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That's it. And we return to our American stories. Up next, the story of the man who lent his name to a scheme you may well know. But the man you don't. And we're talking about Charles Ponzi.
Here to tell the story is John Small, the man behind the podcast, right about now. Take it away, John. A Ponzi scheme is an investment scheme where all the returns are paid to earlier investors using the money that was contributed by newer investors.
So basically what you do is you pay the investors of your Ponzi scheme with the money from the new investors.
So it's a constant cycle. You have to keep on getting new investors in and the money that the new investors put in, you use to pay your old investors. Ponzi schemes have been around forever, but they weren't really called Ponzi schemes until Charles Ponzi came around, probably much to his disappointment. Shit. He was actually born Carlo.
He was a poor Italian immigrant and he came from like a working class family, but he always had a chip on his shoulder about being not as rich as he thought he should be. And he always thought he was much richer than he actually was. When he turned 18, he got in his head that he wanted to go to America because at that time, Italians were hearing that America, like the streets were paved with gold. This is a time of great prosperity in America and not so much prosperity in Italy. And so his parents raised enough money, $200, for him to take a boat to Boston.
He was supposed to have some spending cash, but being Charles Ponzi, he basically gambled all that spending cash away on the boat, lost everything.
So when he arrived, he was a penniless Italian immigrant and he spent many years traveling up and down the coast of America doing all sorts of odd jobs. Like he was a grocery clerk. He was a factory hand. He was a dishwasher. He painted signs.
He was a nurse. He did a million things. And he always, he was one of those guys that always had like. A get rich quick scheme that he would try to do, and then it would fail like miserably every single time. One of the most important events to remember in the pre-Ponzi scheme, Charles Ponzi life, is when he went up to Montreal, because this would come back to haunt him later.
He was working at Montreal for a shopping company, just kind of a labor-type job. And he walked into his boss's office and he saw a checkbook. blank checks and he decided to write himself a check and he cashed it and he went out and bought a nice new suit with this stolen money and the cops immediately nailed him and he was arrested and thrown in jail. But in jail, he met a bunch of other Italian immigrants and he developed a scheme where he was going to sneak them into America from Montreal. They paid him some money to do that, and that did not go well.
They were totally busted at the border. And Charles Ponzi again was arrested, and this time he was thrown in jail at a penitentiary in Atlanta, Georgia.
So he spent all this time in prison. Again, came out of prison penniless. You know, at this point, he's really frustrated. He wants to make money. He moves back up to Boston, where he originally started his American adventure.
And he meets this woman named Rose, who becomes his wife. And Rose introduces him to some members of the Boston community that help him out a little bit, give him some money, lend him some money.
So suddenly he's got some money in his hands. And it's during this period of his life that he comes up with a scheme, the one scheme that actually works for him. There used to be this thing called international reply coupons. And this is because if you sent somebody a letter, say, from Italy to America, and you wanted them to return your letter, you would include this international reply coupon in the letter. And that would enable them to buy a stamp that would be accepted in Italy.
Because at the time, you couldn't put a stamp on a letter and have it go to Italy without paying Italy some money. He felt like because the exchange rates were so different between what was happening in Italy and other countries in Europe and America. That he could buy these coupons and then kind of cash in on the exchange rate. That was basically the scheme, right? That was the original scheme.
And so he opened up this thing that he called a security exchange commission. And he basically told people: hey, invest with me, and I'll give you some really good return. And he would pay them back with some of the money that he would make through this coupon scheme that he had going on, right? And he got some investors.
Some people kind of started putting money in because they were interested and it sounded legit. And he found that the more investors he had, the more money he had to pay back the initial investors. Without even really knowing it, he was starting what would later be called the Ponzi scheme. It was actually a really good deal for people. At the time, if you just like put $100 in a bank, you might make like $5 in interest by the end of the year.
But with Ponzi, he was giving like 50% interest.
So all of a sudden, there were like lines outside of the Security Exchange Commission office in Boston because he was able to give people such incredible returns. In February of I think 1919, He recorded $5,290 from just 17 investors. In March, he had 110 investors and he was making $25,000. By May, he was earning $30,000 a week. To be adjusted for inflation, he was baking about $400,000 a week.
And people, you know, the investors would just hang in there.
So the more investors he had, the more money he had in the pot. And then when people wanted to eventually take their money out, he had enough to pay them back and to pay them this incredible returns. Everybody was super suspicious of this. Like, how could this possibly be? And at one point, they sent some cops over to figure out what was going on.
And the cops were so impressed that they invested. They stopped their investigation and started putting money in this thing.
So by the end of the year of him opening up the Security and Exchange Commission, he had made like 2.5 million. He had 7,800 customers, offices in Boston, he had them in New Hampshire and Vermont, all over New England. He was so rich at this point that he was able to buy his own bank, which was called Hanover Trust. And he moved into this mansion and really became like a real kind of personality. Charles Ponzi was only five foot three, I think like 130 pounds.
But huge personality. And he would kind of walk around with these really fancy tailored suits. He had a cane with a gold top that he used. You know, he wanted to be P.T. Parnum, like the greatest showman on earth.
You know, you can imagine this very poor immigrant suddenly living the life that he always dreamed of living. It was just very intoxicating for him. And the media started paying attention.
So the Boston Post, which was sort of like one of the tabloids of the time. There was a guy that was running it named Richard Grozier. Who was basically like the opposite of Charles Ponzi? He was really like Boston Brahmin. He went to Harvard.
and his son decided that he was going to make his name by bringing Charles Ponzi down. Ponzi sort of kind of fell for this trap. He would agree to do interviews because he was so outspoken and loved to like hear his name and see his name in print and love to give a good quote. And Grossier kept digging and digging and digging into Ponzi's life. And eventually, he found out a bit about what happened up in Montreal.
And that Ponzi was actually a criminal. And that's when things started to unravel. The feds started to investigate what he was doing and they started looking into his bank accounts and realizing that this was not on the up and up. People started panicking because suddenly they're worried that they're going to lose their money that they invested, and there starts to be a run. on the Security Exchange Commission and Ponzi, you know, eventually can't keep up with the run.
It puts him in a lot of trouble. Amazingly, he is able to pay back most of the people that invested with him, and some people even gave the money back, but he still went to prison. He went to prison for four years for this investment fraud, and he got out on good behavior. The state charged him with fraud.
So we have to go back to prison. But during his appeal for this case, He got out on bail and he decided to go on the lamb because Ponzi never did things the easy way.
So while he was on appeal, He went to Tampa Bay where he hoped to escape back to Italy. on a freighter. And he shaved his head and he grew a mustache and he wore this sailor's cap and he assumed this completely different identity to escape America. He also faked a suicide. He had some friends leave his clothes on a beach with a suicide note, but none of this worked because being Charles Ponzi and being a big mouth, While he was on the freighter going back to Italy, he told someone who he really was.
And eventually, the police found out and they entered the boat and they arrested him and they brought him back to Boston. Eventually he was deported. Um Rose divorced him. And he moved to Brazil in his very later years, tried a bunch of different businesses, which completely failed. And on his deathbed, he ultimately confessed to a reporter that the whole thing was a scheme.
that his Security Exchange Commission was never a real business. and that it was all a lie. He came clean and he actually wrote a confession letter to Rose, too. I guess it was very important to him to tell the truth. He died of a brain hemorrhage in 1949 in a...
poor charity hospital in Brazil. and he had only $75 in his pocket. And a special thanks to John Small, who's the man behind the podcast Right About Now, which offers a glimpse into the lives and stories of successful authors. A classic story of an American get-rich-quick schemer. here.
on our American stories. Liberty has never been just a word to we Americans. It has guided every one of our endeavors for the past 250 years. And now it takes form in a new way. The 2026 Semi-Quincentennial Coin and Metal Program from the United States Mint.
It celebrates the founding ideals that have long shaped our coinage. Available one year only, this historic collection features new coin designs, limited edition releases, and reissues. Shop new official coins at usmint.gov forward slash semi-q. That's usmint.gov/slash S-E-M-I-Q. Most Mother's Day gifts end up in a drawer, but a song lives in the heart forever.
This year, tryjoybox.com is giving away 1 million free custom songs to celebrate 1 million incredible moms. Just share a few memories, and Joybox produces an original track and greeting card just for her instantly. It's the most personal gift you'll ever give, and right now it's completely free. Make Mom the star of her own song at tryjoybox.com. One million songs, zero dollars, only at tryjoybox.com.
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