Charles Ponzi (1882-1949): A conman whose notoriety has been forever embedded in our common lexicon

Being the genesis of what is now ubiquitously known as a Ponzi scheme, the legacy of the most iconic con artist in recent history was, first and foremost, his indelible mark left in our common lexicon.

Today, a Ponzi scheme typically refers to a non-existent enterprise often disguised as a lucrative get-rich-quick venture, albeit being merely window-dressing, and in such a fraudulent scheme, the payment of high-yielding quick returns to early investors are paid by the money invested by later investors. In our recent memory, the former non-executive chairman of NASDAQ Bernard Madoff ran the largest Ponzi scheme in history, which was said to have caused damage worth $64.8 billion. A Ponzi scheme slightly differs from a pyramid scheme in that the latter requires members to recruit and enrol new participants into the venture, in effect, locking them in the scheme.

So who was Ponzi? Allegedly, Charles Ponzi was a descendant of the Italian nobility in Parma, although, by the time Charles was born, the family fortune was all dried up. His mother, therefore, cast her expectation on her beloved son, wishing that one day he would restore the lost pride and prestige that once belonged to the family, together with material wealth, or so they believed.

Charles was determined to fulfil his mother’s wish and become someone of significance, even though he often lacked necessary discipline to materialise his wild dreams. Indeed, it is not an exaggeration to say that he was a born thief. While growing up, he stole church donations as a youngster and committed a series of petty thefts. In general, what drives one to commit a crime supposedly varies, be it necessity or the thrill of it. Be that as it may, some aspect of deceit had always animated him.

Early on, he found himself a job as a postal clerk, yet quick-witted Charles was later accepted into the University of Rome La Sapienza. Unlike ambitious Charles, his rich friends saw the university education as merely a four-year vacation, revelling in bars, cafes and opera theatres, and Charles wanted to be part of the lifestyle. Soon, however, he spent all he had and found himself penniless and without a university degree. His dream prematurely came to a halt. Around this time, though, Charles heard about many Italians that moved to the United States and came back as rich. With his family’s blessing, he decided to make the same bold move by hopping on a ship and immigrate to the U.S., the land of opportunity.

Despite his modest 5ft.2 stature, Charles was endowed with a charming charisma so infectious that anyone who met the charmer instantly felt at ease. A part of his charisma was certainly his beaming smile, which had never disappeared from his face even in times of extreme difficulty.

He landed in the United State but with only $2.5 in his pocket, as he gambled away all his life savings on the ship. After his arrival in Boston, however, he quickly learned to speak English, and with his charm, he found a series of menial jobs along the East Coast in the following few years. Eventually, he found a job as a dishwasher in a restaurant. Although in early days when he had no place to live, he slept on the kitchen floor, he later managed to work his way up and became a waiter, though his bad habit resurfaced. He was caught short-changing customers and eventually fired.

After a number of failed attempts to secure a stable footing in the United States for the ensuing few years, he immigrated to Canada. By then, he had learned to speak English and French in addition to his mother tongue Italian, and since Charles was good with numbers, with the help of his friend, he managed to secure a job in a local bank in Montreal. The newly opened bank, Banco Zarossi, was founded by Luigi Zarossi, providing financial services to Italian immigrants that were flooding into the city at that time. It was where he first saw what became a Ponzi scheme. The bank was paying 6% interest on bank deposits, which was double the going rate then, and consequently, the bank was growing fast. Ponzi rose to the position of a bank manager, however, soon found out that the bank had bad real estate loans, and the interest payments were actually made by the deposits of those newly opened accounts with Banco Zarossi, instead of the profit generated from the Bank’s investments. Luigi Zarossi eventually fled to Mexico with a portion of the Bank’s money. Ponzi remained in Montreal, curiously living at Zarossi’s house and helping his abandoned family while planning on returning to the US to start all over again.

Growing desperate and being a born-thief, his deception bug started itching. He noticed an elderly lady coming to the bank occasionally, a long-term client of the bank. In the twilight of her life, she was an easy victim of Charles Ponzi. Opportunistically, Charlie took an advantage of her senility and chequebook. He practised her signature and began to write unwarranted cheques. Immediately, though, he was arrested for forgery and put in prison for 3 years (1908-1911).

After he was released, he returned to the United States, but without means of subsisting himself, yet again, he let himself seduced by the expediency of criminal activities by assisting illegal Italian immigrants to enter the U.S. Again, he was arrested and served another 2-year prison sentence in Atlanta. After then, he was on the lookout for another big idea; an idea so grandiose that not only would it excite him but also give meanings in his life of scarcity and pennilessness.

To add woods to the fire, he met a beautiful woman, called Rose. She was also an Italian immigrant and he instantly fell in love with her. He swore to her that he would do anything to give her the life she deserved and treat her like royalty.

While he grew ever more desperate for yet another idea for a get-rich-quick scheme, one day, he stumbled across postal reply coupons in an envelop his friend sent him from overseas. A flash of light crossed his mind, and he was instantly enthralled by the idea, this time, for a legitimate venture. The idea was that by buying postal reply coupons outside the United States at a discounted price and redeeming them at their face value upon returning to the U.S., the difference becomes a profit, working as a form of arbitrage. Particularly after the end of the First World War, foreign currencies were greatly depreciated against the US dollar, and thanks to the favourable exchange rates, this seemed to be a workable plan, at least, in theory. He promised investors a 50% profit in 45 days or doubling it in 90 days with a principle. Thanks to his infectious smile and gift of gab, his word quickly spread like a wildfire and attracted many enthusiasts.

In reality, though, Ponzi never went outside the country during this time and was merely paying earlier investors, as their share of profit, by using the principles of later investors. Although this type of fraudulent investment schemes existed before Ponzi concocted his postal coupon scheme or Banco Zarossi for that matter, the time could not have been more apt for it to have a maximum effect. Indeed, in the early 1920s, the ending of the First World War brought the United States unprecedented prosperity, and the growing middle-class was enticed by the alluring idea of multiplying extra cash they newly gained, much like how Dutch merchants of the 17thcentury were gullibly seduced by the Tulip Mania frenzy. The euphoria caught the general public who was oblivious to what would have ensued by the end of the decade.

Ponzi’s scheme lasted over a year before it eventually blew up in his face. Before the inevitable end arrived, his spectacular ascent was punctuated by a few alarming signs, nonetheless. Because of the way in which the scheme was set up, every dollar Ponzi received made him 50 cents poorer. Despite that, abusing the enormous capitalisation momentum, he bought a luxury home, flew his mother from Italy, paid secretarial clerks and hired policemen as his office guards. Ponzi always dressed immaculately and never lost his cool, handling any adverse situations with the indestructible confidence and an air of assurance. Characteristically, he was always smiling.

In time, though, the justice caught up with him and his enterprise was found insolvent. The total damage was said to be $20 million, which was immense in those days. Contrary to the immensity of the swindle, to illustrate the long-lasting infectiousness of his smile, years after his postal coupon scheme came crashing down, some people still believed that Ponzi would repay their principles, or some even sent him money, wishing him a major comeback.

Although it is not quite knowable as to whether one can rehearse genuineness, in his case, the years of practice and mastery made him deserve the title of a con artist as opposed to merely a conman, but one thing certain is that he was the by-product of the time he lived, and the lesson to be drawn is that one has to be the ultimate opportunist to be able to leave a legacy significant enough to be remembered after one’s death.

Upon returning to Italy, Ponzi ingratiated himself with Mussolini’s Fascists, having managed to secure himself the position of business manager for Italy’s LATI airlines, and was sent to Rio de Janeiro. However, the war effectively ended his job, and Ponzi spent the last years of his life in poverty, eking out his meagre existence as an occasional translator. His health deteriorated. A heart attack in 1941 weakened him considerably. His eyesight started to fail, and by 1948, Charles had become completely blind. He developed a brain haemorrhage, which paralysed his right arm and leg, and in 1949, he died at the age of 66 in a charity hospital in Rio de Janeiro.

The common trait amongst conmen, be they Charles Ponzi or Bernie Madoff, is that they were from relatively humble backgrounds, and yet, they had a glimpse of the life of riches, and they strove to attain it by their partial ingenuity.



The Time Magazine. (1949, January 31 Monday). National Affairs: Take my Money!
Zuckoff, Mitchell (2005), Ponzi’s Scheme: The True Story of a Financial Legend. New York: Random House
Jobb, Dean. (2015). The Incredible Story of a Master Swindler who Seduced a City and Captivated the Nation. New York and Toronto: Algonquin Books of Chapel Hill and HarperCollins Canada.
Henriques, B. Diana. (2009, June 29). Madoff Is Sentenced to 150 Years for Ponzi Scheme. The New York Times. [Online] Available at: [Accessed on 16 July 2018]

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