Charles Ponzi

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Charles Ponzi

Charles Ponzi (born March 3, 1882 in Parma , Italy as Carlo Pietro Giovanni Guglielmo 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 US and one of the biggest scammers thereits time. In the English-speaking world, his scam is known under the term "Ponzi scheme" (German for example: "Ponzi-Masche").

Charles Ponzi's “fame” as a fraudster has not faded to this day - customers who invested 150 million dollars according to today's monetary value (2006) were cheated out of their fortune.

Beginning in the USA and Canada

Ponzi immigrated to the United States in November 1903 for $ 2.50. He worked in a restaurant after learning English quickly. At first he slept on the floor of the restaurant and was soon able to work his way up to the waiter. He was fired after scams.

In 1907 he moved to Montréal , Canada . As a bank clerk, he saw his boss, the banker Luigi Zarossi, luring Italian newcomers with six percent annual interest , twice the interest rate that was customary at the time. Zarossi got into trouble, however, and paid the interest due by plundering the accounts of new investors. With the "win", Zarossi moved to Mexico .

Ponzi was now living in the household of the family abandoned by Zarossi and was planning his return to the United States. To obtain funding, he went to the office of a former Zarossi customer and, unobserved, wrote a check for $ 423 on behalf of the boss. For this he was sentenced to three years in prison for fraud. He wrote to his family that he had found a job as an assistant to a prison guard.

Because people smuggling Ponzi was serving after his release another prison, this time in Atlanta (USA), and was there actually an assistant to the prison guard. He translated letters received by the Italian gangster Ignazio Lupo and made friends with him. The prisoner Charles W. Morse , also detained in Atlanta, swallowed soap shavings , fell ill and was able to convince the doctors that he was going to die - he was released early. This fellow prisoner became a role model for Ponzi.

Ponzi and his trick

Ponzi began after the dismissal at first so, industry books for sale, but the company went bankrupt soon.

Once he received mail from a company in Spain that was interested in a catalog and included an international reply coupon with the letter . At first the monetary value of such a reply coupon was linked to the currency; However, when the European currencies began to lose value dramatically at the beginning of the 20th century, one could buy a note in Europe for a fraction of the usual price in the USA. Ponzi recruited employees who bought these bills in Europe and then resold them in the USA. In 1920 you could buy a reply coupon in Spain for the equivalent of one US cent, which in the US was worth 6 cents. However, the long mail delivery times at the time and the bureaucracy in international mail prevented a profitable business.

As a result, Ponzi recruited customers who invested money in these reply coupons. For this purpose he founded the company "Securities Exchange Company" in Boston . Ponzi promised a 50% return in 45 days, or doubling the money invested in 90 days. Because business was so great - he paid when someone wanted to see his profit - the trusting customers refused to claim their income and had their "profits" reinvested. Many people mortgaged their homes and belongings to get rich using the Ponzi method.

In a few months of 1920, Ponzi grew his fortune from a few thousand dollars to millions. The money was stored and stacked in drawers, wastebaskets, and on the floor.

But when a furniture dealer unsuccessfully asked Ponzi for money, the media became aware of his wealth. Customers asked for their money back and Ponzi satisfied their demands. But investors were concerned. When the tax office finally examined his assets, they found only a few reply coupons in his possession. It was calculated that he would have had to buy 160 million such notes for the money he raised - but only 27,000 were in circulation at the time. When the press reported his criminal record , the investors realized the fraud and asked for their money back. In total, Ponzi had been entrusted with $ 15 million from around 40,000 customers; when his offices were searched, only 1.5 million were seized.

Ponzi was sentenced to five and an additional seven to nine years in prison.

Ponzi scheme

In the United States, his scam came to be known as the Ponzi scheme ( Ponzi scheme , Ponzi scheme , or Ponzi scheme ). Although it is sometimes incorrectly used as a synonym for the pyramid scheme , it differs from it in several ways. Both systems have in common that the number of participants must increase exponentially in order not to collapse, and that the contributions of new participants cover the profit distributions of the existing participants. The main difference is that with the pyramid scheme the “customer” knows the source of the profit distribution (he recruits it himself), but he does not know the originator of the system. In the Ponzi scheme, however, the originator of the system is known to every “customer”, while the source of the profit distributions is concealed from him.

A well-known example of the recent application of the Ponzi scheme is Bernard Madoff's investment company .

A fraudulent new beginning

After his release, he tried fraud again in Florida , this time in real estate. Under the name Charles Borelli, he bought land at $ 16 an acre , divided the property into 23 parts, and sold each for $ 10. He promised customers a miraculous increase in money from $ 10 million to $ 5.3 million in two years. He said nothing about the fact that the area was swampy and mostly under water.

After this scandal was exposed, he was again sentenced to prison. He was released after paying bail, but fled to Texas in 1926. He was arrested in New Orleans harbor and sent back to Boston. A request to President Calvin Coolidge to replace the prison sentence with deportation abroad was denied.

Italy and Brazil

After seven years in prison in Boston, he was put on a ship to Italy on October 7, 1934. He was still considered a hero by the public. And precisely among the Italians - be it in the USA or in Italy - his admiration had reached an almost mythical dimension. In Rome he first worked as a translator. Benito Mussolini entrusted him with the management of the Brazilian branch of the Italian national airline Ala Littoria ; his employment in Rio de Janeiro lasted from 1939 to 1942. When he discovered that employees were smuggling foreign currency on the planes, Ponzi demanded a profit-sharing scheme. When they refused, he betrayed them to the Brazilian government.

After his dismissal from the airline - the Second World War had ruined the flight business - he tried different jobs. After he failed as a hotel manager, he lived on unemployment benefits and a little extra income from English lessons.

Ponzi died in the poor department of a hospital in Rio de Janeiro in 1949 after a stroke - he was almost blind and his left half of his body was paralyzed. The $ 75 state pension just covered the funeral expenses.

Individual evidence

  1. ↑ Gerald Braunberger: Charles Ponzi, international reply coupons as a hot speculative object. In: Frankfurter Allgemeine Zeitung , January 23, 2009.
  2. ↑ Ponzi telegram: Archive Link. ( Memento of December 4, 2007 in the Internet Archive )

literature

Web links

personal data
SURNAME Ponzi, Charles
ALTERNATIVE NAMES Ponzi, Carlo Pietro Giovanni Guglielmo Tebaldo (full name)
BRIEF DESCRIPTION Italian criminal
DATE OF BIRTH March 3, 1882
PLACE OF BIRTH Parma , Italy
DATE OF DEATH January 18, 1949
Place of death Rio de Janeiro , Brazil