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Charles Ponzi. Facts about Charles Ponzi. flamboyant con man whose scam followed a particularly spectacular course Mr. Ponzi began telling New York investors in December 1919 that investments in foreign postage coupons could yield 50 percent returns in 45 days. .
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Facts about Charles Ponzi • flamboyant con man whose scam followed a particularly spectacular course • Mr. Ponzi began telling New York investors in December 1919 that investments in foreign postage coupons could yield 50 percent returns in 45 days.
By redeeming coupons bought cheaply overseas for much higher amounts in the United States, he could double their money in three months, he claimed. • Mr. Ponzi was a fast-talking immigrant and college dropout
His scheme rested on the eagerness of ordinary working people to benefit from the wealth they saw being generated around them as the economy recovered from World War I. As the fever spread, millions of dollars were coming in every week, most of it from ordinary working-class people investing as little as $10 at a time. It's estimated that nearly three-quarters of the Boston Police Department invested in "Ponzi notes," as they became known.
With successive waves of people entrusting him with their cash, Ponzi needed only enough money to pay off those people redeeming their coupons. Of course, with the prospect of increasing their savings exponentially every couple of months, few ever redeemed anything.
Mr. Ponzi was convicted of mail fraud in 1920 and served time in federal and state prisons before he was deported to Italy in 1934, never having become a citizen. He died penniless in Rio de Janeiro in 1949 and was buried in a pauper’s cemetery there.
Definition • A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk.
Biblical Bilker • In Florida, the Greater Ministries International church used Bible-speak to cheat its flock out of $500 million. Starting in the early 1990s, the church, led by gun-toting minister Gerald Payne, offered worshippers investments in gold coins. Payne then created an investment plan that would "double the 'blessings' that
people invested" by funneling money towards the church's fake precious metals investments. According to the Anti-Defamation League, Payne said that God had modernized the multiplication of the loaves and fishes and asked him to share the secret. $500 million later, the Feds caught Payne, but most investors never got their money back.
Retiree Robber • Mexican resort owner Michael Eugene Kelly schemed retirees and senior citizens out of $428 million. He offered them timeshare investments in Cancun hotels that he called "Universal Leases.“
The timeshares came with rental agreements promising investors a nice fixed rate of return. Most of his victims used their retirement savings, thinking they would get solid, low-risk returns. • The SEC says that "more than $136 million of the funds invested (came) from IRA accounts." Kelly, bought himself a private jet, racetrack, and four yachts.
What exactly is the SEC? • What do the letter stand for? • Where is it located? • What is it’s job?
Letters • SEC • Securities and Exchange Commission
Location • SEC Locations: The SEC employs approximately 3,500 staff in Washington, DC and in 11 regional offices: • New York • Boston • Philadelphia • Miami • Atlanta • Chicago
Job • to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation • main areas of enforcement activity are: • Insider trading • Accounting fraud • False or misleading investment information
Ladies only • In 1880, Boston native Sarah Howe promised women 8% interest on a 'Ladies Deposit." She said it was only for women, selling the fact that their money would be safe with her. She took the money and ran.
