there was a time when the financial World marveled at the genius of Charles Ponzi the man who was in charge of one of the most successful business investments in America he had millions of dollars at his disposal and crowds of people lining up literally begging him to take their money little did everyone know that ponzi's business was built on nothing but lies the whole thing was an outrageous scam one which turned Ponzi into a very rich man that ruined the lives of thousands of innocent people ponzi's deception was so shocking and Infamous that even now
100 years later the scam still shares his name the Ponzi scheme this video is the Untold Truth of The Man Behind the scam and how to make millions of dollars with nothing but [Music] [Music] lies Charles ponz was born in Italy on March 3rd 1882 his father was a hardworking Postman and overall his family was financially comfortable but it used to be so much more than that ponzi's grandparents and great-grandparents had all been successful businessmen merchants and public officials the demotion to the working class really affected Ponzi from a young age and made him bitter
and resentful he wondered why he had to suffer for his family's failing fortunes why couldn't he have been born rich and enjoy a life of leisure without having to worry about a job or money as a teenager Ponzi inherited a modest sum of money following his father's death he used it to enroll in college as his mother had her heart set on him going to a prestigious college to get an education but Ponzi had other plans instead of studying and going to class he decided to burn through his savings by dressing in the latest fashions
and eating at the fanciest restaurants in town then at night maybe the theater or the Opera ought some gambling at the casino with his wealthy friends nothing was too extravagant or expensive for him Ponzi liked to pretend that he was just like his rich friends and that he had endless money but it was an illusion and one day it all came crashing down around him his inheritance money finally ran out and since his studies had been completely neglected he had no chance of graduating his uncle offered him work as a clerk but the idea of
finding a 9-to-5 job repulsed Ponzi who considered himself too good for mean your labor he felt he had only one choice left travel to America and strike it rich there [Music] in 1903 Ponzi arrived in Boston aboard the SS Vancouver he felt a deep shame in his heart that he'd let his mother down and believed that the only way to redeem himself was to return to Italy as a rich man the only problem was he had no idea how to do that America proved to be a much needed reality check for young Ponzi there was
no more inheritance money and no more relatives to bail him out of trouble as distasteful as he found physical labor he had no choice if he wanted to eat he needed to work Ponzi spent the next few years up and down the East Coast from New York to Florida he worked as a sign painter a waiter a grocery clerk a dishwasher a factory hand an insurance salesman and a sewing machine repairman none of the gigs lasted long though Ponzi either quit because he hated the work or he was fired because he tried to cheat the
customers this often meant he resorted to stealing or begging for scraps of food and sleeping in Parks it was a far cry from his Carefree days as a high roller back in Rome and even when Ponzi did manage to scrape together a bit of cash he would inevitably spend it all on a big night out or a weekend vacation to remind himself of the good old days in 1907 Ponzi traveled to Montreal hoping that Canada would prove to be more welcoming and lucrative and at first things were looking up for him he found work as
a clerk at a bank that mainly served Italian immigrants called Bano zosi it was the same type of job that Ponzi had turned down back in Rome because he considered himself too good for it but it was surprising how a few years on the streets working for minimum wage could change his perspective unfortunately for Ponzi his new job did not last long because his boss was a con man so Rossi was using an age-old fraud known as robbing Peter to pay Paul in other words he was using the money from his newest clients in order
to pay off his older ones this allowed zeri to offer 6% interest rates on all Bank deposits which was double the average rate however his clients started getting suspicious when their relatives back home kept complaining they weren't receiving the money the bank was supposed to send in mid 1908 the authorities began investigating the bank for embezzlement at which point zosi filled a suitcase with all the cash he could carry and fled to Mexico leaving his employees and the family to deal with the Fallout from the scam not wanting to be the one who takes the
fall Ponte intended to travel back to the United States so he didn't have to be involved in the investigation and fall out from Zer roi's scam but before that he did something very stupid so that he wouldn't have to start from scratch again he thought he would give himself a little going away present by forging a check from one of his bank's clients a shipping firm called the Canadian warehousing company Pon stole a blank check from the manager's checkbook and filled it out for $423 58 a believable full and unsuspicious amount thought Ponzi but as
soon as he tried to cash the fraudulent check the bank teller easily spotted the fake signature and alerted the police Ponzi got 3 years in prison at St Vincent deple Penitentiary but of course this was just the start of ponzi's [Music] crimes Ponzi was released on parole after 2 years and he immediately made plans to travel to the states again but he didn't go alone instead he took with him five Italian immigrants all fresh off the boat without any proper papers as he'd been paid to smuggle these men into America Ponzi figured this would set
him up with a nice quick payday now that he was a free man again however he got caught and was arrested once again still Ponzi hoped that if he pleed guilty the judge would go easy on him and maybe just let him off with a small fine but once the judge banged his gavl and passed the sentence ponzi's heart sank he was given another 2 years in federal prison in Atlanta after being being released from jail for a second time Ponzi was unsure of his next move he'd come up with all these different plans to
get rich whilst in prison but they all required money and Ponzi was penniless therefore with little Choice he wandered from state to state again working whatever odd jobs came his way ultimately he found a decent position as a clerk with an import export business called the Jr Pool Company in Boston so after a decade and a half in North America he'd ended up in the same place where he began life in Boston was decidedly better for Ponzi the second time around though he was good at his job for a change and it was promoted for
it not just that but Ponzi met 21-year-old Rose Jano and instantly fell head over Hills for her the first time they spoke Ponzi was so nervous that he could barely string two words together fortunately for him the feeling was mutual and the two got married in early 1918 his new married life made Ponzi feel happy but he also felt inadequate even though Rose was content with a simple life Pony had much grander Ambitions he wanted to be able to shower her with diamond rings fancy clothes and expensive holidays obviously this was never going to happen
on a Clerk's salary so 6 months after the wedding Pony quit his steady job at Jr paol and began looking for something new to do he started off by joining his father-in-law's Wholesale Fruit selling business the company was struggling and since Ponzi always bragged to his wife about being a financial genius this was the time for him to show everyone what he could do however Ponzi was unable to save the failing business and instead it went bankrupt by the end of the year undeterred by his recent failure Ponzi rented a small office to start his
own import export business instead but the World At Large took no notice of him Ponzi lacked the experience and the context to attract any serious business however Ponzi refused to believe he was the problem and thought that maybe he just needed to advertise his Services more unfortunately a few quick calculations made him realize that the costs were well outside of his reach just like that ponzi's Import and Export business became another failed Venture the only silver lining for Ponzi was this failure had already given him his next idea when Pony had seen how much money
it would cost him to publicize his Services he thought that maybe he should publish his own trade magazine so that other companies would pay him the same kind of giant advertising fees Ponzi had zero experience when it came to publishing but in his mind this was already a million dooll business idea he would call his magazine the trader guide and he would send it for free to 100,000 companies doubling the circulation number with each new issue according to ponzi's calculations his initial mailing would cost him around $35,000 but he would make $80,000 in advertising income
since he was certain that companies would be lining up around the block to publicize their services in his magazine certain of success Ponzi rented a much larger office and hired three staff members and then he began writing and writing to investors and business owners about the possibility of getting involved with the first ever issue of the Traders Guide then reality Came Crashing Down on Ponzi like a ton of bricks nobody was interested nobody cared about his obscure little trade magazine and they certainly were not willing to pay his exorbitant rates to get featured on it
then when Ponzi went to his local bank to get a loan because he was almost out of money he got another harsh dose of reality when the bank president refused his application on the spot telling him he'd rather close ponzi's account than load him a single dollar these were bitter pills to swallow for Ponzi and left with little Choice he had to fire his staff and sublet his office space to earn some money but his dreams and Ambitions remained as powerful as ever and Ponzi hoped that his next idea would be the one to make
him Rich one day in August 1919 Ponzi was going through his mail when he spotted a letter from Spain back when he still thought the Traders Guide would become the next big thing in advertising Ponzi was not content with simply doing business in America he'd envisioned that his guide would be translated into French German Italian Spanish and Portuguese and that he would expand his business into Europe and th he'd contacted many foreign companies about the possibility of doing business together and it seems that at least one of them was interested the spanish author of The
Letter requested a copy of the trader guide and to pay for postage he included something that Ponzi had never seen before an international reply coupon or IRC irc's were prepaid coupons that could be bought in exchange for postage stamps in any country that was a member of the universal Postal Union they were commonly used by people who sent letters internationally to cover the cost of a return letter where they were not expecting the other person to pay the postage but for Ponzi they were a bot of inspiration and we're about to change his life [Music]
forever years earlier Ponzi had learned about the concept of Arbitrage the strategy of buying and selling an asset in different markets in order to take advantage of the price difference and make a profit in the case of irc's they were always exchanged for the same postage value regardless of the country but they were purchased at slightly different prices depending on the fluctuations in local currency So in theory Ponzi could buy an IRC in Italy where the lra had taken a serious hit after the war and then redeem it in the United States for American postage
stamps where he knew the dollar value would be slightly higher he would then sell those stamps and make a tiny profit then by scaling the operation to thousands even millions of irc's he was looking at some serious money this was ponzi's new business plan and on paper it seemed like not only a good idea but also perfectly legal Arbitrage was a Sound Investment tactic that had been in use for centuries so in January 1920 Ponte started a new company to handle what seemed to be his most promising business venture yet and he called it the
Securities Exchange company unfortunately for Ponzi like many times before reality came in to crush his hopes and dreams the truth was that the profits from the Arbitrage of irc's was so small that they would be completely wiped out by the cost of shipping the irc's from one country to another they literally were not enough irc's in the entire world to sustain the kind of operation that Ponzi was imagining and yet he refused to let go of this idea Ponzi was convinced that this was his Golden Goose his one-way ticket to the life of wealth and
luxury he'd always felt he deserved so when the legitimate business proved unsustainable he turned his idea into the infamous Ponzi scheme that shares his name after all his plan to Arbitrage irc's sounded really good so even though it actually wasn't good at all maybe he could convince other people it would work and take their money now at its core the Ponzi scheme is similar to the classic fraud robbing Peter to pay Paul which Ponty saw firsthand back when he was involved working for Bank goar Rossi it involves getting people to invest in a business opportunity
by promising them huge returns in a short amount of time with little to no risk however their money never really gets invested instead the frauds that keeps most of it for themselves was giving some of the profits to earlier investors when these early investors see such large returns most of them agree to reinvest their profits back into the business to make even more money thinking it all seems to be working as advertised many of them even tell other people about the opportunity as they believe the earnings are perfectly legitimate but in reality all that's happening
is is those early investors are getting paid using some of the money from new investors it's a very simple but effective system that prays on people's greed and financial naivity but it requires a constant flow of new funds in order to keep the scam going as soon as the frauder can't find enough new investors to pay off the returns of his older investors the con usually falls apart even though the scheme was named after Ponzi he was not the first one to do it a New York bookkeeper named William Miller used the same technique to
con investors out of $1 million back in 1899 and outside of America a German actress named adal Spitzer may have operated the first known Ponzi scheme in history in the early 1870s however Ponzi took the idea to a whole new level with the holidays approaching we all know most people put off shopping until the last minute and if you have an online store or you sell anything online you know the feeling of getting hit with a ton of orders all at once when you're buried in orders and emails from stress customers you'll wish you had
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any details on his operation Pony would refuse to divulge any information simply claiming that he couldn't share all the details of exactly how it worked as then it could potentially help his competition most banks companies and serious investors stayed away from Ponzi they knew when something was too good to be true and in fact almost anyone who knew a thing or two about finances could tell that it was impossible for Ponzi to deliver on his promises but they were not the ones Ponzi targeted he wanted the people who used to be just like him with
more dreams than Common Sense who were always looking for the best way to get rich quick this meant he prayed on the people with very little financial literacy often people in desperate need of money fast Ponzi understood that his true Talent was not dealing with finances but dealing with people he knew how to sell his business without appearing too eager or aggressive as if it made no difference to him whether he got their money or not Ponzi started out with people in his own neighborhood and got 18 of them to invest in his first month
once they were all paid their first round of profits word started spreading fast and soon thousands of people began crowding the streets outside ponzi's office desperate to invest their own money in this seemingly Shire opportunity month after month Ponzi gained more and more clients raking in over $250,000 a day at the peak of his operation the Boston Post held him as a financial genius which gave him yet more perceived credibility and th more investors soon Ponzi was able to live the life he'd always dreamed of he moved into a giant mansion bought a fast car
dressed only in expensive clothes wore gold watches and Diamond pins and went on lavish first class trips it was the life St that Ponzi always felt he deserved but he did not get to enjoy it long by the start of the summer less than 6 months after Ponzi launched his new Venture there were Rumblings of doubt about his business initially everyone was afraid to say anything since Ponzi had successfully sued a financial analyst for liable who' accused Ponzi of lying after all many early investors had been paid already which pony said was proof everything was
legitimate but then the Boston Post the same newspaper that once proclaimed Ponzi a genius started to investigate his operation they brought in Clarence Baron president of Jones and manager of the Wall Street Journal who spotted the obvious scheme by his calculations Pony would have needed to purchase 160 million irc's and yet there were only 27,000 in circulation in the whole world in July 1920 the post presented Baron's conclusions on the front page of the newspaper decrying Ponzi as a fraud and prompting an investigation into his company but the wheels of Justice turned slowly and Ponzi
was able to ease the concerns of the government officials initially by cooperating fully and even saying he'd stop taking a new Investments while he was under scrutiny but then Ponzi caused his own downfall by hiring William McMasters as his publicist unlike Ponzi McMasters was an honest man who soon realized that his clients was a total fraud he later said Ponzi is a financial idiot he can hardly even add up he sits with his feet on the desk smoking expensive cigars in a diamond holder and talking complete gibberish about postal coupons with access to all of
ponzi's Records mcms collected the evidence he needed and went to the Boston Post where he wrote a pit prize winning expose detailing all of ponzi's Secrets this time the game was really up and the Ponzi scheme collapsed several Banks had to declare bankruptcy tens of thousands of people lost their life savings and Ponzi himself was indicted on 86 counts of male fraud however the con man managed to strike a deal and pleaded guilty to only a single charge of male fraud receiving just 5 years in federal prison a relatively small amount given the huge amount
of money stolen and the vast amount of lives ruined [Music] Ponzi was released after 3 and a half years in prison and this time he was finally a changed man and ready to do some good in the world I'm just kidding he literally tried a new scam immediately after getting released Ponzi knew that the government wanted to either Deport him to Italy or imprison him again on lasty charges so he fled to Florida where he planned to essentially repeat the Ponzi scam again he started a new company the Sharon Lan syndicut and sought people to
invest in property around Jacksonville he offered even higher gains than before saying he could get people a 200% return in just 60 days the only problem was that the property he was selling was worthless swamp plan this time though there were no takers ponzi's fraud was soon exposed and he risk being sent to Massachusetts where a lengthy sentence awaited him not wanting to go back to prison yet again Pony changed his look and tried to travel to Italy as a sailor aboard a cargo ship however he was recognized and arrested in New Orleans Ponzi was
now A desperate man he wrote to President Calvin kulage asking for Mercy even appealed to musolini to intervene on his behalf but of course nobody listened it was the end of the line for him Ponzi served another 7 years in prison and the man who came out was not the same as the one who went in Ponzi was a broken mess who had lost all the charm and confidence that once made him so rich as he faced deportation to Italy his wife chose to stay behind in America and divorced him Ponzi spent the rest of
his years in poverty with only memories to comfort him of the times when he had it all he ended up in Rio de Janeiro where he died in 1949 in a charity hospital and was buried in a poor grave thus bringing an end to one of the most notorious Tales of rags to riches to rags in history however in terms of the amount of money ponycon people out of is's actually not one of the biggest Financial frauders if you want to know about the guy who sto billions of dollars and then partied with celebrities like
Leonardo Dicaprio and made The Wolf of Wall Street with the stolen money check out the absolutely insane story of Jolo just click the thumbnail here now as it's an awesome story and I think you'll love it so we'll hopefully see you there
