Ponzi's Scheme: The True Story of a Financial Legend

 
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You*ve heard of the scheme. Now comes the man behind it. In Mitchell Zuckoff's exhilarating book, the first nonfiction account of Charles Ponzi, we meet the charismatic rogue who launched the most famous and extraordinary scam in the annals of American finance.

It was a time when anything seemed possible每instant wealth, glittering fame, fabulous luxury每and for a run of magical weeks in the spring and summer of 1920, Charles Ponzi made it all come true. Promising to double investors* money in three months, the dapper, charming Ponzi raised the ※rob Peter to pay Paul§ scam to an art form and raked in millions at his office in downtown Boston. Ponzi*s Scheme is the amazing true story of the irresistible scoundrel who launched the most successful scheme of financial alchemy in modern history每and uttered the first roar of the Roaring Twenties.

Ponzi may have been a charlatan, but he was also a wonderfully likable man. His intentions were noble, his manners impeccable, his sales pitch enchanting. Born to a genteel Italian family, he immigrated to the United States with big dreams but no money. Only after he became hopelessly enamored of a stenographer named Rose Gnecco and persuaded her to marry him did Ponzi light on the means to make his dreams come true. His true motive was not greed but love.

With rich narrative skill, Mitchell Zuckoff conjures up the feverish atmosphere of Boston during the weeks when Ponzi*s bubble grew bigger and bigger. At the peak of his success, Ponzi was taking in more than $2 million a week. And then his house of cards came crashing down每thanks in large part to the relentless investigative reporting of Richard Grozier*s Boston Post.

In Zuckoff's hands, Ponzi is no mere swindler; instead he is appealing and magnetic, a colorful and poignant figure, someone who struggled his whole life to attain great wealth and who sincerely believed每to the very end每that he could have made good on his investment promises if only he*d had enough time. Ponzi is a classic American tale of immigrant life and the dream of success, and the unexpectedly moving story of a man who每for a fleeting, illusory moment每attained it all.


From the Hardcover edition.

Customer Reviews:

  • "Double Your Money in 3 Months!" - Charles Ponzi
    Arriving in the U.S. by way of Italy, penniless, Charles Ponzi amassed a fortune of over $8,000,000 before losing it all and winding up in jail. After serving his sentence, he was deported from the U.S., divorced by his American wife, and living without a dime to his name just as he had when he first arrived in the United States.

    So how did this famous 'Ponzi Scheme' work? Read on...

    The Business: Currency Speculation in the form of International Postage Coupons. If Ponzi bought coupons in bulk in countries with weak currencies, converted them into stamps, and cashed them in the United States or other countries with strong currencies, he would soon be the richest man in the world! (EXAMPLE) In the United States, $1 could purchase 20 Postal Coupons. With that same $1 U.S. Dollar, you could purchase 66 Postal Coupons in Rome Italy. 66 Postal Coupons purchased in Rome for a dollar would be worth $3.30 in the United States. Profits of $2.30 on every dollar spent, or 230%. Other countries might have even more devalued currencies and profits would be even higher. The Hitch, Ponzi understood, would be getting cash for the stamps he bought with the coupons.

    Unfortunately, the post office would not allow a person to redeem a Postage Coupon for cash. Still excited about the concept, Ponzi decided to push forward with his plan anyway and decided to worry about the problem of exchanging the Coupons for Cash later. With the promise of 50% interest in 45 days, or 100% in 90 days, Ponzi Opened the doors to his new business dubbed 'The Security Exchange Company' the day after Christmas in 1919. Within 7 months since he had opened for business, he took in $9,600,000 from thirty-thousand investors. Not suprisingly, he still handn't found a way to make a profit through the postal reply coupons nor any other investment and kept paying old customers interest with new customers investment money.

    Eventually the Local, State, and National Government took notice and began looking into Ponzi's outlandish claims for enormous profits. During their investigations into his "business practices," he voluntarily refused to accept new investments but still paid out either the principal to people who had invested with him but didn't wait the entire 45 or 90 days to withdraw, or when their Ponzi Notes matured, the principal + interest. Upon hearing of the Investigations, people turned up in troves to withdraw their money. Eventually the money ran out and Ponzi's business went bankrupt. All told, twenty thousand people who had held Ponzi notes at the time of the collapse received refunds equal to 37.5% of their initial investments.

    All in all, Ponzi was a con-artist that swindled thousands of people out of their hard-earned money. But he wasn't all bad. He saved the life of a woman that was badly burned by an explosion. Upon hearing from a doctor friend that a caring Nurse was in desperate need of a skin graft, Ponzi voluntarily had 152 square inches of skin from his thighs and back removed. The donations would leave him with broad white patches of scar tissue on his back and legs, however, he saved the nurse's life and she recovered.

    This book features old pictures of Ponzi, his family, his home, and other important people, & places at the beginning of every chapter that I found very entertaining. There are also quotes from ponzi and others taken directly from journalists which were in Newspapers of the day. In the end of this book it's stated that in the last years of his life, failing health, broke, Charles Ponzi wrote his own Autobiography called 'The Rise of Mr. Ponzi' which was not published until after his death. I haven't read it yet but plan to ;)
    ...more info
  • A Real Life Great Gatsby
    A Real Life Great Gatsby

    Ponzi is described as charismatic character similar to a real life Great Gatsby who has the mindset of an arbitrageur, the wit and character of a movie star, the style and personality of politician but the morals and values of a crook. It's too bad; it always bothers me when I read books about people with such potential that take a turn to the dark side, but I do love a non fiction that tells such a good story that it could almost be a fiction drama.

    The book is very enjoyable. It takes us through a, "magical time, when anything felt possible". Ponzi starts his great scam just at the brink of the roaring 20's when prohibition-which started in Jan 1920 was just setting in and the Boston-Irish politics were played out through sometimes underhanded dealings and new inventions and discoveries had everyone excited about the future. All the while Ponzie is opening offices all over the East Coast collecting as much as several million in a single week. It describes Ponzi's Machiavellian outlook that the ends will justify the means and describes his continuous almost delusional optimism.

    You may just find yourself rooting for Charles Ponzie to find a way to go legit, while he struggles to invest the $[...] million or so he collects through the issuance of his "Ponzi notes"

    By Kivin Kingston author of, A 20,000% Gain in Real Estate: A True Story About the Ups And Downs from Wall Street to Real Estate Leading Up to Phenomenal Returns

    My Blog: [...]...more info
  • great story!!
    This is a really great story and gave me a different view of Ponzi. Didn't know a thing about the guy, other than his name is synonymous with chain letters.

    I found the book motivating. This guy built something from nothing, even if it didn't exactly work out in the end.

    Better than fiction! If you want a book with interesting characters and a memorable story, this is it! I recommend it especially for people who like crime, history, or business books....more info
  • Highly Recommended!
    Nowadays, the phrase "Ponzi scheme" is applied to everything from putrid boiler-room operations to the housing boom. That makes it instructive to take a look at the phrase's actual namesake. Charles Ponzi was a con man, to be sure, but he also was a gifted promoter and cheerful dreamer who captured the shadiest side of the American spirit. In this fascinating, novelistic account of Ponzi's meteoric rise and inevitable fall, journalist Mitchell Zuckoff painstakingly recreates the 1920 zeitgeist that allowed Ponzi to delude and scam so many investors. Times have changed, but the underlying human nature that allowed Ponzi to raise so much cash remains the same. We recommend this page-turning history to investors who want to be equipped to spot hype and scams designed to lure the gullible....more info
  • A Good Investment of Your Reading Time (50%above principal!)
    I always like to read books which tell the story of a person in history who we hear about all the time but never get the details. I found Ponzi's Scheme to be well-written, informative and entertaining. I also feel that the hallmark of a good biography is that it tells the stories of the people around the subject of the biography as well as the subject. Ponzi's Scheme fits this hallmark with its stories of Richard Grozier of the Boston Post and Ponzi's wife Rose, among others. As for Ponzi himself, I was left with the feeling that although he did come across a basically a nice person, I felt that his passion for greed was his fatal flaw and that he should have realized that it would have been better to have the love of his wife and settle for an ordinary life rather than scheme for quick riches which hurt those who believed in his scheme, his wife and himself at the end. I do feel, however, that he would have made a great host of a "reality" TV show over someone like Donald Trump. Ponzi's Scheme is a good book, especially for those who are interested in Boston history....more info
  • An Excellent Biographical History
    In short, this is the best history book I have read in years. Prof. Zuckoff takes a historical figure whose scheme is well-known but whose life story, until now, is not. The absence of historical literature on Charles Ponzi is remarkable because the man lived a fascinating life.

    What is amazing about Ponzi's scheme is the amount of success he enjoyed. Over the course of 6 months, he was able to raise $10 million based on his promises to return 50% on investments. This amount, in 2006, would be quite impressive. But Ponzi did it in 1920, when the average American had little savings, rarely invested in anything, and did not have access to widespread information, like the internet.

    Prof. Zuckoff does a great job of capturing the essence of America in 1920. The characters are lively. The writing is crisp. The observations are insightful. If you are remotely interested in American history, this is a must-read....more info
  • The rise and fall of Ponzi reads like Greek drama!
    The folly of the get-rich-quick formula was already a familiar story in 1920 when Charles Ponzi's descent into financial criminality forever connected his name with the pyramid scheme. The smart talker and smart dresser --one Boston newspaper dubbed him the man who put the "crease" in Croesus-- had tremendous powers of salesmanship and a quick mind for seeing monetary gain where others saw merely mundane transactions.

    His abilities, channeled into legitimate finance would likely have made him rich and respected. Tragically, those assets --his smooth tongue and quick mind-- were the very instruments of his degradation and destruction. Zuckoff parallels the life of Ponzi, the fatherless and penniless immigrant, with Ponzi's nemesis, Boston Post publisher Richard Grozier. Grozier was born with every advantage of wealth and position; yet he struggled under the crippling burden of a larger-than-life father. The early life of Grozier --he was suspended from Harvard College several times due to his lack of focus on his studies-- suggested a young man on the way to a life of no distinction. But just as Ponzi makes his fateful choice for quick money and illegality, Grozier decides to accept his destiny to be the man to expose Ponzi's fraud to the people of New England who are recklessly investing in the 50 percent in 90 days scheme.

    David Trumbull.
    [...]...more info
  • Ponzi: Seductive Scam Artist
    Zuckoff has written a first-class biography of Charles Ponzi. His writing style keeps the reader deeply engrossed in the story and wanting to know what happens next. Zuckoff recounts various communications between the main characters, all of which he says comes from letters, newspaper accounts, etc. He also does a very nice job paralleling the lives of the scam artist, and the newspaper publisher who finally exposes the scam.

    Although he was hardly the first to come up with the con game, Ponzi will forever be associated with pyramid schemes and "robbing Peter to pay Paul" schemes. The way he did it was brilliantly simple: Come up with a way of making money that seems completely legal and is relatively easy to explain. Market that scheme to folks that are in the same boat as you (e.g., same industry, ethnicity, religion, neighborhood, etc.) Pay the astronomical returns to the initial investors. Then let their word of mouth recommendations bring in additional investors. Repeat the process and watch the money pour in.

    It is difficult to read this book and not empathize with Ponzi. Even though the reader knows that many of Ponzi's "investors" will become victims of the fraud, Ponzi's amazingly seductive personality is able to win over most people. The question that lingers throughout most of the book is whether Ponzi ever actually intended to pay off the investors with a legal - and feasible - money-making idea, or whether he simply wanted to scam the victims out of their life savings. The answer is finally provided by Ponzi himself towards the end of his life.

    This book - and Ponzi's story - serves as a great reminder of the old adage that if something sounds too good to be true, then it probably is. But what is truly amazing is that these same Ponzi-type schemes continue even today, whether it is stock "pump and dump" scams, late-night infomercials on how to get rich quick, or large-scale Enron-like frauds. By appealing to people's instinctive desire to make money, the end result of these schemes is usually the same: the investor becomes a victim. This book makes for a great read, as well as a great life lesson.

    ...more info
  • Facts Without Color

    Our desire to get ahead financially is insatiable, especially in this capitalist society. A 50% return on my investment in 45 days? Where do I sign up? Too good to be true? Well, you know what they say... We think we are smarter, more sophisticated people today. Maybe so, but if we are, it's because we know about things like Ponzi schemes, or think we do.

    Mitchell Zuckoff provides the best detail yet, of the life and times of the man who gave his name to an illegal financial scheme, Charles Ponzi. The narrative is straightforward and factual. It's interesting, but a little dull. Charles Ponzi was a very charismatic man, very shrewd; think Donald Trump. This book provides many facts, but little in the way of emotional motivation.

    I recommend this book to everyone interested in human gullibility and the financial world. You won't learn a lot about either, but you'll have many facts about Charles Ponzi. ...more info
  • The Power of Appearance
    This is a great biography of Charles Ponzi who, as we all know, gave his name to the scheme whereby an investment fund pays profits directly from the pooled receipts rather than utilizing receipts to produce any real income. Banks make their money by taking money from depositors and then renting it out. In Ponzi's day, banking was blissfully simple--pay 3% to depositors and collect 6% from creditors, a simple business model that tantalized Mr. Ponzi who, we learn, was a tremendously gifted individual with a quick wit and charisma who did not lack faith in himself. Ponzi made his money by selling the public on the fact that they would indeed be able to make a profit and then proving sufficiently capable of doing so that the needed new deposits continued to pour in to his fund.

    Where this study becomes fascinating is in its exposition of the mindset of Mr. Ponzi who came very, very close to pulling it off. Mr. Zuckoff takes pains to point out that in writing this book he did not interpolate from extant facts and scrupulously notes his sources. Apparently Ponzi was of the type that just can't stomach the hard work of doing things the accepted way; however, ethics are ethics and regardless of his motive--Ponzi did commit fraud because he was not creating income with his depositors money. Yet, Ponzi's fraud was more of a "short cut" as he never really knew exactly what his liabilities were and was on the brink of figuring out a way to use his fund that would have produced profit; as he himself noted, he could have cut and run with the money but instead was trying to figure out a way to invest the funds. In fact, he did bank the money, so if he was guilty of anything it was overselling the returns. Really, Ponzi created a kind of liquid venture capital fund that just didn't ever get around to making investments. He could have pulled off his scheme and the way the book is written you are rooting for him to succeed.

    Ponzi's public persona created such confidence that his fund was able to weather repeated attacks by the media. In fact, his strong public image and his ability to sway opinion actually stymied most of the law enforcement agencies whose responsibility it was to ferret out fraud. However, his past criminal record was his undoing. A sharp reporter figured out how to dent the public trust in Ponzi and a bank examiner unafraid to do his job managed to lock up Ponzi's remaining cash thereby forcing a default. In my opinion, but for Ponzi's past transgression, he would have ended up successful. There's a lesson.

    The story is simple but the man was complex. His ability to appear completely unruffled in the face of the most dire of situations continually disarmed the media as well as the police, who were so accustomed to looking for signs of guilt that they let the guy go on repeated occasions. Even though you know what is going to happen it is fascinating to watch Ponzi continually evade detection and capture. There is a real lesson to legitimate business people regarding self-confidence and the power of dressing well.

    And as a postscript: Anyone stupid enough to think we've progressed as an economy should turn on the TV after 11 PM and see ads for pills that either melt fat or grow a specific body part. Ponzi lives....more info
  • Ponzi Scheme
    The book was a present for my wife. I asked for her assessment of the book, story, writing style, and overall opinion. She said it was a good read. She described it as light reading and quick to finish. Her opinion was that the story held her interest and the writer style was pleasing and entertaining. Once she picked the book up she could not out it down. My wife is a fast reader and devours dozens of books each year.

    She has degrees in English and Business and is not easily impressed with most writers and stories.

    She loved this book....more info
  • A forgotten figure and a slice of history more Americans should know about
    The great P.T. Barnum once observed "There is a sucker born every minute". Barnum knew human nature all too well. Take a look around you. How many times per day do you encounter those annoying radio ads, TV infomercials or bulk mailings that tout the latest way to get rich quick? It is increasingly hard to avoid them. You hear the stories and see the smiling faces of those who have allegedly made a killing by following some prescribed plan by a huckster with a book or DVD to sell. I suppose that in most cases these schemes are perfectly legal but I always wonder about the morality of most of them. You certainly never hear anything about those unfortunate souls who lose money in these deals. Yet the quest for easy money is really nothing new in America. Throughout our history Americans have sought out and been victimized by these schemes. It seems we never learn. Perhaps the granddaddy of all these many schemes was foisted upon the unsuspecting public by an Italian immigrant named Charles Ponzi. In his colorful 2005 offering "Ponzi's Scheme: The True Story of A Financial Legend" author Mitchell Zuckoff presents a portrait of a man with a plan. It is a fascinating and entertaining read to say the least.
    Charles Ponzi was truly a man for his time. With a largely checkered past that he adroitly manages to camouflage Ponzi opened the Securities Exchange Company in Boston in 1920.
    His offer was really quite simple and obviously too good to be true. Ponzi promised his customers to return their initial investment plus fifty percent in just 90 days! Now this was just the kind of fantastic deal that would appeal to many folks in the freewheeling decade of the 1920's. Ponzi cleverly positioned himself as a friend to "everyman" and criticized the banking industry for hoarding all of the profits for themselves. But what Ponzi's investors did not know or refused to believe was that the Securities Exchange Company was merely a front for a classic "rob Peter to pay Paul" scheme. This deal really was too good to be true. Nevertheless, tens of thousands would invest their hard earned money with Ponzi and when all was said and done many of them would lose a large percentage of their initial investment. What makes Ponzi such a fascinating charactor to study is that he really was a very charming and likeable fellow. Mitchell Zuckoff does a outstanding job of painting an intimate portrait of the man who would become a household name. Zuckoff also introduces us to the interesting cast of charactors who would have roles to play in the investigation and ultimate conviction of Charles Ponzi.
    In a strange sort of way Ponzi would attain the notoriety he set out to achieve. In the late 1950's the Oxford English Dictionary actually added the term "Ponzi scheme" to its listing of words. A "Ponzi scheme" would be defined as "a form of fraud in which belief in the success of a fictive enterprise is fostered by payment of quick returns to first investors from money invested by others." It was really just that simple. As I indicated earlier this is history more Americans should be aware of. I found "Ponzi's Scheme" to be an extremely well written and entertaining book. Highly recommended!!...more info
  • Good History!
    This book is excellent. It tells a fascinating story and blends it well with the era it is set in. One interesting fact about Charles Ponzi: Our present Social Security system is based on the EXACT SAME scheme!! Happy retirement!...more info
  • Surprising after Skepticism
    I didn't think it was going to be this good.

    Zuckoff paints a brilliant picture of the life of Ponzi the man who came up with one of the first and most incredible pyramid schemes in history.

    The book of course is a tragedy. Ponzi made some people a lot of money, caused a lot of people to lose money and went from great wealth to poverty in rollercoaster ride time.

    The book is a fascinating study for those interested in business, persuasion and a great reminder that what sounds too good to be true, probably is.

    Ponzi is painted as having been a complex character that knew what he was doing...knew it was wrong...knew it would ultimately collapse, but was not without heart and caring for some.

    A truly well written and page turner of a book.

    Kevin Hogan
    Author of The Psychology of Persuasion, and, The Science of Influence...more info
  • Great telling of the story behind a household name
    I love books that tell the story behind a well-known phrase with a little-known background, so Ponzi's Scheme was a natural selection for me. Turns out it was a great choice. The story of Charles Ponzi, an Italian immigrant to America, is a fast-moving rollercoaster of a tale told with skill by Zuckoff.

    The result is a very readable book with a combination of good lessons for its reader about too-good-to-be-true propositions, great characters, good history, financial lessons, and a tradgedy of Shakesperean proportions.

    Highly recommended for history buffs, fans of character-driven stories, people in financial markets, and anyone who's curious to know the story behind the phrase "Ponzi Scheme."...more info
  • Fun Read, but Possible Interpretation Problems
    Zuckoff paints Ponzi as someone who desperately wanted his international reply coupon scheme to work legitimately, and then merely didn't know exactly how to get out of it and "go straight." He almost makes you feel sorry for the guy.

    To his credit, Zuckoff does explain his sources very well in the back of the book. However, even using the substantiated facts that he himself presented, one wonders if Ponzi really was trying to legitimate his career, pressures from his wife and mother aside.

    Even according to Zuckoff's own account, trouble followed Ponzi like mice to cheese. How many times have you been arrested? Me neither. Given the series of events and the fact that Ponzi kept lying to everyone (even behind his facade of charming confidence), I don't think he deserves an iota of sympathy (although Zuckoff and the New York Times did bring up interesting questions about Ponzi's investors and their characters--the desire to get something for nothing).

    Most telling are Ponzi's quotes and actions after turning himself in for the fraud committed under the auspices of the Securities Exchange Company and serving his prison term for that. Here we see the desperate thief running from the authorities and making a pretty stark "confession" (as Zuckoff states) later in life which shows little remorse.

    I wonder if Ponzi's character was more consistent than Zuckoff describes through this book. He started off as a person of questionable character and ended the same way. I just don't think he was as desperate to legitimize his scheme as Zuckoff makes him out to be (he seemed to do a lot of thinking about how to manipulate the coupons, rather than doing; and what he really got close to doing (stealing from his own bank), wasn't very legitimate).

    His charming character and devotion to mother and wife aside, the guy seemed to be a crook through and through.

    Still, it's a fun read; it does make you think about who Ponzi really was....more info
  • History of Classic Scheme
    Mitchell Zuckoff does a fine job of detailing the rise and fall of Charles Ponzi, for whom the notorious pyramid scheme is known. The author details the beginnings of Ponzi in America, his thirst for success, and his continual attempts to rapidly achieve the success which he thinks he deserves. Though less detailed in this book, the continual fleecing of Americans was an accepted tradition in securities trading and business ventures of the day. Therefore, little sympathy could be felt for the speculators who couldn't resist the temptation to get-rich-quick. The book points out Ponzi's vague desire to be legitimate, but his self-promotion and desire to succeed overwhelm any good judgment remaining. Overall, a good read about an historical icon....more info

 

 
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