2. The Original Ponzi Scheme
Year: 1919-1920
Approx. Amount: $7 Million*
Company / Person Involved: Charles Ponzi
A Ponzi scheme is based on the idea of taking the money from recent investors and using it to pay out the promised profits to older investors. Charles Ponzi, the scheme’s namesake, and original perpetrator convinced people to invest in IRCs (international postal reply coupons), which he was buying in one country and selling in another, where people paid more for them.
The Original Ponzi Scheme @sigsolar / Pinterest.com
In 1920, after more than a year in operation, the fuzz got wise to Ponzi’s scheme, and Chuck was arrested. Some sources claim the Ponzi’s investors’ losses totaled close to $20 million, however, Charles Ponzi was charged for scamming only $7 million from those who trusted him, as well as being convicted of fraud on the federal and state levels.