Charles W. Ponzi

Paper Summary:

This paper describes the fraudulent activities of Charles Ponzi, with particular emphasis on his Boston-based postal coupon enterprise. The paper briefly provides some biographical information on Ponzi and then explains his postal coupon scheme, which was the forerunner of the modern-day pyramid scheme. The paper further describes the criminal procedures brought against Ponzi after being arrested and charged for mail fraud, the time he served in prison after he was found guilty at his trial and his involvement in a land scheme operation after his release from jail. Next, the paper discusses Ponzi's deportation to Italy, his travels to Brazil and his exploits there as well as his death in a charity ward in a Rio de Janeiro hospital. Finally, the paper discusses, in further detail, the criminal and civil charges brought against Ponzi for his illegal activities and describes some of the legal sanctioning mechanisms that were a direct result of the Ponzi fiasco.

From the Paper:

"In the summer of 1920, most investors on the East Coast knew of Charles W. Ponzi and his Boston-based postal coupon enterprise. Ponzi invented a phony investment plan and promised investors enormous profits. He lived up to this promise initially. The first investors spread the news about this great deal and new money came pouring in. However, by October of the same year, the shady investment entrepreneur was indicted on multiple fraud counts, and the simplicity and grand scale of his scheme linked Ponzi's name with a particular form of fraud: "Ponzi scheme." Still, before Charles Ponzi's investment scheme faltered, he had collected $9,500,000 from 10,000 investors by selling promissory notes paying "fifty percent profit in forty-five days." "

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