Before Charles Ponzi sailed from Italy to the United States with big dreams but no money, his father assured him that the streets were really paved with gold, and that Ponzi would be able to get a piece.
Ponzi came to the United States in 1903. After drifting around he found a job in an Italian bank in Montreal as a clerk. There he first saw the fraud operation known as “robbing Peter to pay Paul”.
While in Montreal, he landed in prison, for check forgery. When released he found himself back in a US prison for smuggling illegal aliens. He drifted again for some time and ended up in Boston in 1916. There he met his wife Rose and came upon the scam that today still bears his name.
The scam was based upon the international reply coupon (IRC), a financial instrument that the United States and 62 other countries had devised to make it possible “for a person in one country to essentially send a stamped, self-addressed envelope to someone in another”.
Ponzi planned on buying coupons in countries with weak currencies and cashing them in other countries with strong currencies. It would not work, but this was the basis of the scam that would allow him to offer a return of 50 percent in 45 days.
Ponzi raised the “robbing Peter to pay Paul” scam to an art form and raked in millions At the peak of his success, Ponzi was taking in more than $2 million a week. While it lasted, Ponzi’s scheme made some people rich beyond their wildest dreams. When it ended, it rocked the nation.Powered by Sidelines