Ponzi Schemes Through the Ages: Learning from Charles Ponzi and Beyond
It is a tribute to Charles Ponzi’s lasting influence that the phrase “Ponzi scheme” has come to represent financial fraud, as one of the most well-known examples of investment fraud is named after him. Investigating the past of Ponzi schemes reveals a pattern of dishonesty that endures, revealing the flaws in human nature and the unrelenting chase of false riches.
The Genesis: Charles Ponzi’s Ill-Fated Scheme
Charles Ponzi captured the public’s attention in the early 20th century by offering an apparently infallible investment plan. With the promise of making enormous profits through the worldwide arbitrage of postal reply coupons, Ponzi enticed investors by promising to double their money in a matter of weeks. Unaware that the rewards provided to early investors were financed by the capital of new investors, people flocked to invest because the temptation was too strong to resist.
Ponzi’s complex financial scam finally came undone in 1920, which resulted in his detention. But his name would always be connected to the phony investment scheme that was named after him.
