Postage stamp speculation scheme makes Charles Ponzi infamous
As defined by the Securities and Exchange Commission (SEC), a Ponzi scheme is a type of illegal pyramid scheme named after Charles Ponzi. So who is Ponzi and how did he manage to get an investment scheme named after him? He used postage stamps.
Back in the 1920s, Ponzi duped thousands of New England residents by encouraging them to invest in a postage stamp speculation scheme, according to the SEC. Ponzi told investors he could provide a 40% return in just 90 days. He thought he could take advantage of the differences between U.S. and foreign currencies used to buy and sell international mail coupons.
The SEC uses an exclamation mark to explain how well his scheme worked at first: “Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period—and this was 1921!” Ponzi, an Italian immigrant, paid off a few early investors to make the scheme look legitimate. Later the investigation found he had only purchased about $30 worth of the international mail coupons.
And that is why, almost a century later, we use . . .
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