🧵 We all know about Ponzi Schemes. But let’s take a look at the man who started it all: Charles Ponzi
Ponzi was born in Italy in 1882. He immigrated to the United States in 1903.
Ponzi was born in Italy in 1882. He immigrated to the United States in 1903.
2/ Ponzi is famous for perpetrating a financial scam that came to be known as a "Ponzi scheme." This type of scam involves promising investors high returns on their investments, but using money from new investors to pay off earlier investors instead of generating real profits.
3/ In 1919, Ponzi launched his own company called the Securities Exchange Company. He told investors that he was able to generate high returns by arbitraging international postal reply coupons.
He promised clients a 50% profit within 45 days or 100% profit within 90 days.
He promised clients a 50% profit within 45 days or 100% profit within 90 days.
4/ Ponzi's scheme was initially successful and he was able to attract a large number of investors, many of whom became very wealthy as a result.
At its peak, Ponzi's company had over $20 million in assets, which is the equivalent of ~$300 million today.
At its peak, Ponzi's company had over $20 million in assets, which is the equivalent of ~$300 million today.
5/ However, Ponzi's scheme eventually collapsed when it became clear that he was not generating any real profits and that he was simply using new investors' money to pay off earlier investors.
6/ The scheme came crashing down in 1920 when a Boston newspaper published an exposé revealing that Ponzi was not actually making any money from arbitraging postal coupons. The headline read "Ponzi's Million Dollar Coupon Business Proves a Mirage”
7/ As a result of the collapse, many investors lost their life savings & Ponzi was arrested & charged with mail fraud. He was sentenced to prison.
Despite the collapse of his scheme, Ponzi continued to insist that he was innocent and that he had been the victim of a conspiracy.
Despite the collapse of his scheme, Ponzi continued to insist that he was innocent and that he had been the victim of a conspiracy.
8/ Ponzi spent the rest of his life in and out of prison, and he died in 1949 at the age of 66.
The legacy of Charles Ponzi lives on to this day, and his name is still associated with financial scams and questionable investment practices.
The legacy of Charles Ponzi lives on to this day, and his name is still associated with financial scams and questionable investment practices.
9/ Ponzi's scheme serves as a cautionary tale for investors, reminding them to be cautious of promises of high returns and to always do their due diligence before investing.
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