One of the most classic scams in the form of multi-level Pyramids is by Charles Ponzi. The man who caused thousands of people to lose money, 6 banks went bankrupt, with the total amount of money raised was nearly 20 million US dollars in 1920 (equivalent to 1.2 billion USD currently). A case that shocked America. With its classics and vibration, the start of a series of such cases later, the fraud was called the Ponzi Model. So Who is Charles Ponzi?

Charles Ponzi was born in 1882 in Italy. Although accepted at the University of Rome, Ponzi saw it as a long vacation so that when he ran out of money, he was forced to drop out of school and board the train to make a living in Boston, Massachusetts (USA). The whole amount of money he brought along was also baked into the red and only a mere $ 2.50 when the ship docked.

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In a new country, Ponzi spent several years doing many things to make a living. Sometimes he even washed dishes for a restaurant and slept right on the floor. But thanks to hard work, Ponzi was promoted to a waiter position and then fired for fraud and customer theft.

Unemployed, Ponzi went to Montreal, Canada and became a cashier in the newly opened branch of Banco Zarossi bank. To attract customers, owner Zarossi paid twice the profits of his competitors to anyone who deposited money into his bank. No matter what they do, the bank is in real trouble because of its bad debts and absolutely no investment. In order to remain active, Zarossi usually paid the latter's money to the former. Zarossi fled to Mexico before the bank collapsed.

Who is Charles Ponzi? - When success comes

After a period of wandering and being repeatedly arrested for fraud, Ponzi returned to Boston, fell in love and married a young girl named Rose Gnecco. Wanting to let his wife soon enjoy the silk life, Ponzi rushes to make money. He came up with the idea that later people formed the Yellow Pages yearbook to sell ads to customers, but failed.

One day Ponzi received a letter from a company in Spain asking to discuss his business ideas. The letter has an IRC ballot. IRC can be used as a stamp and has been accepted by many countries. Because the price of stamps is different from each other, Ponzi discovered a lucrative opportunity: Buy IRC in Italy and abroad, where the price is very cheap and sell it at a high price in the US. Ponzi calculates the profits, after deducting expenses, can exceed 400% and this is completely legal.

Planned, Ponzi started a company called "Securities Exchange Company" in Boston and sought financial help. He called on his friends to lend money and promise to pay them interest rates up to 50% within 45 days. Some boldly invested money and paid interest as promised. Good news spread, the investments competed on each other. Ponzi employs a series of employees and promises to pay huge profits to investors. By February 1920, Ponzi had $ 5,000 in hand, a huge sum at the time. By March, he had $ 30,000. Money dazzled Ponzi. He hired a variety of workers and collected money in all areas of New England and New Jersey. Investors who paid big interest encouraged their friends and relatives to join.

By May, Ponzi had $ 420,000. The man who sold the house, throwing pigs economically, brought it to Ponzi. Most when receiving the interest, reinvest in Ponzi in the hope of receiving a 100% return. In July, Ponzi had nearly $ 8 million.

Who is Charles Ponzi? - Downhill without braking

Successful in raising capital, Ponzi could not earn enough IRC to invest and make a profit. However, he lived a luxurious life, buying castles, luxury cars, investing in banks, businesses ... By August of the same year, it was discovered that Ponzi was paying interest to old investors with money from new investors. This action, originally known as "robbing one person to pay the other", now has an official name as "Ponzi scheme". Until the collapse, by this scam Ponzi cost investors $ 20 million, and six banks went bankrupt.

In 1920, Ponzi was indicted on charges of fraud and sentenced to federal prisons for a while before being deported back to Italy in 1934. He died in a deadly state in Rio de Janeiro (Brazil). in 1949 and buried in a cemetery of the poor.

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