Friday, March 25, 2011

Charles Ponzi

Charles Ponzi was born in 1882 and died in 1949. His early life is vague as his accounts of his life during that period don’t add up. He dropped out of the University of Rome and immigrated to United States with only $ 2.5 in his possession. Ponzi schemes are used to refer Make Money Fast scheme, was born from his name.

This famous con artist had it rough in his early years in the United States. He was employed in a restaurant where he was to be fired shortly after for shortchanging customers. His next job was in Canada at a bank for Italian immigrants. He was very good with his job save for his boss who was diverting savings for his clients to pay interest to cover for bad investment. The owner was to close shop and flee for Mexico leaving Ponzi jobless. Ponzi was to write a bad check that earned him time in prison for a couple years. He was determined to beat the odds and become a wealthy man.
After he was released from prison he was to come with a brilliant idea. He came across postal reply coupons that he had received from overseas. If he was to buy such foreign coupons at such low prices (the prices were fixed after the war), he would be able to sell the same to the United States for a whopping 400% profits! Armed with the idea he went on the offence by asking friends and acquitances for money with the understanding that the money would be doubled in 90 days. To promote the scheme, Ponzi started Securities Exchange Company.
Before long word went round of this get quick investment and soon Ponzi was living the good life. The truth of it was that Ponzi was losing money. He went more into debt with every dollar he received. That did not matter at the time as he was bringing in cash at an amazing rate. He was enjoying himself before the storm.
The bad press on the Ponzi scheme made people suspicious and led them to ask for their money. His offices were raided by federal agents and shut down. To the investors shock no stock of stamps were found. The investors lost all their money that run in tens of millions of dollars. He was sentenced to prison after he pleaded guilty of mail fraud. He was arrested after one escape and was deported after he finished his jail sentence back to Italy where he died in utter poverty in 1949.

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