Charles Ponzi
| Charles Ponzi | |
|---|---|
| Born: | March 3, 1882 Lugo, Emilia-Romagna, Italy
|
| Charges: | Federal mail fraud (1920; pleaded guilty, originally charged with up to 86 counts). Earlier federal conviction for smuggling Italian immigrants (1910). Massachusetts state larceny (convicted; labeled a "common and notorious thief"). |
| Sentence: | 5 years for federal mail fraud (1920), paroled after roughly 3.5 years (~40 months); separately 7-9 years for Massachusetts state larceny (served ~7 years); earlier ~2 years (1910-1912) for immigrant smuggling. |
| Released: | Paroled from federal sentence c. 1924; released from Massachusetts state prison and deported to Italy October 7, 1934 |
| Facility: | |
| Status: | Deceased (died January 18, 1949, Rio de Janeiro, Brazil) |
Born on March 3, 1882, in Lugo, Italy, Charles Ponzi was an Italian-born swindler. His 1920 Boston investment operation, the Securities Exchange Company, gave the "Ponzi scheme" its name by paying earlier investors with money taken from later ones. Ponzi was arrested on August 12, 1920. In November 1920, he pleaded guilty to federal mail fraud before Judge Clarence Hale and received a five-year sentence, later incurring a separate Massachusetts state larceny sentence of seven to nine years. After serving his prison terms, he was deported to Italy in October 1934 and died penniless in Rio de Janeiro, Brazil, on January 18, 1949.
Early Life and Career
Charles Ponzi was born on March 3, 1882, in Lugo, in the Emilia-Romagna region of Italy. He emigrated to the United States in the early 1900s, specifically in 1903, and later also lived and worked in Canada.[1] Between 1908 and 1910, Ponzi was imprisoned in Canada for forging a check, serving his time at the Saint-Vincent-de-Paul Penitentiary near Montreal, which was a Canadian, not a U.S. federal, prison.[2] From 1910 to 1912, he was convicted in the United States of smuggling five Italian immigrants across the Canadian border. He served roughly two years at the federal penitentiary in Atlanta, Georgia. This prior record, which was later exposed by the Boston Post, helped bring down his 1920 scheme.[3]
Criminal Case
In 1920 in Boston, Ponzi operated the Securities Exchange Company, promising investors returns of about 50% in 45 days, or 100% in 90 days, ostensibly through the arbitrage of International Reply Coupons, which were postal coupons.[4] In practice, he paid earlier investors with funds collected from newer ones, taking in millions of dollars from thousands of people in a matter of months. Because he mailed notices and updates to investors, the U.S. Post Office and its postal inspectors could pursue mail fraud charges.[5] A Boston Post investigation exposed his finances and his criminal past, triggering a run by investors and causing the collapse of the scheme. Ponzi was arrested on August 12, 1920.[6]
Trial and Sentencing
In November 1920, Ponzi pleaded guilty to a federal mail fraud charge before U.S. District Judge Clarence Hale. He was sentenced to five years in prison, having originally faced up to 86 counts of mail fraud.[7] After completing his federal term, Massachusetts prosecuted him on state larceny charges spanning 22 counts. A first trial ended in an acquittal, a second resulted in a hung jury, and a third resulted in a conviction. He was sentenced to seven to nine years in state prison as "a common and notorious thief."[8] While he was free on bail during his state appeals, Ponzi ran a Florida real estate scheme known as the Charpon Land Syndicate. He was convicted in Florida in 1926 of violating state securities law, jumped bail, and was recaptured before being returned to Massachusetts.[9]
Incarceration
The association identifying Ponzi with FCI Atlanta (low-security) is only partly accurate. Ponzi was held at the federal penitentiary in Atlanta, Georgia, from 1910 to 1912 for the immigrant smuggling conviction, not the famous Ponzi scheme.[10] That site is the historical predecessor of today's FCI Atlanta. From 1910 to 1912, it was known as the United States Penitentiary at Atlanta, rendering the modern low-security designation anachronistic. His 1920 federal mail fraud sentence was not served in Atlanta. Because federal cell space was unavailable, he was incarcerated at the Plymouth County Jail in Plymouth, Massachusetts. He was paroled after about 40 months, roughly 3.5 years, around 1924. He later served his Massachusetts state larceny sentence beginning in February 1927 at the Charlestown State Prison in Boston, serving about seven years.[11] No BOP register number exists for Ponzi, as the federal Bureau of Prisons was not created until 1930 and his federal imprisonments predate it.
Release and Aftermath
Ponzi was released from Massachusetts custody in 1934. Because he had never become a U.S. citizen, he was ordered deported. On October 7, 1934, U.S. immigration authorities put him aboard the SS Vulcania in Boston Harbor bound for Italy.[12] He later relocated to Brazil, where his fortunes declined. He became partly paralyzed and blind in one eye. Ponzi died on January 18, 1949, in a charity hospital in Rio de Janeiro, Brazil, reportedly leaving an estate of about $75.[13]
Frequently Asked Questions
Q: What did Charles Ponzi do?
In 1920 he ran a Boston investment operation, the Securities Exchange Company, promising huge short-term returns supposedly earned by trading International Reply Coupons. He actually paid earlier investors with money from newer investors, defrauding thousands. The fraud type known as a "Ponzi scheme" is named after him.
Q: How long was Charles Ponzi's sentence?
He received five years in federal prison for mail fraud in 1920 and was paroled after roughly 3.5 years. He was separately sentenced to seven to nine years for Massachusetts state larceny, of which he served about seven years. An earlier 1910 federal conviction for immigrant smuggling drew about two years.
Q: Where was Charles Ponzi incarcerated?
His 1920 federal mail fraud sentence was served at the Plymouth County Jail in Massachusetts (federal cells were unavailable). His state larceny sentence was served at the Charlestown State Prison in Boston. Earlier, from 1910 to 1912, he was held at the federal penitentiary in Atlanta for smuggling immigrants -- not for the Ponzi scheme.
Q: When was Charles Ponzi released?
He was paroled from his federal sentence around 1924 and released from Massachusetts state prison in 1934. Upon release he was deported to Italy, leaving Boston Harbor aboard the SS Vulcania on October 7, 1934.
Q: Is Charles Ponzi still alive?
No. He died on January 18, 1949, in a charity hospital in Rio de Janeiro, Brazil, reportedly nearly penniless.
See also
References
- ↑ "The Eponymous Mr. Ponzi". '. Retrieved .
- ↑ "Charles Ponzi - Scheme, Movie & Wife". '. Retrieved .
- ↑ "When Ponzi's Bubble Burst". '. Retrieved .
- ↑ "Ponzi Scheme (Behind the Badge exhibition)". '. Retrieved .
- ↑ "Ponzi Cheats Thousands in an Investment Scheme (Research Starters)". '. Retrieved .
- ↑ "What Madoff could learn from Ponzi's legal trials". '. Retrieved .
- ↑ "When Ponzi's Bubble Burst". '. Retrieved .
- ↑ "What Madoff could learn from Ponzi's legal trials". '. Retrieved .
- ↑ "Charles Ponzi - Scheme, Movie & Wife". '. Retrieved .
- ↑ "When Ponzi's Bubble Burst". '. Retrieved .
- ↑ "What Madoff could learn from Ponzi's legal trials". '. Retrieved .
- ↑ "When Ponzi's Bubble Burst". '. Retrieved .
- ↑ "The Eponymous Mr. Ponzi". '. Retrieved .