The Devils of American Finance - Past and Present

1920s - PONZI

Italian immigrant Charles Ponzi has long been memorialized as the father of the financial fraud in which investors are paid with money from other investors. Like a chain letter, early positive returns induce more investors to jump in. Eventually, the 'pyramid scheme' runs out of new investors. Or someone blows the whistle.

In Ponzi's case, as the Museum of American Finance writes: "The editors and reporters of the Boston Post (which won a Pulitzer in 1921 for its coverage of Ponzi and his crimes) became suspicious….The news triggered runs by investors to exchange their notes, causing the scheme to unravel.

"Ponzi served almost 10 years in federal and state prison and was eventually deported back to Italy….Despite his innate genius and charis matic personality, he spent his life try ing to get rich quickly and ultimately died penniless in Rio de Janeiro in 1949 at the age of 67."

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