The man who created the first financial pyramid (8 photos)

We are all familiar with this scheme - invested money, attracted new participants, and after a while made a profit. Just due to those new members. It was first invented by the Italian Charles Ponzi, and the system surprisingly it still works.





Charles Ponzi was born in 1882 in Italy. His family was once very, very wealthy, but by the time the son was born from there is no trace of the former financial well-being. Although the family lived modestly, they were able to send Charles to study in Rome. Here only nothing came of it: the young man spent all the money and instead studies decided to go to America for the same dream.

In 1903, a Ponzi with two dollars in his pocket came to Boston and his goal was to become a millionaire. He started with a simple job: washed dishes and was a waiter. True, he was caught on the shortfall of customers and his fired. But on the other hand, he had a big bonus in his pocket: a good spoken English.



In 1907, Charles got a job in a bank that worked with Italian emigrants. Bank customers were promised a rate of 6%, which was twice as high as in other banks. The Italians trusted "their" bank, brought money, which, by the way, brought profit. Just not from work of the bank, but because new depositors came, who so far percentage was not charged. This scheme was called "pay Paul by robbing Peter." A little later, Charles took over as bank manager, and this scheme would be named after him. The institution went bankrupt, Zarossi, its founder, escaped, and Ponzi ended up in prison - he was accused of counterfeit checks.

But the prison did not stop the future king of swindlers. In 1919 year he published the "Guide to International Trade" - a book where were addresses of European and American trading companies are collected. So In this way, Ponzi wanted to help different firms find each other. The idea was not very successful, but it is believed that this was the key to the beginning new startup.



Ponzi received a letter from Spain, most likely it was an order directory. A return coupon was attached to it. It had to be exchanged for postage stamps - their amount was equal to the payment of the costs of sending back.

The coupon cost 4.5 cents, but in exchange for the coupon, Charles had to get stamps for 5 cents. The swindler quickly realized that on such a monetary the difference can be earned. Times were tough after World War I. war inflation was powerful in many countries, but it was the postal the exchange rate has been stable.

Charles converted dollars to other currencies for good exchange rate and with this money agents had to buy coupons in different countries and send them to the USA. Already in America, Ponzi changed coupons for stamps. Surprisingly, it was quite legal at the time.

But the profit has so far been non-convertible - the stamps are not turned into dollars. Ponzi was a maximalist and decided to do this: he brings the good news about the coupon business to future investors, gives to depositors printed promissory notes (unsecured), which money back guarantee with interest. But in fact, neither coupons nor stamps, not dollars - money was brought to investors by those new participants, who are interested in a new "business".



The swindler registered a securities exchange company and at first he worked in it himself, promising his investors in 45 days to increase the amount paid by 50%, and twice as much for the quarter (all supposedly thanks to the exchange of coupons for stamps with the subsequent sale of stamps). Interesting but Ponzi borrowed $200 from a furniture salesman to open a business. Daniels.

Gradually, the staff of the company increased and Charles handed over the reins reign of the 18-year-old girl Lucy Martelli, and he finally began to live as he wanted since childhood: he bought a mansion for 35 thousand dollars, began to dress like a dandy, to walk with canes with gold heads.



Charles Ponzi Mansion

Furniture maker Daniels, looking at how beautifully he began to live Ponzi, decided to roll out a claim to him: he came to him with a lawyer and words that he gave those same 200 dollars on the condition that he laid half of the profits of the future company. Trial started and for this period, Charles's assets were frozen. Came to the company auditors with checks, Ponzi reported that the receipt of funds suspended. Depositors became nervous and began to demand the return of their funds. Ponzi got worried too: treated his customers to hot dogs, coffee, put dummy people in line, assuring that the money would certainly will pay. And he actually paid a lot of demands, after the first appeals.



In old age

The company's liabilities amounted to $7 million. Ponzi arrested, and the hunt for secret archives began: they searched the mansion, ransacked Martelli's house, confiscated the money he had given Daniels and bank vaults - all funds found were spent on payments to depositors.

The media didn't budge either. The Boston Post learned about the past Italian and published an article where they recalled his work on Zarossi, about the check scam, about the prison. Charles, of course, carefully concealed unseemly milestones in his biography.



Ponzi sits in a chair waiting to be deported

Charles Ponzi was sentenced to five years in prison. From he received 10 million dollars from his depositors, and paid 8 million. totaled $2 million.

After leaving prison, the swindler did not stop and continued engage in all kinds of deception and as a result he was deported back to Italy. At home, he taught English and then got a job representative of the Italian airline in Brazil. But World War II the war again deprived him of his earnings and he had to do whatever to feed.



Ponzi scheme pioneer dies of brain hemorrhage in a hospital for the poor in Rio. He had $75 with him. who buried him.