Here’s what you’ll learn when you read this story:
- Charles Ponzi is best known for his infamous Ponzi scheme involving international postage stamps.
- After serving time in federal prison, Ponzi relocated from Boston to Florida and began a fraudulent real estate business.
- He never stopped conning people and loved the attention of his notoriety.
Today, most people have heard of a Ponzi scheme. This specific type of fraud, wherein a swindler promising swift investment success uses money from new investors to pay out the old ones, had existed long before its current namesake was born. It’s often been summarized as “robbing Peter to pay Paul,” possibly evoking the apostles, and it even appears as a plotline in Charles Dickens’ debtors prison–set novel Little Dorrit from 1857.
But the scale and the showmanship with which Charles Ponzi executed his version of the scheme a century ago has so immortalized the Italian immigrant in the modern lexicon that even more recent and more costly criminal enterprises, like that of disgraced stockbroker Bernie Madoff, cannot wrench Ponzi’s name from the scam.
A new Apple Original podcast called Easy Money: The Charles Ponzi Story depicts the infamous grifter’s rise and how his seemingly slick postal reply coupon scheme turned into a well-regarded financial wizard before it all came crashing down.
But just as remarkable as the story of the snowballing stamp scheme that brought him infamy is the fact that, even after that scheme was exposed, Ponzi picked up, moved to a new state, and concocted a whole new enterprise. Even more remarkably, some people were still willing to trust him with their money.
Charles Ponzi’s postage scheme was a national scandal
America at the dawn of the 20th century was, in the eyes and imaginations of many, the land of opportunity. Since European explorers first coined it “the New World,” there had always been individuals enterprising enough to pursue and attain prosperity in the United States. But the coming of the 20th century had codified, and perhaps commodified, what James Truslow Adams would in 1931 describe as the American Dream.
Rushes on resource-rich lands like the 1848 California Gold Rush and the 1859 Pennsylvania oil rush recontextualized the idea of just what “opportunity” this land offered. Where once it meant doing a little better than your forbearers so that your kids could do a little better than you, now it meant with the right swing of a shovel or a pickaxe, you could strike it rich in an instant (never mind that the richest entrepreneurs of the time were often the ones selling those shovels and pickaxes).
Meanwhile, authors like Horatio Alger were spinning rags-to-riches stories for an inspiration-hungry public. These tales taught that with the right idea for a business, and a little bit of gumption, the hotel bellboy could one day sit in the penthouse.
This national mindset must be understood to really reckon with what Charles Ponzi “achieved” in his lifetime. It contributed to not just why so many unsuspecting people were susceptible to Ponzi’s schemes, but why Ponzi, himself, might have thought, at first at least, that his shady deals were legitimate business ideas.
When Ponzi undertook his most famous scheme, he appealed to fellow members of Boston’s Italian immigrant community with what sounded like a loophole waiting to be exploited: international postage prices. Specifically, international reply coupons. These coupons, abbreviated as IRCs, were sometimes included in international business correspondence as a way to pre-pay for reply postage. The sender could purchase an IRC in one country, and the recipient could redeem it for their own country’s legal postage. Ponzi realized that the price of these stamps varied by country, so if he bought them from his home country of Italy, where they were cheaper, and then refunded them in the United States, where they were more expensive, he could make a modest profit.
Through the Securities Exchange Company, which he founded in early 1920, Ponzi collected from investors, ostensibly to purchase the stamps, and promised to double their investments in 90 days. But when the stamp scheme fell through, and Ponzi was on the hook for the promised profits. That’s when he began taking money from the newer investors to pay off the earlier ones (or even persuading those earlier investors to reinvest once more).
By that June, Ponzi had brought in $2.5 million from investors ($38,452,751.20 today, per the CPI Inflation Calculator), and he didn’t do quietly. A front page story on Ponzi in the Boston Post in late July, as recounted in Mitchell Zuckoff’s Ponzi’s Scheme: The True Story of a Financial Legend, described his lavish Lexington, Massachusetts, home as being “furnished with the best” in a way that “does not give the impression of nouveau riche either, for the fine Italian tastes of the owner fixed that.”
But the Post’s coverage turned unfavorable fast. They began questioning the math behind Ponzi’s investment strategy, slowing exposing the flaws and causing a panic among his investors.
By August, they’d exposed his criminal past, including a three year prison stint in Montreal for forgery, and blasted it across their front page. By November, Charles Ponzi was pleading guilty to a federal indictment for mail fraud and was sentenced to five years in prison.
All of this played out in the headlines across the nation, and Ponzi’s name quickly became synonymous with fraudulent investment schemes.
After prison, Ponzi concocted a Florida real estate con
In September of 1925, Ponzi had wrapped up his federal prison stint in just three and a half years but still faced 22 state charges of larceny. Part of the delay came from Ponzi’s appeal that his federal plea bargain also applied to state charges. This claim made it all the way to the U.S. Supreme Court but was denied, with a decision written by Chief Justice, and former President, William Howard Taft.
Ponzi served as his own attorney in the three subsequent trials for his state charges. He managed to smooth talk his way out of two of them, and while out on bail, skipped town and headed down to Florida, where he had previously worked as a sign painter as a young man.
But the Florida Charles Ponzi fled to was a different place than the Florida he had been a sign painter in years ago. As Smithsonian Magazine notes, 1925 saw the state experience a “land boom,” not dissimilar to the gold and oil rushes of the previous century, as Americans hoped to strike it rich in the panhandle. For his part, Ponzi was a much different man than the young sign painter he once was. If people dreamed of striking it rich with Florida land, Ponzi was willing to sell them that dream—and only the dream.
Ponzi settled in Jacksonville, a city experiencing a population boom that made it “Florida’s first city with a population exceeding 100,000,” according to The Jaxson. Ponzi initially assumed the alias of Charles Borelli, but anonymity didn’t suit him, and he quickly reassumed his real name. Moreover, he incorporated his infamy into his sales pitch.
Forming the Charpon Land Syndicate (Charpon being an amalgamation of Charles Ponzi), Ponzi began a national advertising campaign, declaring that Charpon would be facilitating the sale of land near the vibrant city of Jacksonville for just $10 a lot. Ponzi claimed he intended to use the money he made from this “legitimate” venture to pay back those he had defrauded during his previous scheme.
Investors weren’t deterred by Ponzi’s previous exploits and gave him the initial funds to purchase 100 acres of land for $16 an acre. Ponzi then planned to split each acre into 23 lots to be sold for the aforementioned $10 price. Per The Jaxson:
“Under this scenario, Ponzi would profit 500% off his initial investment. In addition, he would sell shares in his company to investors focused more on profits than land. To lure investors, he offered a 200% profit within 60 days, which was significantly greater than his infamous Securities Exchange Company returns.”
So, had Charles Ponzi finally gone legit? Was the next chapter in Ponzi’s story as a real estate mogul? Not quite.
The land “near Jacksonville” he was selling was actually 65 miles away in Florida’s rural Columbia County. And a fair amount of that land was underwater.
Although Ponzi was able to get some investors for this real estate scheme and even managed to make some sales, he was only able to accrue about $7,000 before Florida authorities intervened and put a stop to his scheme. He was indicted on charges of violating Florida trust and securities laws and sentenced to a year in prison.
But Charles Ponzi had had his fill of prisons. His clothes were found on a Florida beach, along with a note apologizing to his wife and mother for having taken his own life rather than face more time in prison. The story of the man infamous for a scheme meant to keep his financial head above metaphorical water had ended with him physically sinking beneath the water, much like the land he had fraudulently tried to sell.
Or at least, that’s how the story would have ended, had that note been at all true.
In reality, Ponzi had faked his suicide, shaved his head, grown a mustache, assumed an alias, and took a job in Tampa as a dishwasher aboard an Italian freighter. Now, one might be inclined to think that if you went through all the trouble of faking your death, changing your name, and disguising yourself as a dishwasher on a freighter, you would be cautious not to say anything to anyone aboard said freighter that could give away your secret past. Like, say, “I am actually Charles Ponzi, the man behind multiple crimes I am now fleeing justice over.”
And, for what it’s worth, we don’t know that he used those exact words. But he did reveal his true identity to another crew member and was apprehended before the ship even left United States waters.
Ponzi reportedly tried appealing to U.S. President Calvin Coolidge and, when that failed, Italian Prime Minister Benito Mussolini in the hopes of securing a premature deportation in lieu of jail time. Instead, Ponzi was sentenced to another stint in prison and deported afterward.
Ponzi never stopped scheming
The grifter then made his was to Brazil and reportedly tried his hand at other schemes and ventures, but their extent and their success are more difficult to verify. Ponzi, for his part, claimed he nearly pulled a $2 million con on the Soviet Union, but by his final years, most people knew Ponzi couldn’t be taken at his word.
And that was something Ponzi didn’t seem all that ashamed of. To him, salesmanship and showmanship were two sides of the same coin. In one of his final interviews, Ponzi declared that:
“Even if they never got anything for it, it was cheap at that price. Without malice aforethought I had given them the best show that was ever staged in their territory since the landing of the Pilgrims! It was easily worth fifteen million bucks to watch me put the thing over.”
Charles Ponzi wanted to be known, to be remembered. He craved the cover of the Boston Post, and he couldn’t stand the anonymity his multiple aliases had offered him. So, in 1936, he published an autobiography, The Rise of Mr. Ponzi. With this, he could share his side of the story. He could shape history to his liking. With this autobiography, he could use the same silver tongue that had so seduced hundreds of investors to now appeal to a wave of Depression-era Americans hoping to learn the tricks of the trade, of how to finesse your way into a fortune.
But Ponzi’s memoir didn’t make the splash he might have hoped. His book of hollow platitudes like “Life, hope and courage are a combination which knows no defeat” and “Temporary setbacks, perhaps, but utter and permanent defeat, never!” had little to offer the ambitious would-be entrepreneurs of 1936.
Besides, they were likely busy with a different new release, a book that would become one of the best-selling books of all time. At exactly the same time one of America’s most famous con artists was publishing his book in a final grasp for relevance, in a dose of bitter irony, Americans everywhere were flocking to purchase a copy of a book called How to Win Friends and Influence People by one Dale Carnegie.
Michale Natale is a News Editor for the Hearst Enthusiast Group. As a writer and researcher, he has produced written and audio-visual content for more than fifteen years, spanning historical periods from the dawn of early man to the Golden Age of Hollywood. His stories for the Enthusiast Group have involved coordinating with organizations like the National Parks Service and the Secret Service, and travelling to notable historical sites and archaeological digs, from excavations of America’ earliest colonies to the former homes of Edgar Allan Poe.
