June 18, 2025 • 10 mins
On this episode of Our American Stories, Charles Ponzi didn’t invent the Ponzi scheme, but he made it famous and gave it his name. Jonathan Small, host of the Write About Now podcast, shares the fascinating true story of one of history’s most notorious con artists.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
And we returned to our American stories. Up next, the
story of the man who lent his name to his scheme.
You may well know, but the man you don't. We're
talking about Charles Ponzi. Here to tell the story is
John Small, the man behind the podcast. Right about now,
(00:32):
take it away, John.
Speaker 2 (00:33):
A Ponzi scheme is an investment scheme where all the
returns are paid to earlier investors using the money that
was contributed by newer investors. So basically what you do
is you pay the investors of your Ponzi scheme with
the money from the new investors.
Speaker 3 (00:51):
So it's a constant cycle.
Speaker 2 (00:52):
You have to keep on getting new investors in and
the money that the new investors put in you use
to pay your old investors. Ponzi schemes have been around forever,
but they weren't really called Ponzi schemes until Charles Ponzi
came around, probably much to his disappointment.
Speaker 3 (01:14):
He was actually born Carlo.
Speaker 2 (01:17):
He was a poor Italian immigrant and he came from
like a working class family. But he always had a
chip on his shoulder about being not as rich as
he thought he should be, and he always thought he
was much richer than he actually was. When he turned eighteen,
he got in his head that he wanted to go
to America because at that time Italians were hearing that America,
(01:39):
like the streets were paved with gold, this is a
time of great prosperity in America and not so much
prosperity in Italy. And so his parents raised enough money
two hundred dollars for him to take a boat to Boston.
He was supposed to have some spending cash, but being
Charles Ponzi, he basically gambled all that spending cash away
(01:59):
on the boat lost everything. So when he arrived he
was a penniless Italian immigrant. And he spent many years
traveling up and down the coast of America doing all
sorts of odd jobs, like he was a grocery clerk,
he was a factory hand, he was a dishwasher, he's
painted signs, he was a nurse.
Speaker 3 (02:19):
He did a million things, and he.
Speaker 2 (02:21):
Always he was one of those guys that always had
like a get rich quick scheme that he would try
to do and then it would fail, like miserably every
single time. One of the most important events to remember
in the pre Ponzi scheme Charles Ponzi life is when
he went up to Montreal, because this would come back
(02:41):
to haunt him later. But he was working at Montreal
for a shopping company, just kind of a laborer type job,
and he walked into his boss's office and he saw
a checkbook, blank checks, and he decided to write himself
a check and he cashed it and he went out
and bought a nice new suit with his stolen money,
and the cops immediately nailed him and he was arrested
(03:04):
and thrown in jail. But in jail, he met a
bunch of other Italian immigrants and he developed a scheme
where he was going to sneak them into America from Montreal.
They paid him some money to do that, and that
did not go well. They were totally busted at the
border and Charles Ponzi again was arrested, and this time
he was thrown in jail at a penitentiary in Atlanta, Georgia.
(03:29):
So he spent all this time in prison again, came
out of prison penniless. You know, at this point, he's
really frustrated. He wants to make money. He moves back
up to Boston where he originally started his American Adventure,
and he meets this woman named Rose, who becomes his wife.
And Rose introduces him to some, you know, members of
(03:50):
the Boston community that help him out a little bit,
give him some money, lend him some money. So suddenly
he's got some money in his hands. And it's during
this period of his life that he comes up with
a scheme, the one scheme that actually works for him.
There used to be this thing called international reply coupons,
and this is because if you send somebody a letter,
(04:10):
a say, from Italy to America, and you wanted them
to return your letter, you would include this international reply
coupon in the letter, and that would enable them to
buy a stamp that would be accepted in Italy, because
at the time, you couldn't put a stamp on a
letter and have it go to Italy without paying Italy
some money. He felt like, because the exchange rates were
(04:34):
so different between what was happening in Italy and other
countries in Europe and America, that he could buy these
coupons and then kind of cash in.
Speaker 3 (04:42):
On the exchange rate.
Speaker 2 (04:43):
So that was basically the scheme, right, That was the
original scheme, And so he opened up this thing that
he called a Security Exchange Commission, and he basically told people, hey,
invest with me, and I'll give you some really good
return and he would pay them back with some of
the money that he would make through this coupon scheme
that he had going on.
Speaker 3 (05:03):
Right, and he got some investors.
Speaker 2 (05:05):
Some people kind of start putting money in because they
were interested and it sounded legit, and he found that
the more investors he had, the more money he had
to pay back the initial investors. So without even really
knowing it, he was starting what would later be.
Speaker 3 (05:19):
Called the Ponzi scheme.
Speaker 2 (05:21):
It was actually a really good deal for people at
the time. If you just like put one hundred dollars
in a bank, you might make like five dollars an
interest by the end of the year. But with Ponzi,
he was giving like fifty percent interest. So all of
a sudden, there were like lines outside of the Security
Exchange Commission office in Boston because he was able to
(05:43):
give people such incredible returns. In February of I think
nineteen nineteen, he recorded two hundred and ninety dollars from
just seventeen investors. In March he had one hundred and
ten investors. And he was making twenty five thousand dollars.
By May he was earning thirty thousand dollars a week.
To be adjusted for inflation, he was baking about four
(06:04):
hundred thousand dollars a week, and people, you know, the investors,
would just hang in there. So the more investors he had,
the more money he had in the pot. And then
when people wanted to eventually take their money out, he
had enough to pay them back and to pay them
this incredible returns. Everybody was super suspicious of this, like
how could this possibly be? And at one point they
sent some cops over to figure out what was going on,
(06:26):
and the cops were so impressive they invested. They stopped
their investigation and started putting money in this thing. So
by the end of the year of him opening up
the Security and Exchange Commission, he had made like two
point five million. He had seventy eight hundred customers offices
in Boston, he had New Hampshire and Vermont all over
New England. He was so rich at this point that
(06:48):
he was able to buy his own bank, which was
called Hanover Trust, and he moved into this mansion and
really became like a real kind of personality. Charles Ponzi
was only five foot three, I think like one hundred
and thirty pounds, but huge personality, and he would kind
of walk around with these really fancy tailored suits. He
(07:08):
had a cane with a gold top that he used.
You know, he wanted to be Pet Parnham, like the
greatest showman on Earth. You know, you can imagine this
very poor immigrant suddenly living the life that he always
dreamed of living. It was just very intoxicating for him.
And the media started paying attention. So the Boston Post,
(07:29):
which was sort of like one of the tabloids of
the time, there was a guy that was that was
running it named Richard Grosier, who was basically like the
opposite of Charles Ponzi. He was really like Boston Brahman.
He went to Harvard and his son decided that he
was going to make his name by bringing Charles Ponzi down.
(07:51):
Ponzi sort of kind of fell for this trap. He
would agree to do interviews because he was so outspoken
and love to like hear his name and see his
name in Frand and love to give a good quote.
And Grozier kept digging and digging and digging into Ponzi's life,
and eventually he found out a bit about what happened
up in Montreal and that Ponzi was actually a criminal,
(08:11):
and that's when things started to unravel.
Speaker 3 (08:14):
The FEDS started.
Speaker 2 (08:16):
To investigate what he was doing, and they started looking
into his bank accounts and realizing that this was not
on the up and up. People started panicking because suddenly
they're worried that they're going to lose their.
Speaker 3 (08:26):
Money that they invested.
Speaker 2 (08:27):
And there starts to be a run on the Security
Exchange Commission and Ponzi, you know, eventually can't keep up
with the run.
Speaker 3 (08:36):
It puts him in a lot of trouble.
Speaker 2 (08:39):
Amazingly, he is able to pay back most of the
people that invested with him, and some people even gave
the money back, but he still went to prison. He
went to prison for four years for this investment fraud
and he got out on good behavior. The state charged
him with fraud, so he had to go back to prison.
But during his appeal for this case, he got out
(09:03):
on bail and he decided to go on the lamp
because Ponzi never did things the easy way, So while
he was on appeal, he went to Tampa Bay where
he hoped to escape back to Italy on a freighter,
and he shaved his head, and he grew a mustache,
and he wore the sailor's cap and he assumed this
completely different identity to escape America. He also faked a suicide.
(09:26):
He had some friends leave his clothes on a beach
with a suicide note, but none of this worked because
being Charles Ponzi and being a big mouth. While he
was on the freighter going back to Italy, he told
someone who he really was, and eventually the police found
out and they entered the boat and they arrested him,
and they brought him back to Boston. Eventually he was deported.
(09:49):
Rose divorced him and he moved to Brazil. In his
very later years, tried a bunch of different businesses, which
completely failed. On his deathbed, he ultimately confessed to a
reporter that the whole thing was a scheme, that his
security exchange commission was never a real business, and that
it was.
Speaker 3 (10:09):
All a lie.
Speaker 2 (10:10):
He came clean, and he actually wrote a confession letter
to Rose too. I guess it was very important to
him to tell the truth. He died of a brain
hemorrhage in nineteen forty nine in a poor charity hospital
in Brazil, and he had only seventy five dollars in
his pocket.
Speaker 1 (10:30):
And a special thanks to John Small, who's the man
behind the podcast Right About Now, which offers a glimpse
into the lives and stories of successful authors. A classic
story of an American get rich quick schemer. Here on
our American Stories
And we returned to our American stories. Up next, the
story of the man who lent his name to his scheme.
You may well know, but the man you don't. We're
talking about Charles Ponzi. Here to tell the story is
John Small, the man behind the podcast. Right about now,
(00:32):
take it away, John.
Speaker 2 (00:33):
A Ponzi scheme is an investment scheme where all the
returns are paid to earlier investors using the money that
was contributed by newer investors. So basically what you do
is you pay the investors of your Ponzi scheme with
the money from the new investors.
Speaker 3 (00:51):
So it's a constant cycle.
Speaker 2 (00:52):
You have to keep on getting new investors in and
the money that the new investors put in you use
to pay your old investors. Ponzi schemes have been around forever,
but they weren't really called Ponzi schemes until Charles Ponzi
came around, probably much to his disappointment.
Speaker 3 (01:14):
He was actually born Carlo.
Speaker 2 (01:17):
He was a poor Italian immigrant and he came from
like a working class family. But he always had a
chip on his shoulder about being not as rich as
he thought he should be, and he always thought he
was much richer than he actually was. When he turned eighteen,
he got in his head that he wanted to go
to America because at that time Italians were hearing that America,
(01:39):
like the streets were paved with gold, this is a
time of great prosperity in America and not so much
prosperity in Italy. And so his parents raised enough money
two hundred dollars for him to take a boat to Boston.
He was supposed to have some spending cash, but being
Charles Ponzi, he basically gambled all that spending cash away
(01:59):
on the boat lost everything. So when he arrived he
was a penniless Italian immigrant. And he spent many years
traveling up and down the coast of America doing all
sorts of odd jobs, like he was a grocery clerk,
he was a factory hand, he was a dishwasher, he's
painted signs, he was a nurse.
Speaker 3 (02:19):
He did a million things, and he.
Speaker 2 (02:21):
Always he was one of those guys that always had
like a get rich quick scheme that he would try
to do and then it would fail, like miserably every
single time. One of the most important events to remember
in the pre Ponzi scheme Charles Ponzi life is when
he went up to Montreal, because this would come back
(02:41):
to haunt him later. But he was working at Montreal
for a shopping company, just kind of a laborer type job,
and he walked into his boss's office and he saw
a checkbook, blank checks, and he decided to write himself
a check and he cashed it and he went out
and bought a nice new suit with his stolen money,
and the cops immediately nailed him and he was arrested
(03:04):
and thrown in jail. But in jail, he met a
bunch of other Italian immigrants and he developed a scheme
where he was going to sneak them into America from Montreal.
They paid him some money to do that, and that
did not go well. They were totally busted at the
border and Charles Ponzi again was arrested, and this time
he was thrown in jail at a penitentiary in Atlanta, Georgia.
(03:29):
So he spent all this time in prison again, came
out of prison penniless. You know, at this point, he's
really frustrated. He wants to make money. He moves back
up to Boston where he originally started his American Adventure,
and he meets this woman named Rose, who becomes his wife.
And Rose introduces him to some, you know, members of
(03:50):
the Boston community that help him out a little bit,
give him some money, lend him some money. So suddenly
he's got some money in his hands. And it's during
this period of his life that he comes up with
a scheme, the one scheme that actually works for him.
There used to be this thing called international reply coupons,
and this is because if you send somebody a letter,
(04:10):
a say, from Italy to America, and you wanted them
to return your letter, you would include this international reply
coupon in the letter, and that would enable them to
buy a stamp that would be accepted in Italy, because
at the time, you couldn't put a stamp on a
letter and have it go to Italy without paying Italy
some money. He felt like, because the exchange rates were
(04:34):
so different between what was happening in Italy and other
countries in Europe and America, that he could buy these
coupons and then kind of cash in.
Speaker 3 (04:42):
On the exchange rate.
Speaker 2 (04:43):
So that was basically the scheme, right, That was the
original scheme, And so he opened up this thing that
he called a Security Exchange Commission, and he basically told people, hey,
invest with me, and I'll give you some really good
return and he would pay them back with some of
the money that he would make through this coupon scheme
that he had going on.
Speaker 3 (05:03):
Right, and he got some investors.
Speaker 2 (05:05):
Some people kind of start putting money in because they
were interested and it sounded legit, and he found that
the more investors he had, the more money he had
to pay back the initial investors. So without even really
knowing it, he was starting what would later be.
Speaker 3 (05:19):
Called the Ponzi scheme.
Speaker 2 (05:21):
It was actually a really good deal for people at
the time. If you just like put one hundred dollars
in a bank, you might make like five dollars an
interest by the end of the year. But with Ponzi,
he was giving like fifty percent interest. So all of
a sudden, there were like lines outside of the Security
Exchange Commission office in Boston because he was able to
(05:43):
give people such incredible returns. In February of I think
nineteen nineteen, he recorded two hundred and ninety dollars from
just seventeen investors. In March he had one hundred and
ten investors. And he was making twenty five thousand dollars.
By May he was earning thirty thousand dollars a week.
To be adjusted for inflation, he was baking about four
(06:04):
hundred thousand dollars a week, and people, you know, the investors,
would just hang in there. So the more investors he had,
the more money he had in the pot. And then
when people wanted to eventually take their money out, he
had enough to pay them back and to pay them
this incredible returns. Everybody was super suspicious of this, like
how could this possibly be? And at one point they
sent some cops over to figure out what was going on,
(06:26):
and the cops were so impressive they invested. They stopped
their investigation and started putting money in this thing. So
by the end of the year of him opening up
the Security and Exchange Commission, he had made like two
point five million. He had seventy eight hundred customers offices
in Boston, he had New Hampshire and Vermont all over
New England. He was so rich at this point that
(06:48):
he was able to buy his own bank, which was
called Hanover Trust, and he moved into this mansion and
really became like a real kind of personality. Charles Ponzi
was only five foot three, I think like one hundred
and thirty pounds, but huge personality, and he would kind
of walk around with these really fancy tailored suits. He
(07:08):
had a cane with a gold top that he used.
You know, he wanted to be Pet Parnham, like the
greatest showman on Earth. You know, you can imagine this
very poor immigrant suddenly living the life that he always
dreamed of living. It was just very intoxicating for him.
And the media started paying attention. So the Boston Post,
(07:29):
which was sort of like one of the tabloids of
the time, there was a guy that was that was
running it named Richard Grosier, who was basically like the
opposite of Charles Ponzi. He was really like Boston Brahman.
He went to Harvard and his son decided that he
was going to make his name by bringing Charles Ponzi down.
(07:51):
Ponzi sort of kind of fell for this trap. He
would agree to do interviews because he was so outspoken
and love to like hear his name and see his
name in Frand and love to give a good quote.
And Grozier kept digging and digging and digging into Ponzi's life,
and eventually he found out a bit about what happened
up in Montreal and that Ponzi was actually a criminal,
(08:11):
and that's when things started to unravel.
Speaker 3 (08:14):
The FEDS started.
Speaker 2 (08:16):
To investigate what he was doing, and they started looking
into his bank accounts and realizing that this was not
on the up and up. People started panicking because suddenly
they're worried that they're going to lose their.
Speaker 3 (08:26):
Money that they invested.
Speaker 2 (08:27):
And there starts to be a run on the Security
Exchange Commission and Ponzi, you know, eventually can't keep up
with the run.
Speaker 3 (08:36):
It puts him in a lot of trouble.
Speaker 2 (08:39):
Amazingly, he is able to pay back most of the
people that invested with him, and some people even gave
the money back, but he still went to prison. He
went to prison for four years for this investment fraud
and he got out on good behavior. The state charged
him with fraud, so he had to go back to prison.
But during his appeal for this case, he got out
(09:03):
on bail and he decided to go on the lamp
because Ponzi never did things the easy way, So while
he was on appeal, he went to Tampa Bay where
he hoped to escape back to Italy on a freighter,
and he shaved his head, and he grew a mustache,
and he wore the sailor's cap and he assumed this
completely different identity to escape America. He also faked a suicide.
(09:26):
He had some friends leave his clothes on a beach
with a suicide note, but none of this worked because
being Charles Ponzi and being a big mouth. While he
was on the freighter going back to Italy, he told
someone who he really was, and eventually the police found
out and they entered the boat and they arrested him,
and they brought him back to Boston. Eventually he was deported.
(09:49):
Rose divorced him and he moved to Brazil. In his
very later years, tried a bunch of different businesses, which
completely failed. On his deathbed, he ultimately confessed to a
reporter that the whole thing was a scheme, that his
security exchange commission was never a real business, and that
it was.
Speaker 3 (10:09):
All a lie.
Speaker 2 (10:10):
He came clean, and he actually wrote a confession letter
to Rose too. I guess it was very important to
him to tell the truth. He died of a brain
hemorrhage in nineteen forty nine in a poor charity hospital
in Brazil, and he had only seventy five dollars in
his pocket.
Speaker 1 (10:30):
And a special thanks to John Small, who's the man
behind the podcast Right About Now, which offers a glimpse
into the lives and stories of successful authors. A classic
story of an American get rich quick schemer. Here on
our American Stories
Host
Lee Habeeb
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