Who was Charles Ponzi? Everything You Need to Know

Quick Facts

Italian Celebrities Born In March

Also Known As: Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi

Died At Age: 66

Family:

Spouse/Ex-: Rose Gnecco (m. 1918)

father: Oreste

mother: Imelde Ponzi

Born Country: Italy

Fraudsters American Men

Height: 1.57 m

Died on: January 18, 1949

place of death: Rio de Janeiro, Brazil

Founder/Co-Founder: Securities Exchange Company

More Facts

education: Sapienza University of Rome

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1

What was the Charles Ponzi scheme?

The Charles Ponzi scheme was a fraudulent investment scheme in which returns to earlier investors are paid with the capital from newer investors, rather than from legitimate profits.
2

When did Charles Ponzi's fraudulent activities begin?

Charles Ponzi's fraudulent activities began in 1919, when he started promoting his scheme promising high returns in a short period.
3

How much money did Charles Ponzi's scheme eventually swindle?

Charles Ponzi's scheme swindled an estimated total of $20 million from investors, although the exact amount is difficult to determine due to poor record-keeping.
4

What was the legal outcome for Charles Ponzi?

Charles Ponzi was convicted of multiple counts of fraud and sentenced to prison. He served time in various prisons and was eventually deported from the United States.
5

What is the lasting legacy of Charles Ponzi?

Charles Ponzi's name has become synonymous with fraudulent investment schemes, with the term "Ponzi scheme" being widely used to describe any fraudulent investment operation.

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Childhood & Early life

Born in Lugo, Italy, in 1882, Charles Ponzi came from a well-to-do family. However, his parents went through tough times and struggled to make ends meet later on.

He used to spend a lot of money on bars, cafés, and the opera during his university years. Ponzi ended up broke and without a degree. Following this, his parents urged him to go to US so that he could make some money.

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The Ponzi Scheme

Ponzi reached Boston in November 1903 aboard the S.S. Vancouver. It is believed that he entered the country with just $2.50 in cash. He learned English and took up odd jobs for the next few years.

For a while, he took up a job as a dishwasher in a restaurant and slept on the floor. Ponzi was good at his work and was soon promoted to a waiter. He was later fired for theft and shortchanging the restaurant clients.

In 1907, Ponzi lived in Montreal and worked as a teller at Bank Zarossi. The bank charged high interest rates and was often used by the new Italian immigrant population living in Canada. Bank Zarossi then went bankrupt and Ponzi was without a job.

He was imprisoned for three years in a prison in Quebec for forgery. In 1911, after getting released, he started helping smuggle Italian immigrants into the United States. He spent two more years in a prison in Atlanta after getting caught.

In 1919, Ponzi set up a small office in Boston. He got a letter from a Spanish company requesting an advertising catalog. He found an international reply coupon (IRC) inside the envelope and realized he could make money out of it.

After World War I ended, inflation greatly reduced the cost of postage in Italy expressed in U.S. dollars. This meant he could buy IRC cheaply in Italy and exchange it for U.S. stamps of higher value. He started making money by buying the stamps at a lower price and then immediately selling it for a higher rate, which was completely legal. Ponzi said he had made a profit of almost 400%.

In 1920, Ponzi started a stock company to get more money from the public. He promised his clients a 50% profit within 45 days of investment or a 100% profit within 90 days.

Ponzi used to pay back earlier investors with the money that he received from his future investors. This paved the way for his fraudulent investment schemes. Although Ponzi was not the first person to exploit his clients with this tactic, it became synonymous with him and came to be called the "Ponzi scheme".

Eventually, his scheme collapsed and he was charged with 86 counts of mail fraud. Ponzi pleaded guilty on November 1, 1920, and was sentenced to five years in federal prison.

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Family & Personal Life

In 1918, he married Rose Maria Gnecco, a stenographer hailing from an Italian-American immigrant family in Boston. He worked on his father-in-law's fruit business for a while but it failed shortly thereafter.

Ponzi lived a luxurious life in Lexington, Massachusetts, and owned a Locomobile, the finest car of that time. His mother lived with him and Rose, but died later on. Ponzi said he would donate $100,000 in honor of his mother to the Italian Children's Home in Jamaica Plain.

He divorced Rose in 1937, right after his deportation to Italy.

Death

Charles Ponzi moved to Brazil and worked as an agent for Ala Littoria, the Italian state airline. He later became an English language teacher. Ponzi barely had any money left during his last years. By 1941, he had suffered a heart attack and had various medical issues. He became almost blind by 1948.

He also suffered a brain hemorrhage that paralyzed his right leg and arm. On January 18, 1949, he died at the Hospital São Francisco de Assis of Federal University of Rio de Janeiro in Brazil. At the time of his death, he was living in such poverty that there was barely anything to fund his own burial.

Facts About Charles Ponzi

Charles Ponzi was originally known for his charm and charisma, which helped him gain the trust of many investors during his infamous scheme.

Despite his fraudulent activities, Ponzi was known for his love of literature and reportedly enjoyed reading classic works by authors such as Shakespeare and Dickens.

Ponzi was a skilled linguist who was fluent in multiple languages, including Italian and English, which helped him navigate different cultural environments.

Prior to his Ponzi scheme, Charles Ponzi worked a variety of odd jobs, including as a dishwasher, waiter, and even as a nurse's aide, showcasing his versatility and work ethic.

Despite his criminal actions, some people viewed Ponzi as a clever and innovative entrepreneur who managed to capture the public's imagination with his ambitious financial scheme.

Charles Ponzi Biography

You wanted to know

What was the Charles Ponzi scheme?

When did Charles Ponzi's fraudulent activities begin?

How much money did Charles Ponzi's scheme eventually swindle?

What was the legal outcome for Charles Ponzi?

What is the lasting legacy of Charles Ponzi?