Ponzi was an Italian immigrant who came to the United States in 1903. In 1920, he started a company called the Securities Exchange Company, which promised investors returns of 50% within 90 days
Ponzi claimed to be making these returns by buying discounted international postal reply coupons (IRCs) in other countries and then redeeming them at face value in the United States. However, Ponzi was not really buying any IRCs. He was simply using money from new investors to pay off old investors
Ponzi's scheme worked for a while because he was able to attract a large number of investors who were eager to get rich quickly. However, the scheme eventually collapsed when Ponzi could no longer attract enough new investors to keep up with the payments to old investors
Ponzi was arrested, convicted of fraud, and spent several years in prison
📸: Bettmann Archive
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