Charles Ponzi the Father of the Ponzi Scheme

Charles Ponzi - Father of the Ponzi Scheme

Charles Ponzi was born on 3rd march 1882 in the city Lugo in Italy. He died on 18th January 1949 after the age of 66 in Brazil. He was a famous business man in United States and Canada in his days. He became very famous by his money making schemes. HE started Ponzi scheme for investors to make greater profit and he became very famous in and hence his name is preceded by Ponzi. He landed in America with just $2.51 with him. He struggled hard to lead his life in America. He started to work as dishwasher in America to make money for his living and he was finally thrown out for theft. He joined a private firm and after few days to make more money he forged a check in the name of company director. When the check got cased he surrendered himself because of his guilt and was sent to prison for three years.

Ponzi Scheme
After releasing from the jail he did not stopped to make money. He was very eager to make money and was looking for one or the other way. Once, Ponzi received a mail from a Spain company. He found one coupon inside the letter and he was wondered after seeing it for the first time. It was a postal reply coupon which is used to send to the people who are staying in another country which can be used for paying the postage. He found a weakness in this process. These can be purchased in one country where they are cheap and can be exchanged in the other country where they cost more and make money from it. He planned very drastically on this process. He reached many people and told them he would double their money in another 90 days. He got lot of contacts and also the business went in profit and also he paid the double amount who invested with him.

After getting a good amount of investors, he started a company – Security Exchange Company (SEC) in a small building. Soon many people came to know about this business and started investing. He hired many more agents so that the business goes smoothly. He kept his entire profited amount in a bank in Boston. When he got drastic increase in profit, many of the writers got suspicious and one of the writers wrote it’s impossible to gain so much legally in short span of time. But this business was legal and he won the race. But later on they started to investigate on his way of business and soon many people started to get back their money from the investment. He started to loose the investors and hence profit reduced. But bank people started to keep an eye on his transactions, since most of the money is kept in the bank; if he draws the amount immediately there will be huge loss for the bank. Finally he was caught hold for his act of making money and was sentenced to imprisonment for 5 years. But he was released in the year 1934 and he asked sorry for the governor.

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