Keith Everett
charles ponzi

The Outrageous $8 Million Dollar Conman Called Charles Ponzi

PONZI SCHEME – a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

19 Slocum Road, Lexington. The mansion that briefly belonged to Charles And Rose Ponzi

Charles Ponzi was an Italian Conman who carried out an outrageous series of swindles back in the 1920’s which netted him a cool $8 Million Dollar fortune, this would be worth around $120 Million dollars today.

Although he was eventually rumbled, he enjoyed an amazing lifestyle, driving only the best cars and living in a colonial style mansion with servants in the best part of town in Lexington, . Lexinton is a suburban town in Middlesex County, Massachusetts, United States, just 10 miles from downtown Boston.

It all came crashing down around Ponzi one day when the police caught up with him. He was sentenced to three and a half years for mail fraud and a further nine years on other state charges. He served the entire sentence and ended up being deported back to Italy where he ended up broke.

You Can Fool Some Of The People All Of The Time

But you can’t fool all of the people, all of the time.

Charles Ponzi was born in 1882 and was a small time crook for most of his early adult life. He had been in prison several times in the past for helping illegal immigrants gain entry into Canada, and for several minor fraud charges including check fraud

But, the skies really opened up for Ponzi when he eventually conned his way into the United States arriving with very little to his name except a few dollars his parents gave him and a willingness to work. After many unsuccessful terms of employment, he eventually started his own company in the summer of 1920 at 27 School Street Boston, Massachusetts – impressively called “The Securities Exchange Company”. From this address Charles Ponzi advertised his amazing scheme in the local papers. The Advert read” “Doubles The Money Within Three Months

Back in the 1920’s people were a lot more gullible than they are today. Although, these “rob Peter to pay Paul” schemes still exist today and people still fall for them. This is mainly because having more money quickly is so desirable, and just like back then in the 1920’s some people are desperate. When desperation sets in, common sense can go out the window.

Charles Ponzi King Of The Conmen

Charles Ponzi’s scheme was simple. You pay your money and in three months time if you hadn’t requested your money before 90 days, you would get double your money back. School street was chocked solid with people willing to “invest”. Even members of the police force wanted to “double” their money.

27, School Street was overrun daily with willing investors. They queued all day, and the queues got longer and longer as each day passed. Ponzi paid the earlier investors their double money by using the moneys from the most recent investors to pay . This is how any “rob Peter to pay Paul scheme works.

Once the early investors started to see a doubling of their cash. They would tell others. This is free advertising for the conmen. This caused a huge rush of new investors. Conmen will trick you by letting you see the scheme working before fleecing you of all your money.

Ponzi’s company “The Securities Exchange Company” was not just growing by thousands of dollars a day, it was sometimes growing by hundreds of thousands of dollars a day. Ponzi had graduated from being a two bit swindler to becoming “King of the Conmen”

Ponzi even tried to “legitimize” the business by investing some of the funds in IRC’s (International Reply Coupons). These are postal reply coupons issued in every country whereby if you send a letter abroad and you want to send return postage to the recipient, you send an International Reply Coupon in your letter. Ponzi realised that by trading some IRC’s he could make a small profit on each coupon.

The problem was, he couldn’t buy enough.

Ponzi had so many people trying to give him money to “double” that he had to take on more staff at School street and eventually he started opening more branches throughout the United States. He was quite clever in the way he did this. He simply got employees to open them up for him on a commission basis.

Soon, Ponzi had millions of dollars in the bank. He had to start spending it soon as his empire was starting to collapse as it became harder and harder to keep paying everyone double their money.. Many investors kept their money in the scheme to “keep doubling” it every three months. The banks of the time were only paying a very small yearly interest, so Ponzi’s scheme seemed like it was worth the risk to many.

People honestly thought Charles Ponzi was the answer to their prayers…

He bought a mansion outside of Boston on his ill-gotten gains, in a town called Lexington. He lived there with his wife Rose Gnecco, and bought the finest furniture you could buy. They had a butler and several servants, they also had a fine limousine to match their impressive lifestyle.

Rose Gnecco was innocent. she knew nothing of Ponzi’s “rob Peter to Pay Paul scheme”. She just though her husband was a financial genius who invested the money in International Reply Coupons (IRC Postal Coupons).

Ponzi – The End

In the end, it was the banks and the newspapers who threw a spanner in the works. The Boston Globe became suspicious and through one of their intrepid reporters found a lot of discrepancies in what Ponzi was saying regarding his business. Suspicion mounted and eventually the banks called time on Ponzi’s activities as he could no longer service the debt he was accumulating.

Eventually the police were brought in and Ponzi had managed to make around $8 Million Dollars disappear.

Ponzi was jailed, and eventually deported back to Italy minus the love of his life, Rose. She decided to call it a day. Ponzi had lied and deceived her, and it broke her heart. He was poor, down and broke. He eventually died of a stroke in a cheap convalescent home aged just 66.

I hope you liked this short story about Charles Ponzi. He was (and still is) remembered as a financial genius. Although he broke a lot of hearts along the way and ruined many people’s lives, his legacy is a lesson to us all – “If it looks too good to be true – it probably is

Have a great day


P.S People who liked this post, also liked this one. “The NO.1 Secret To Becoming A Millionaire

Add comment