AKA Carlo Ponzi

Born: 3-Mar-1882
Birthplace: Parma, Italy
Died: 18-Jun-1949
Location of death: Rio de Janeiro, Brazil
Cause of death: Cerebral Hemorrhage
Remains: Buried, unmarked grave, Pauper’s Cemetery, Rio de Janeiro, Brazil

Gender: Male
Religion: Roman Catholic
Race or Ethnicity: White
Sexual orientation: Straight
Occupation: Criminal

Nationality: Italy
Executive summary: Get-rich-quick schemes

Charles Ponzi, alias Charles Bianchi or Charles Borelli, was an Italian immigrant to Canada, where he was convicted of forgery in a scandal that brought down Zrossi & Company, a Montreal banking firm. He was sentenced to three years in prison, but served only twenty months before being released. Within weeks he was arrested again, this time for smuggling illegal aliens from Italy into the United States. He was jailed for two years in a federal prison in Georgia, and after serving his sentence he settled in Boston, where he operated the famous swindle that now bears his name -- the Ponzi scheme.

Ponzi established the Securities Exchange Company, a one-man operation that offered coupons reflecting a purported investment in international reply coupons (IRCs). IRCs are legitimately sold in the postal facilities of many nations, intended to be enclosed with international correspondence and redeemed for return postage from the recipient's nation. At the time, IRCs were sold for a fraction of a cent less than the price of the stamps they could be redeemed for, so the plan's profitability seemed plausible to investors. In reality, though, the profit margin was so slim it would take millions of IRCs to make just a few dollars, but Ponzi promised his customers a 50% profit on their investment, payable in ninety days.

His coupons sold so briskly that Ponzi was able to make his first few rounds of payment to investors in only 45 days instead of 90, so word about the coupons spread quickly, and more and more people invested. He had started his business with a loan of $200, but within months he had two offices in Boston with a staff of dozens of employees processing sales, and he bought a modest mansion for the then-staggering sum of $35,000. Of course, there were no actual profits -- Ponzi had not actually bought the IRCs, only promised to, and he paid early investors with the funds derived from later investors. By the time the scheme collapsed his income was estimated at $1M per week, and latecoming investors were defrauded of between $7-$15M. Most of Ponzi's ill-gotten gains were seized in an involuntary bankruptcy hearing, and what little remained was spent in his subsequent legal battles.

Ponzi was charged with 86 counts of mail fraud, tried, and sentenced to five years in federal prison, and while jailed on federal charges he was prosecuted again on state charges in Massachusetts. Ponzi claimed that this violated his protection against double jeopardy and took the case all the way to the US Supreme Court, which ruled that both the state and federal government had jurisdiction, thus allowing Ponzi's re-prosecution. In a state trial held while Ponzi was in federal prison, he was convicted again, and sentenced to seven to nine years in state prison. When released from federal prison, he sought bail to appeal his state conviction, and when bail was granted he fled to Florida -- where he launched another pyramid scheme, selling real estate that was literally underwater.

He then attempted to return to Italy, booking passage on a ship from Tampa to Rome, but when the ship made a scheduled stop in New Orleans, Ponzi was arrested -- kidnapped, essentially, by a Texas deputy acting outside his jurisdiction and without an arrest warrant. Ponzi was then taken to Texas and extradited to Massachusetts, where he was jailed until 1934. Upon release he was deported as an undesirable alien to Italy, where he wrote and self-published an autobiography. He later resettled in Brazil, where he worked as an English language teacher, and died with barely enough funds to pay for his burial.

Wife: Rose Guecco Ponzi (m. Feb-1918, div. 1937)

    Forgery Montreal, Canada (1909)
    Smuggling (1911)
    Mail Fraud Boston, MA (1921)
    Fraud Tampa, FL (1927)
    Extradited
    Deported from United States to Italy (1934)
    Stroke 1948
    Securities Exchange Company Founder & President (1919-20)
    Bankruptcy 1920:(involuntary)
    Eponyms
    Italian Ancestry

Author of books:
Meet Mr. Ponzi (1935)

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