CHARLES PONZI (1882-1949)
Charles Ponzi was an Italian swindler who became infamous for his investment scam in the early 20th century. He promised investors extravagant returns on international postal reply coupons, claiming to take advantage of currency exchange rates. However, he used the investments of new clients to pay off earlier investors, leading to the collapse of his scheme. The “Ponzi scheme” is now a term used to describe similar fraudulent investment operations.
HOW THEY GOT CAUGHT
Charles Ponzi’s fraudulent investment scheme eventually unraveled due to a combination of factors, including increased scrutiny from the media, suspicious investors, and a determined investigation by authorities. Here’s how Ponzi was ultimately caught.
Media Investigation
As Ponzi’s investment scheme grew, it attracted attention from the media. Reports began to question the feasibility of his returns and the lack of transparency regarding his business operations. The scrutiny from the press raised doubts about the legitimacy of his operations and brought his activities into the public eye.
Financial Strain
Ponzi’s operation relied on recruiting new investors to pay off earlier investors. As the number of new investors slowed down, it became challenging for Ponzi to maintain the promised returns. The financial strain started to reveal inconsistencies in his claims, as he struggled to keep up with the increasing demands for payouts.
Whistleblower
A former employee of Ponzi’s company, Securities Exchange Company, became suspicious of the operation and
