2020 marked 100 years after Charles Ponzi was charged for committing what some have referred to as the “fraud of the century”. Indeed, there are not many criminals who have their work named after them. But such was the case with the Ponzi scheme, a confidence scam that fraudsters continue to commit to the present day.
Simply put, a Ponzi scheme is a fraudulent investment scheme in which existing investors are paid with funds collected from new investors. Typically, the scheme unravels once the number of new investors declines, meaning insufficient funds are available to pay everyone. In terms of the history of this particular scam, it actually pre-dates Charles Ponzi, with the first known schemes of this type traced back to the latter half of the 19th century in both the United States and Germany. Charles Dickens even described such a scheme in his 1857 novel Little Dorit.
Charles Ponzi was born in Lugo, Italy, in 1882. At the age of 21, having already worked as a postal worker, Ponzi decided to set sail for the US in pursuit of a better life—although somewhat infamously, he arrived on American shores with only $2.50 to his name, having gambled the rest of his money away on the ship.
Having arrived in the US, Ponzi soon moved to Canada, where he became an assistant teller at the recently established Banco Zarossi in Montreal. It was there that he first witnessed in action what would later become known as the Ponzi scheme. The bank was in serious…