme Court ruled on March 27, 1922, that federal plea bargains have no weight on state charges. Even though the charges related to the same criminal investigation, it was also found that Ponzi was not facing double larceny because Massachusetts was charging him with larceny but the federal government charged him with mail fraud.

Ponzi was one of the first ten larceny convictions in October 1922. Ponzi was insolvent, and the jury found him not guilty on all counts because he was speaking as convincingly as he had with his duped investors. The jury denied five of the remaining charges a second time, and the court found him not guilty. Ponzi was found guilty at a third trial and was sentenced to an additional seven to nine years in jail as "a common and notorious robber." Ponzi continued to receive Christmas cards from some of his more gullible investors, as well as other calls from others to invest his money—from his prison cell, despite the fact that he was largely released prisoner. In 1922, there were attempts to have him deported as an unwanted alien.

Ponzi was released on bail after he appealed the state's conviction in September 1925. He moved to Jacksonville, Florida, where he founded the Charpon Land Syndicate ("Charpon"), aiming to cash in on the Florida land boom. He promised tiny tracts of land to investors, some submerged, and some in 60 days. In reality, it was a fraud that sold swampland in Columbia County. In February 1926, a Duval County grand jury charged Ponzi with breaching Florida trust and securities laws. A jury found him guilty of the securities fraud, and the judge sentenced him to a year in the Florida State Prison. Ponzi appealed his conviction and was released after posting a $1,500 bond.

Ponzi travelled to Tampa, where he shaved his head, grew a mustache, and attempted to leave the country as a crewman on a merchant ship headed for Italy. However, he revealed his identity to a shipmate. A deputy sheriff who followed the ship to its last American port of call in New Orleans and arrested Ponzi, who was then arrested. Since Ponzi's pleas for removal were turned down, he was sent back to Massachusetts to serve out his prison term. Ponzi spent seven years in jail.

In the meantime, government investigators continued to track Ponzi's tumultuous accounts to see how much money he'd earned and where it had gone. They never managed to untangle it, and they could only say that millions of dollars had been spent by his hands.

Ponzi was first introduced in 1934. With the deposition of the letters, he was immediately ordered to be deported to Italy. Governor Joseph B. Ely of Massachusetts demanded a complete pardon. However, Ely's appeal was dismissed on July 13. Ponzi's charismatic confidence had dwindled, and when he left the jail gates, he was met with an angry crowd. "I went looking for trouble, and I found it," he told reporters before leaving. Ponzi was officially expelled on October 7.

In 1937, Rose stayed in the United States and divorced Ponzi. She didn't want to leave Boston, and Ponzi was in no position to help her in any case.

Ponzi changed from plan to plan in Italy, but no one knew of them. He then began working in Brazil as an agent for Ala Littoria, the Italian state airline. However, the airline's operations in the region were suspended after the British intelligence services intervened, and Brazil sided with the Allies during World War II. Ponzi also wrote his autobiography at the time.

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