The Woman Who Invented The Ponzi Scheme
Being a woman and a criminal allowed Howe to operate in relative obscurity
“Howe’s case also demonstrates a struggle in feminist circles that persists today: How do you balance the desire to celebrate women with the need to hold bad behavior accountable?” Rose Eveleth asks.
While the Ponzi scheme would be named after notorious scammer Charles Ponzi, and Bernie Madoff perpetrated the most notorious Ponzi scheme, the Ponzi scheme was not invented by a man — it was invented by a woman.
The first documented use of the Ponzi scheme, at least in America, was from a woman named Sarah Howe. Howe first perpetuated the scheme in Boston in 1879, when she created a bank to invest money for widows, according to Steve Weisman at TIME Magazine. Unlike Ponzi, she swindled vulnerable widows and single women who did not have homes.
Howe, like many people who perpetuated the Ponzi scheme, promised absurd profits to investors and told them she would double their profits within nine months. There was absolutely no investing going on: Howe simply paid new investors using money from old investors. Eventually, Howe, like Charles Ponzi, would be brought down by a newspaper in Boston — the Boston Daily Advertiser.
