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Carlo "Charles" Ponzi was born in italy, Parma, in 1882. At the age of 21 (1903), he migrated to the states, where he lived in various locations, doing different jobs, until 1917, when he permanently moved to Boston where he was employed in a service dealing with the handling of foreign e-mail. One day, he recieved a postal coupon. He realized that the coupon, bought in spain for the equivalent of about 1 cent, could be cashed in the states for 6 cents. A 600% revenue! Ponzi decided to start a business on this. He actually tried for a while to actually make money in this way, but he soon realized that dealing with the various postal organizations together with the delays in currency transfer did quickly eat-up all the revenues. Did Ponzi gave up? Not at all. Absolutely determined to get rich, despite the losses, Ponzi kept bragging about his great idea and of the incredible revenues that could be earned with his coupons-based scheme, the Ponzi Scheme.
 Family and friend, exposed to these perspectives of easy gains, were the first to buy "quotes" of the coupons investment. On December 26, 1919, Ponzi (in the photo on this page) officially founded the "Security Exchange Company", that promised a 50% interest in 90 days. The investment was in the form of promissory notes, with values ranging from $10 to $50,000, the average investment beeing 300$.
He also bragged about beeing able to pay the same dividends in just 45 days, which meant doubling your money in 90 days. How to resist to such an offer, coming from what appeared to be a legitimate investment business based on solid grounds (the coupons exchange mechanism)? Indeed, the world did not resist. Ponzi claims were also substanciated by the fact that the early investors DID double their money as promised. How is this possible, you might ask. Well, Ponzi simply paid the early investors with the money he got from the next investors. FOR A WHILE IT WORKED! Charles Ponzi was the man, he could double your money in 90 days, PROVEN FACT. Charles Ponzi was soon literally flooded with money. Many satisfied investors re-invested the earned money and everybody wanted Ponzi's promissory notes. At the peak of the business, the flow of money was estimated at about 1.000.000$/week.
Ponzi's lifestyle changed, he was dressing the finest suits, covered his wife with jewels and bought a mansion in Lexington. Of course this had to collapse one day, because no real revenues were made (it was estimated that a total of two -2!!- coupons were bought during the whole period of operations). The success and unconventional nature of the scheme attracted the attention of law man and taxes officers, that somehow did not manage to find anything irregular for a period, also because Ponzi had basically met, until then all his obbligations. But it indeed collapsed and in 1920 Ponzi was officially declared bankrupt. It is fascinating to note that his "customers" wanted to believe him so much, that people still sent him money WHILE HE WAS IN JAIL in the hope he could help them becoming rich quick Is the Ponzi Scheme still alive today? E-Currency Scams and HYIPs
The Ponzi Scheme, disguised under a number of different appearances, is still a quite actual scam and has re-flourished with the explosion of the internet. In case you didn't know, please be aware that in this very moment hundreds if not thousands of websites, often presented as "HYIPs" (High Yield Investment Programs) offer you amazing interests rates to be earned in a very short time. In a tipical offer, you might be promised a 10% DAILY earning on your investment for a total of 15 days. For example in this case, by investing 10 $, you would then get 1$ back each day for 15 days, that is a 50% net gain in just 15 day. Of course, rarely there is a maximum sum to be invested, you can invest as much as you want. While there could well be in principle some legitimate investment of this kind of the internet, the observation that if it was really true everybody would know about this at this time and would be investing there, is hard to overcome. As it usually happens, in particular on the internet, "too good to be true" offers are scams. Instead, the notion that these kind of investment are in fact disguised Ponzi Schemes is becoming diffuse, and it is easy to step into discussion forums full of hangry people complaining that after some initial payment of the interest rates, their favorite investment website had disappeared and e-mails simply jumped back to sender, or stories along this line. Often the proposed scheme of gains is based on "forex exchange", that is the possibility to gain high revenues by purchasing and selling different currencies of money including e-money, as it happens in the real market of foreign money exchange.
The world of HYPs is indeed a fast moving world, with new websites popping-up and disappearing every day. A while ago, the top advertiser in google for "make money fast" was a company offering the following:
########GOI OFFER######### We offer the following plans : START Plan, ADVANCED Plan, PROFESSIONAL( Your profit will be paid everyday for 15 days) , and Hotplan Plan ( update on 11.18.2005 )
START_Plan : 18% profit daily for 15 days : Minimum invest: $10 , Maximum invest: $199
Example: If you invest 50USD now, you will receive 135USD in your e-gold account, after 15 trading days ( Your profit will be paid everyday , per day is 9$ if you invest 50$ )
- ADVANCED_Plan: 20% profit daily for 15 days . Minimum invest: $200 ,Maximum invest: $499
Example: If you invest 200 USD now, you will receive 600USD in your e-gold account, after 15 trading days ( Your profit will be paid everyday , per day is 40$ if you invest 200$ )
- PROFESSIONAL:25% profit daily for 15 days. Minimum invest: $500, Maximum invest: $7000
Example: If you invest 500 USD now, you will receive 1875USD in your e-gold account, after 15 trading days . ( Your profit will be paid everyday , per day is 125$ if you invest 500$ )
########END OFFER#########
Attractive isn't it. Well I did not go for the offer but monitored the website. The domain name had been purchased just 4 days before I landed on the website from a google adsense ad. After a couple of weeks the .com domain disappeared (site unavailable) and the very same website was now available at the .net extension. After another week, the .net domain disappeared aswell and the site was completely unreachable. How many "investors" did fall in the trap in these couple of weeks of operation of the web site, how much was the actual total "investment" that was "collected" by the "company" during this period? How many of these ephemeral web sites are born every day, just to disappear after a few days of "income collection"? The operation of this type of website is facilitated by a number of factors, including the following: - The money is nearly always exchanged as e-currency, such as e-gold or e-bullion. Among the characteristics of these kind of currencies is anonimity: when you pay with a credit card, the recipient of the money is never anonimous, and you can for example request a cashback. In contrast with e-currencies the owner of the money associated for example to an e-gold account is easily anonimous, as basically no identity check is required to open an e-gold account and tranfer money there, for example by western union. And no checkback is possible with e-currencies. - The websites tipically do not supply a contact phone number and an address, contacts are limited to e-mail or maybe just a contact web form. Would you send 100.000$ to somebody of whom you only know the e-mail address? Well maybe not you, but you'd be surprised to learn how many people actually do so every day. It should be reminded that in a Ponzi scheme, early investors are generally paid, so if you find posts around, of people bragging about their gains with such or such HYIP, well they might be truthfull and sincere. However, as you have learned by the Ponzi story, Ponzi Schemes are bound to collapse after a short time because no real money is gained anywhere. Moreover, from the legal point of view, those who actually gain from a Ponzi can be sued by those who lost money, because although unknowingly they profited from a scam perpetrated at their expense, so the idea to "jump in early" and get out before it crashes migh not be the best one. Related Article: Can you trust HYIP rating websites?  Discuss this article
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