Bernard Madoff has ensnared the rich and famous in his Ponzi scheme, unlike the original Ponzi who defrauded mainly working people.
“The Great Ponzi” was born Charles Ponzi, an Italian immigrant living in Boston. His unlikely resume included a stint as a clerk, a bankrupt fruit and vegetable businessman, a forger, and an illegal alien smuggler.
By 1920, the former convict was able to morph into a con artist extraordinaire. His hook was a guarantee to exchange money overseas at an incredibly high rate of return.
Everyone wanted to get in on the ground floor of Ponzi’s money making scheme. Within eight months, 40,000 investors, mostly hard-working ordinary people, had invested $15 million. The response exceeded even Ponzi’s expectations and he raked in cash by the barrel.
Ponzi only exchanged $30 overseas. Instead he used the money from new investors to pay off earlier investors. Finally, the Boston Post blew the whistle on Ponzi’s shady past, pulling the rug out from under the dapper confidence man.
Ponzi’s bank, the Hanover Trust Co., collapsed as investors made a run on the institution. Ponzi was convicted for his massive fraud by Massachusetts and Florida. After Ponzi served his time, he was deported in 1934 to Italy and, eventually, died penniless in South America in 1949.
Ponzi’s own sloppy records showed a loss of $5 million and most of the money he swindled was never recovered.
Source: The Lawless Decade by Paul Sann
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