Charles Ponzi’s Schemes

Episode Transcript
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Speaker 1 (00:01):
Welcome to Stuff You Missed in History Class, a production
of I Heart Radio. Hello and welcome to the podcast.
I'm Tracy V. Wilson and I'm Holly Fry. I said
back in our episode on the south Sea Bubble that
I kind of wanted to do one on Charles Ponzy.

(00:22):
So here it is. His name is synonymous with one
particular kind of fraud today. But until I started researching
this episode, I did not realize just how short lived
this scheme that made him famous was. Like I imagined,
if his name becomes synonymous with the thing that he

(00:44):
was running this scam for years and years, a long
term identity for now not the case. Carlo Ponzi was
born on March two, Lugo, Italy. He was the only
child of arrest A and Ponzi. Arreste was a postal
worker and Emelde's family was from Parma, Italy. The Ponzi's

(01:05):
life was comfortable but fairly modest, and after they moved
to Parma when Carlo was still a child, Emelde entertained
him with stories of the opulent homes and luxurious lifestyles
of their wealthier relatives in the area. Oreste and Emelda
wanted Carlo to become a lawyer and maybe eventually work
his way up to being a judge, something that would

(01:27):
be a little more prestigious and have more income than
what they had, so they sent him to a private academy.
He became fluent in French there. Oreste died before Carlo
started college, but he left Carlo enough money to pay
for an education at La Sapienza Universita de Roma. Like
a lot of people who are away from home for

(01:48):
the first time, when Carlo got to college, he made
the most of his newfound freedom. He was attractive, he
was charismatic, He made friends really easily, and a lot
of the friends had he made had a lot more
money than he did. Some descriptions of him make it
sound like he immediately started doing petty crimes, but it

(02:09):
seems more like he just burned through his inheritance buying
clothes and going to the opera and trying to keep
up with his new circle of fancy partying friends, including
drinking and gambling. But after a couple of years he
had frittered or gambled his inheritance away, and he was
failing his classes. An uncle who had become something of

(02:30):
a father figure to him suggested that he get a job,
maybe as a clerk, something that would be stable but
not require a degree. Carlo hated this idea. He could
not afford this extravagant lifestyle he had been trying to
keep up, but he had gotten used to it and
it was what he wanted. Getting some kind of low
level job felt like an insult and something that all

(02:52):
of his friends would judge him for. I can understand
all of this. Meanwhile, his family was becoming increased singly
frustrated with him. They were having to loan him money
to pay his debts or cover various fines on his behalf,
and this became not just expensive but also embarrassing. So
his uncle made another suggestion that he might immigrate to

(03:15):
the United States and try to make a life for
himself there. So some relatives pulled their money and they
bought him a ticket aboard the s S Vancouver. They
gave him a gift of about two hundred dollars to
get him started. Although Carlo didn't really know what he
was going to do once he got to the US,
this did seem more appealing to him than getting a

(03:36):
desk job in Italy. He also seems to have thought
it might give him a chance to redeem himself in
the eyes of his mother. It does seem like he
regretted how much his time and college had really disappointed her,
so he took his uncle's suggestion. He departed for Boston
in November of nineteen o three. Unfortunately, though he gambled

(03:57):
and drank away most of that two hundred dollars during
the edge, Carlo did not stay in Boston for long.
Another relative offered him a job at his freight company
in Pittsburgh, and Carlo traveled there by train, spending most
of the trip trying to improve his knowledge of English.
He did not like that job in Pittsburgh, though, so
he quit, and for a while he traveled around New Jersey,

(04:18):
New York, and Rhode Island doing whatever work he could find.
Most of that work involved manual labor, things like painting
signs and working at a laundry. At this point, there
was not a standardized spelling of Ponzi in the US,
and he spelled his name in a few different ways.
He also sometimes used a different name, the surname of Bianchie.

(04:40):
By nineteen o seven, Ponzi was fluent in English, French
and Italian, and that was really useful for working in
places with a large immigrant community. He went to Montreal and,
using the name Charles Bianchi, got a job at Banco's Russi,
which was a bank catering to the city's Italian immigrant population.

(05:00):
Many banks with a predominantly Italian clientele invested in Italian
securities that paid three percent interest. The bank would pass
two thirds of that on to customers on their interest
bearing accounts, while using the rest to cover expenses and
turn a profit. But Luigi Zarossi, owner of Banco Zarosi,
was offering customers six percent interest, tripling the amount of

(05:24):
interest that customers were seeing on their accounts. Might have
seemed too good to be true, and it was so.
Rossi did not have some kind of secret way to
get more money from the bank's investments. He was just
paying established account holders interest by skimming money from the
deposits that people made when they opened up new accounts

(05:45):
and from money that customers were trying to send to
their family back in Italy through the bank. Of course,
this was both criminal and unsustainable, and as it started
to unravel, Zarosi fled to Mexico. At first, investigators thought
this scheme was Zerosi's work alone, but then one of
the bank's employees took his own life and another was

(06:08):
arrested after being accused of stealing from a customer. Even
as investigators started digging into more people who worked at
the bank, Ponzi stayed in Montreal, looking after Zarossi's wife
and daughters and purportedly helping with the investigation, but then
not totally clear why he decided it was time to leave.

(06:29):
On August eight, Ponzi stole a check from the back
of a check book while he was visiting the offices
of Canadian warehousing company. He made out the check for
four hundred twenty three dollars and fifty eight cents, and
he forged the signature of the company's office manager, Damien Bournier.

(06:49):
Ponzi cashed the check at a bank and then spent
pretty much all the money on the clothing and supplies
that he would need to get out of Montreal and
set himself up somewhere else. Meanwhile, a clerk at the
bank became suspicious of the out of sequence check and
the signature on it, and contacted the authorities Ponzi was
arrested and immediately confessed, and he feigned epilepsy so that

(07:13):
he would be housed in the prison infirmary rather than
in a regular cell until he stood trial. Ponzi was convicted,
he spent the next twenty months incarcerated at sam Vincent
DePaul Penitentiary. While he was there, he worked his way
up from being a clerk in the prison blacksmiths shop
to working in the wardens office, and he wrote to

(07:35):
his mother about what was going on, although in his
account this was all kind of a misunderstanding and he
was really distinguishing himself in his work with the warden.
Just a couple of weeks after being released from prison
in nineteen ten, Ponzi headed back to the US by
train in the company of five other Italian men. At
this point, US immigration law banned immigration from China, and

(07:59):
while there weren't limits or quotas for other countries yet,
various so called undesirables were also banned, including anarchists, sex workers,
people with contagious diseases, and people likely to become a
public charge. None of these five men on the train
had valid identification papers with them, and none of them
spoke English, so when officials boarded the train near the U.

(08:22):
S border, they questioned Ponzi. Ponzi said he did not
know any of these men that he was with. He
said he had run into an old friend at the
train station, and the friend had asked him to watch
over this group, basically as a favor. It's not clear
whether this was something Palsy actively planned or whether he
took any money for doing it, but that old friend

(08:45):
was really the man who had fled during the Bank
os Arrassi collapse. After being accused of stealing from a customer,
Ponzi was charged with smuggling quote undesirable aliens into the US.
He took a plea deal, thinking it he'd just have
to pay a small fine. Instead, he was sentenced to
two years in federal prison and find five hundred dollars.

(09:09):
He once again worked as a cleric while incarcerated, including
translating other people's mail so the warden could read it.
He served as full sentence plus an additional month because
he did not have the money to pay his fine.
Once he was out of prison, Ponzi again worked at
a range of jobs, mainly in the southern US. While
working in a mining camp in Alabama. He donated some

(09:33):
of his skin to a nurse named Pearl Gossip, who
was badly burned when a gasoline fueled sterilizer that she
was using exploded. Ponzi reportedly donated almost two hundred square
inches of his skin over the course of three surgeries,
requiring several months to recover and contracting pleurisy in the process,

(09:56):
and also expecting nothing in return. This almost certain we
saved Gosset's life, Especially in the context of the rest
of Ponzi's life. This story seems incredible enough that Tracy
went on a little bit of a quest to try
to corroborate it, and it does seem to have really happened.
Gossett's initial injury was covered in the local West Blocked
in Alabama newspaper, and Ponzi's skin donation was covered in

(10:20):
the Tampa Times. On December, he apparently sent a clipping
of this or another article on his donation to the
warden in Atlanta, who showed it to a reporter for
the Boston Globe. After Ponzi became famous, Okay, what I
kept finding references to this and nobody was providing any details,
and I was like for real though, because this sounds

(10:42):
like something somebody would say to aggrandize themselves. I'm a
great guy. Yeah, there are these news reports about it.
We will talk more about when Ponzy got to Boston
after we take a quick sponsor break. Charles Ponzi moved

(11:06):
to Boston in nineteen seventeen, and around that time he
seems to have settled on that name rather than going
by Carlo or using a pseudonym like Bianchie. He had
been working with a company that sold freight vehicles overseas,
and being trilingual came in pretty handy there. When he
got to Boston, he started working as a clerk at JR.

(11:26):
Pool Company, which was an import export firm, another good
place for somebody who spoke three languages. In Boston, he
met Rose Nico, who he married in nineteen eighteen. Ponzi's
mother was apparently worried that he wasn't being honest with
her about the time he had spent in prison, so
during their engagement, Emmelde wrote Rose a letter explaining everything.

(11:48):
Of course, that was the explanation that she had heard
from her son, which made him sound wrongfully accused. Rose
already thought really well of Charles. She knew about things
like his skin donation and his attention to the Zerosi
family during the Bonco zar Rossi scandal. She carried on
with their relationship, and she did not let Charles know

(12:09):
that she knew because she didn't want him to think
she thought any less of him. Rose's father ran a
produce business, which Charles took over, but that business quickly failed.
In some accounts, Ponzi ran it into the ground through
sheer mismanagement, but in others, this business was already really floundering,
and Ponzi was basically making a last ditch effort to

(12:31):
try to save it. In Ponzi was arrested for stealing
more than five thousand pounds of cheese, but his name
was misspelled on the warrant. This was not a case
of the reflection of various spellings of Ponzi that he
had used over time. There was just a you in
place of the end. That misspelling led to a series

(12:51):
of delays, and eventually this whole thing fizzled out. Ponzi
then tried to start up an international business directory called
trey Ter's Guide, which would make its money through ads.
Another good thing for somebody to make use of their
three languages. Doing he applied for a startup loan at
Hanover Trust Bank, but they turned him down, and so

(13:13):
this effort also fizzled out. But then someone in Spain
wrote Ponzi to ask for a copy of the Trader's Guide,
not realizing that it had already folded, and according to
Ponzi's account, that person had included an international reply coupon.
These are not used much anymore, and many nations no
longer issue them at all, but the International Universal Postal

(13:35):
Union established these in nineteen o six to make it
easier for people in its member countries to correspond with
one another. If you wrote to someone who was living
in another country, you could include a coupon, and then
the recipient could exchange that coupon for the postage that
they would need for their reply. When these coupons were
first created, their value was roughly equivalent no matter where

(13:58):
they were bought and no matter where they were redeemed.
But after World War One the value of various European
currencies fell, and Ponzi realized he could take advantage of
these exchange rates. He could buy reply coupons in countries
where the currency was weaker than in the US, and
then he could sell them in the US for a profit.

(14:19):
Pondz rented office space at twenty seven School Street in
Boston in December of nineteen nine, opening a business that
he called the Securities Exchange Company. People would give him
their money and he would give them a promissory note
entitling them to their money plus interest when it matured.
He guaranteed a fifty percent profit after forty five days

(14:42):
and a one profit after ninety days. That first, he
needed to convince people to participate in this. He owed
a man named Joseph Daniels money for office furniture he
had bought, and when he fell behind on the payments,
he offered Daniels the opportunity to invest. He promised him
a hundred percent return over just two months. Ponzi recruited

(15:05):
investors from Boston's predominantly Italian North End, many of whom
were just ordinary people with a little bit of money
they wanted to invest. Or were people who trusted Ponzi
with their entire life savings. As words spread and his
business grew, Ponzi hired a secretary and a sales team
and opened satellite offices in other parts of the northeastern US.

(15:28):
He posted notices in multiple languages that started with phrases
like do you want to get rich quick? He boasted
about having a whole network of people in Europe who
were buying coupons on his behalf and a confidential method
of exchanging them for cash in the US. As the
money rolled in, Ponzi started making investments of his own.

(15:49):
He bought a house in Lexington, Massachusetts for thirty nine
thousand dollars. That was nine thousand dollars in cash, plus
a twenty dollar certificate from the securities exchanged company that
was payable for the rest of it six weeks later.
The seller's attorney seems to have been a little nervous
about this arrangement and got Pons to also use a
thirty thousand dollars certificate of deposit from an actual regular

(16:13):
bank as a backup. Okay, as an aside. I'm trying
to understand this. Yeah, So it's nine thousand dollars in
cash and then the twenty thousand dollars certificate, and then
the idea was that it would make enough profit that
it would get to thirty k Yes, okay, yes, Okay,

(16:34):
I just had this moment where I'm like, I don't
understand the math um. Ponzi also invested in other businesses,
including his former employer JR. Pool Company, the Napoli Macaroni Company,
a construction company, and American Telephone. He bought City of
Boston bonds and bought shares in multiple Boston banks, including

(16:54):
a massive investment in Hanover Trust Bank, which had turned
him down for that earlier loan. They also indulged in
various luxuries, like buying a car and then upgrading that
to a limousine with a hired driver. He brought his
mother over from Italy. He also loaned people money, and
he made donations to various charities. On July four, the

(17:17):
Boston Post reported that Joseph Daniels had sued Ponzi for
one million dollars. Although Ponzi publicly said this suit had
no merit, He started opening bank accounts under false names
to try to hide his money in case Daniels might
be successful. This report also led to some of his
customers asking for their money back, but this was temporary,

(17:40):
and not long after the news broke of a lawsuit,
he was bringing in a million dollars a week. By
late July, newspapers were reporting on this Italian man with
the office in on School Street and a supposedly full
proof way to get rich quick. An article in the
Boston Post on July twent fourth of nine twenty outlined

(18:02):
Ponzi's guaranteed returns that we talked about earlier, and also
noted that at least as of that moment, nothing seemed
to be illegal about this. Two police officers who had
been sent to investigate had wound up investing themselves. The
Post also reported that Ponzi's estimated worth had grown to

(18:22):
about eight point five million dollars, up from essentially zero
the previous October. In yes, he may as well be
a basillionaire at that point. In this article, Ponzi described
what he was doing as a sure thing, one that
he could continue to do for as long as exchange

(18:43):
rates made stamps bought for a dollar overseas worth four
dollars in the US. He was quoted as describing that
first burst of inspiration with the reply coupon from Spain quote.
I looked the coupon over I thought about its value.
On the other side, I said to myself, if I
can buy one of these stamps in Spain for one
cent and cash it for six cents in the United States,

(19:06):
just because the rate of money exchanges higher here. Why
can't I buy hundreds, thousands, millions of these coupons. I'll
make five cents on every one of this particular kind,
so why not. This article did raise some doubts about
whether Ponzi could continue to do this long term. There
was an international postal conference schedule to take place in

(19:28):
Spain that might adjust how these coupons worked, and for
the most part, Italy and France had both already stopped
issuing them, but Ponzi expressed that he was really confident
that he could keep this going. The next day, the
Post reported that Arrival Get Rich Quick Company had opened
up next door to Ponzi, the old colony for an

(19:49):
exchange company, which had also hired a ballyhoo Man like
at a side show to draw in customers. Even without
the ballyhoo Man, accounts described the area around Ponzi's office
as completely chaotic, thronged with people who wanted in on
the deal. The Post also reported that more investigations were
getting underway into Ponzi's business, including a collaboration among international authorities. Uh,

(20:16):
This whole hiring a bally hu Man to holler at
people in the street to kind of invest cracks me up. Also,
Ponzi found the whole ballyhu Man situation very annoying. They've
out posied me. Yeah. So. On the the Post print
ed quotes from Clarence W. Barron, who at the time

(20:37):
was running the Boston News Bureau and would later establish
Baron's Business and Financial weekly name folks might recognize. Baron
said that it was true that differences in postal rates
could make it possible to sell reply coupons for a profit,
but it was really only possible to do that on
a very small scale. Baron also raised some very pointed questions,

(21:01):
like if Ponzi was promising investors return, then why was
he investing his own money in things like real estate
and government bonds that did not even guarantee a ten
percent return. An editor's note in the Financial section that
same day noted that the difference between Spanish and American
currency had never been as large as Ponzi was describing,

(21:23):
and wondered how long European governments would allow their reply
coupons to be used for a purpose, it was clearly
not their intent. As a side note, the headline on
the front page of the Post on July read quote
questions the motive behind Ponzi scheme, And that's one of
the first uses of Ponzi scheme in writing, if not

(21:44):
the first. The Oxford English Dictionary actually cites a New
York Tribune article from a few days later than this. Soon,
U S District Attorney Daniel J. Gallagher was starting a
federal investigation. Attorney General J. Weston Allen was heading up
the investigation for the Commonwealth of Massachusetts. Suffolk County District
Attorney Joseph C. Pettier was also involved, as well as

(22:07):
the Boston Police Department, various New England bankers, and Bank
Commissioner Joseph Allen. On July Palz agreed not to take
any more money until audits and investigations into his business
were done, and he also agreed that he would keep
offices open so that he could pay people whose notes
had matured, or to refund money to people who wanted

(22:30):
to get their money back. D A. Joseph C. Pettier
characterized Ponzi is totally willing to do this and very
friendly about the whole situation. Ponzi's branch offices and other
cities and states started closing down as well. In news
reports from that day, US District Attorney Daniel J. Gallagher
was quoted as saying that the US government was the

(22:52):
largest user of reply coupons in the world, and yet quote,
the entire issue for the past twelve months of our
government is only a small fraction of the entire number
which must have been handled by Ponzi to account for
the tremendous income which he claims to have made since
December last The US was reportedly using only about two
hundred thousand stamps a year, which sold for six cents each,

(23:15):
so it just didn't add up that Ponzi was using
them to bring in millions of dollars. On July twenty,
after these and other news reports, there was a huge
run on Ponzi's offices in Boston as worried people tried
to get their money back. People fainted in the heat
as they waited. A crowd smashed through a glass paneled

(23:36):
door as they tried to get in. Ponzi reportedly returned
a million dollars in a single day. Meanwhile, the Boston
Post ran a report from the Boston News Bureau that
said there was just no indication that international reply coupons
were being moved with anywhere near the volume that Ponzi's
scheme would have required, and that there was no increase

(23:57):
anywhere in how many stamps were being read. Aamed Ponzi
was publicly dismissive of all of this, joking with reporters
and investigators and announcing plans to start a charitable Ponzi foundation.
Although earlier reports had described Ponzi as charming and cheerful
and happy to suspend new investments until the investigations were over,

(24:19):
by July twenty nine, the Boston Post was quoting him
as saying that the US was butting in on his
business and investigating where it had no cause to a
massive crowd of people wanting their money back jammed the
alley adjacent to his office, and Ponzi brought them coffee
and sandwiches at lunch. Meanwhile, speculators also made their way

(24:41):
through the crowd, trying to buy notes off of people
who wanted to cash them in. On July, auditor Edwin L.
Pride started going through Ponzi's records. Meanwhile, the Postmaster of
New York was quoted as saying the entire world supply
of postage coupons would not be enough to bring in
the money Ponzi claimed he had made on them. That

(25:03):
would require at least one hundred sixty million coupons, but
in New York, for example, there were only twenty seven
thousand of them on hand. Meanwhile, Ponzi announced that he
had been offered ten million dollars to sell the business,
but hadn't decided what he wanted to do. Then, on
the thirty one, he announced that he was suing Charles W.

(25:25):
Baron for libel and also thinking about running for office
once all of this was over. Although multiple people pointed
out that what he said he was doing was just
not possible, he still maintained that he had a way,
but it would be unethical to breach the confidentiality of
his European partners by explaining it. He also promised that

(25:48):
he was going to donate a hundred thousand dollars to
the Italian children's home. At this point, so many people
were saying this doesn't end up, but there wasn't yet
conclusive proof of it not adding up, but that I'll
change on August second, and we'll talk about that after
a sponsor break. On August second, nineteen twenty, a front

(26:18):
page headline of the Boston Post read quote declares Ponzi
is now hopelessly insolvent. What followed was an article written
by William McMasters, who Ponzi had hired to do pr
for him. McMasters had recognized that if Ponzi was the
real deal, he would be a huge asset to McMaster's

(26:40):
publicity career, but if pons was ripping people off, McMasters
wanted to stop it. This article that he wrote for
the Post alleged that Ponzi was two million dollars in debt.
Without factoring in all the interests that was due on
the Securities Exchange Companies notes when they matured. With that
interest included, he was four point five million dollars in debt.

(27:04):
He also said that Ponzi had sent no money abroad
over the last sixty days, and that he had not
deposited any money in any bank from anything that came
from overseas. He had only deposited money that had been
given to him by his investors. McMaster's article also spelled
out just how massively Ponzi's scheme had grown, from issuing

(27:28):
two hundred notes today on June eight to two thousand,
nine hundred notes the day before he agreed to stop
taking people's money. Palsy still definitely had supporters at this point, though.
The Post reported in exchange with an anonymous bystander on
the street who shouted out to Ponzi that he was
the greatest Italian in history. Ponzi said that he was

(27:53):
the third greatest because Columbus had discovered America and Marconi
had discovered wireless, which that's a sentence to unpass. The
bystanders shouted back at him, According to the Post's report,
quote you discovered money. The area around Ponzi's Boston office

(28:14):
was still swarmed with people trying to get their money back.
The Department of Justice got involved in the investigation, with
past podcast subject Attorney General A. Mitchell Palmer getting personally involved.
The Boston News Bureau revealed that the entire previous year's
sale of postal coupons had totaled less than sixty thou dollars.

(28:36):
At one point. During all of this, Ponzi disappeared for
several hours leading people to wonder if he had fled. Then,
on August eleven, the Boston Post printed an article under
the headline Canadian pons served jail term. Montreal Police jail
warden and others declare that Charles Ponzy of Boston and

(28:57):
Charles Palmsy of Montreal, who was sentenced to two and
a half years in jail for forgery on Italian bank,
are one and same man. The next day, Ponzi was
arrested and admitted his previous forgery conviction and that he
didn't have the money to repay all these investors. Four
officers of the old Colony Foreign Exchange Company, which was

(29:20):
that competitor across the way with the Ballyhu man, They
were all arrested at about the same time as well.
Soon Ponzi's time in federal prison in Atlanta was public
knowledge as well, and his so called business had collapsed,
with auditors concluding that there was no overseas investment in
reply coupons. Although the word scheme had been used in

(29:41):
a lot of reporting, many newspapers were describing what was
happening as a bubble. The Boston Globe printed up a
list of other big bubble collapses, including the South Sea
and Mississippi bubble collapses that we talked about on the
show recently, and the fraud carried out by past podcast
subject Cassie chab Wick. Thousands of people lost their money

(30:03):
due to Ponzi scheme, and the Hanover Trust Bank collapsed.
Throughout all of this, Rose stood by her husband. She
told reporters that she loved him and would support him,
and then along the way during all this, Charles learned
that she had known about his prior criminal history for
their entire marriage and had never said anything about it.

(30:24):
Charles Ponzi was charged with eighty six counts of mail fraud.
He pleaded guilty and was sentenced to five years in
federal prison. His incarceration started on December twelfth, nineteen twenty,
and he was paroled after forty months. In nineteen twenty one,
While Ponzi was incarcerated, the Boston Post was awarded the

(30:45):
Pulitzer Prize for Public Service Quote for its exposure of
the operations of Charles Ponzi by a series of articles
which finally led to his arrest. During those months of reporting,
the Post had listed Edwin A. Grozier as a publisher
and editor of the paper, but Edwin was actually unwell.
His son, Richard had largely taken his place and had

(31:06):
reported most of this story. Edwin insisted that Richard had
been running the newspaper this whole time, and that he
deserved all the credit for the Pulitzer. William McMasters claimed
that Ponzi still owed him money for his pr work
and sued him for a little over four thousand dollars.
From prison, Ponzi filed a suit of his own, claiming

(31:29):
that Masters owed him money for being paid to place
advertisements that never ran. Ponzi won both of those suits.
As Ponzi served his sentence on these federal fraud charges,
the Commonwealth of Massachusetts tried to press charges of its own,
although Ponzi's lawyers argued that this was double jeopardy. He

(31:50):
was again tried, convicted, in this time sentence to seven
to nine years in prison. While out on bail during
an appeal, ponz went to Florida and sold a bunch
of people what he claimed was prime Florida real estate
but was really swampland. He was found guilty of fraud
in that scheme and sentenced to a year of hard

(32:10):
labor at Florida State Prison while out on bail appealing
that conviction. He attempted to flee by boat, but he
was caught, arrested, and sent back to Massachusetts to serve
his sentence there. He was released from prison in nineteen
thirty four and deported back to Italy on October seven
of that year. There's various brief write ups of this

(32:31):
that make it kind of sound like authorities suddenly realized
that he had never become a citizen, but like that
had been part of the reporting of the whole initial crime.
So I think it was more that they were just like,
all right, time to be done. They may have realized
that that was a fast way to end their efforts
in the matter. There was talk of Rose joining Charles

(32:54):
in Italy after he was deported, sort of with the
idea that once he got himself set up there, she
might come, but has never happened, and they ultimately divorced
in nineteen thirty six. They kept writing to one another
after their divorce, though even after all of that, she
seems to have genuinely loved him and thought the best
of him. She got a job keeping the books at

(33:15):
the Coconut Grove nightclub, which burned down in a horrific
and deadly fire in ninety two. She was not there
when that happened because she had gone home early that day.
She remarried in nineteen fifty six and died in at
the age of Details are contradictory about the last year's
of Ponzi's life. It's possible that he worked for an

(33:38):
Italian airline and that was how he made his way
to Brazil, which is where he spent the end of
his life. He died in a charity hospital in Rio
de Janeiro on January eighth, ninety nine, was only enough
money to pay for his own burial expenses. Although this
kind of fraud is synonymous with Ponzi's name today, he

(33:59):
was not the first or only person to pretend to
invest people's money but really just pay the earlier investors
out of money that was brought in from new marks.
It's been described as robbing Peter to pay Paul, which
is a phrase that has roots as far back as
the fifteenth century. Documented schemes like this that pre date

(34:20):
Ponzi include one that was carried out by Sarah Howe,
who opened the Ladies Deposit Bank in Boston in eighteen
seventy nine. She was arrested, tried, convicted, and imprisoned multiple
times as she ran this same scheme in multiple cities.
She would get out of prison and go somewhere else
and do it over again. William Miller, who was known

(34:42):
as five Miller because of the massive returns that he promised,
launched the Franklin Syndicate in Brooklyn in eight nine. This
was the same basic schemes what Ponsi was doing, and
newspapers actually got quotes from him during their reporting on Ponzi.
Sometimes the term Ponzi scheme is also used interchangeably with

(35:02):
pyramid scheme, although that term can also have slightly different nuance.
Both of these schemes involved bringing in more and more investors,
but a pyramid scheme typically has more of a hierarchy,
with layers of investors below the person or people at
the top, who are usually the only ones making money.
Ponzi's scheme made enormous headlines when it happened, but it

(35:26):
really wasn't until after the Great Depression that federal regulators
in the US really took steps to try to prevent
this kind of scam. But that was also part of
regulations meant to try to prevent another catastrophe like the depression.
The Securities Exchange Commission was established in nineteen thirty four,
and newly passed laws required most businesses and individuals who

(35:49):
were selling securities to register with the SEC and to
abide by newly created regulations. And then the Investment Advisors
Act of nineteen forty and Investment Company Act of nineteen
forty similarly require most companies that are advising people about
the purchasing of securities to register with sec also to

(36:10):
follow various regulations about doing so. That has not stopped
ponzi schemes entirely, though not in the US or in
the rest of the world. For example, ponzi schemes became
a massive problem in Albania in the nineteen nineties, with
as much as two thirds of the population investing in them,
leading to rioting when those schemes collapsed. And of course

(36:32):
there was Bernie made Off, who ran what is described
as the largest ponzi scheme in history, estimated at almost
sixty five billion dollars, which was discovered in two thousand eight. Uh,
there's still a lot of ways that people are able
to defraud other people. As a random side note, Ponzi's
mansion in Lexington, Massachusetts that he bought for thirty nine

(36:54):
thousand dollars. That's still there. It last sold in one
for three point five million dollars. Ponzi. Uh, do you
have a listener mail? I do have listener mail. Um.
We have started to get lots of listener mail about
our episode about rabies. Uh. This is one of the

(37:16):
rabies emails. And I love the title because the title
is my own bat rabies story from a veterinarian. Don't worry,
it is not a bad story. Um. So Liz wrote, Hello,
Holly and Tracy. I was so excited when I saw
you guys did an episode on rabies. I'm a small

(37:37):
animal veterinarian, and of course I give thousands of rabies
vaccinations a year. I'm excited to hear Holly's bat rabies
story on Friday. But I have my own. About three
years ago, my husband was out of town and my
three year old daughter was sleeping in bed with me.
We were woken up in the middle of the night
by one of my cats leaping across the room. I

(37:58):
turned on the light to a bat lying around my room.
I moved my daughter out of the room and called
to my dad, who lives with us. As I checked
on my daughter and my son, who was asleep in
another room, my dad, unbeknownst to me, let the bat
out of the window, and it's not widely known, So
hopefully you will tell your listeners about this part. If
a person is asleep, we're too young to accurately tell you.

(38:20):
If they were bitten, and we're in the same room
as about, it's considered an exposure. This is because bat
bites can be so small they do not draw blood
or leave a visible mark. You can be sleeping and
not even know you have been bitten. Because my dad
let the bat out, it could not be tested, so
my two small children had to go through rabies exposure shots.
Since I'm a veterinarian, I'm vaccinated, so I just got

(38:43):
a booster. I was very lucky that my pediatrician knew
about this and knew the protocols needed. I cannot say
the same for the e er physicians, who unfortunately were
not up to date on their rabies protocols. My kids
are older now and do not even remember the series
of shots they got, but it gives me a great
personal story to tell my clients who don't understand why
they're dogs and cats still need rabies vaccinations if they

(39:05):
are mainly inside animals. I've included several pictures of my
zoo to pay my pet tax. I currently have four cats.
I'm not gonna list off all of their names because
this is quite a lot of animals. I currently have
four cats, four dogs, three horses, and a guinea pig. Uh.
There is a theme to all of those names. I

(39:26):
did not read them all, but they all they all.
They all have alcohol related names, which I find very lovely. Uh. Liz, ps,
I have a suggestion that is hopefully on your list
of topics for the future, the Libby Prison breaker. Just
Libby Prison. This is a close personal topics since my
four times great grandfather was one of the escaped prisoners
and even wrote a book that I have a reprinted copy. Uh. So,

(39:48):
thank you list so much for this email. It's so
funny to me. As we got this email on Tuesday,
May the tenth. The Rabies episode came out Monday May
the ninth, Wednesday, May the eleven, the episode that included
the Libby prison break. Uh and then, of course the
Friday episode that UH talked more about rabies, exposures and

(40:08):
things that also was not out yet. When Liz send
this email, thank you so much, Liz, um, I feel
like we made the point somewhere that, yeah, bat bites
can be so small that it can be hard to
know if you were personally bitten. Way back, forever ago,
there was an episode of the podcast Judge John Hodgment
about these brothers that were living in a house that

(40:29):
they had gotten for some ridiculously small amount of money
through like a tax sale or in a state so
something like that, and it was infested with bats and
their method of dealing with the bats was not a
safe method, and John Hodgeman was like, seriously, you have
got to do something about these bats, because if they're

(40:52):
in your house while you're asleep and you get bitten
by when you will not necessarily know. Um so I
did not know that that that means that if you're
sleeping and there's a bat in the room, that that
that can count as an exposure. But yes, yeah, this
is one of the reasons why bats are great. Leave
them alone, do not mess with UH. If you would

(41:16):
like to write to us about this or any other
podcast where history podcast that I heart radio dot com.
We're all over social media at miss in History and
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the I heart radio app or wherever you get your podcasts.

(41:37):
Stuff you Missed in History Class is a production of
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Holly Frey

Tracy Wilson

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