August 12, 1920: On this day, Charles Ponzi was arrested on 86 counts of mail fraud and went down in infamy for his expansive investment scheme, which became known as a “Ponzi Scheme.” After working many odd jobs and spending a few years in jail for crimes such as check forging and smuggling Italian immigrants across the U.S. border, Ponzi devised a plan that would earn him approximately $250,ooo each day at his peak. He started by buying international reply coupons cheaply in one country and then trading them for priority airmail stamps for a higher price in another country. He then sought investors by promising high returns in short periods of time, and as he gained investors, he would use those funds to pay back other investors rather than with profits. Suspicious of his business, The Boston Post began investigating Ponzi’s business, which led to his eventual disgrace and arrest. At the time of his arrest, he owed investors an estimated $7 million.
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