Charles Ponzi offered his investors the opportunity to double their investment in three months. Most Bostonians exposed to the idea early on took a pass. So how did Ponzi eventually convince thousands of people (including many members of the Boston Police Department) to invest millions of dollars over a three-month run in the spring and summer of 1920?
As anyone who knows the term Ponzi Scheme can attest, the thirty-seven-year-old Italian immigrant was a charlatan extraordinaire. At the peak of his persuasive powers, Ponzi was pulling in $2 million in cash a week in exchange for Ponzi notes. Investors paid $175 for a note and reappeared forty-five days later for their $262.50. If they pocketed the money, they won. But most reinvested the earnings into more notes. Ponzi used new investments to pay off earlier investments, all the while trying to devise a legal way to exploit fluctuations in foreign currency to make good his obligations. The scheme cratered under the weight of a Boston Post investigation.
So who was Charles Ponzi, and why did so many people give him so much money? For Zuckoff, the answer is a combination of factors, including Ponzi's irresistible salesmanship, human greed, a mob mentality, the immigrant experience in the United States, and the thirst to get rich quick in the Roaring Twenties.
Zuckoff, a former journalist turned Boston University professor, paints a largely sympathetic portrait of Ponzi, who always thought he could make good on his promises. Still, it's tempting to think that if Ponzi put his considerable sales skills to legitimate use, we would today associate his name with success rather than scams.—Sean Silverthorne