Who Was Charles Ponzi? The Forgotten Story Behind the Scheme. We've all heard of Ponzi schemes, but the man they're named after is a mystery to many. This week's Dirty Money takes a deep dive into his spectacular rise and fall.

By Jonathan Small

In 1903, a penniless Italian immigrant with a gambling problem arrived in Boston with dreams of making it big in America. His name was Charles Ponzi.

Standing 5'2 and weighing 130 pounds, the diminutive man may not have been imposing, but he made up for it with his ambition. Ponzi would ultimately invent the most elaborate investment scheme ever perpetrated at the time, earning him the equivalent of $220 million in just a few years.

How did this happen, and what was the fate of the man immortalized forever for perpetrating the ultimate money con?

On this week's episode of Dirty Money, Entrepreneur editors Dan Bova and Jon Small tell the mostly forgotten story of the man behind the original Ponzi scheme. Charles Ponzi's classically American tale is about ambition, greed, ingenuity, and hubris. There's a reason they named a con after this guy.

Rags to riches

Like so many newcomers to the U.S., Ponzi honestly believed that the city streets were paved with gold. All you had to do was stoop down and shovel it into bags.

But that didn't work out for him. Ponzi traveled America taking odd jobs as a grocery clerk, factory hand, dishwasher, sewing machine repairman, nurse, insurance salesman, and sign painter. He was always scribbling ideas for businesses in his notebook. He was broke, in and out of jail, and most people thought he was a joke.

The laugh was on them. In 1919, Ponzi pawned his wife's jewelry to open up the Securities Exchange Company, promising investors a 50% return on their investment within 45 days or a 100% return within 90 days. He told them he could do this by exploiting the difference in international postal reply coupons' value.

Ponzi became very rich and famous — very quickly.

But just as fast as Ponzi built his empire, everything came crashing down.

What is a Ponzi scheme?

A Ponzi scheme is an investment scheme where the returns are paid to earlier investors using the money contributed by newer investors. The scheme often relies on attracting a large number of investors and promising them high returns with little or no risk. The returns are usually paid from the investments made by newer investors rather than from legitimate profits earned by the scheme.

Charles Ponzi didn't invent this scheme, but he perfected it, laying the groundwork for even bigger scammers in the future — such as Bernie Madoff, who stole $50 billion.

Ponzi always dreamed he'd be the talk of the town. But he never imagined his name would forever be associated with a scam.

Jonathan Small

Entrepreneur Staff

Founder, Strike Fire Productions

Jonathan Small is a bestselling author, journalist, producer, and podcast host. For 25 years, he has worked as a sought-after storyteller for top media companies such as The New York Times, Hearst, Entrepreneur, and Condé Nast. He has held executive roles at Glamour, Fitness, and Entrepreneur and regularly contributes to The New York Times, TV Guide, Cosmo, Details, Maxim, and Good Housekeeping. He is the former “Jake” advice columnist for Glamour magazine and the “Guy Guru” at Cosmo.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

Walmart Is Laying Off Hundreds, Relocating Others as the Company Closes a U.S. Office

Walmart is giving some employees at least a month to decide if they want to relocate.

Starting a Business

Why Psychological Courage Is the Secret Ingredient for Successful Startups

This article explores the concept of psychological courage in startups, highlighting how employees — not just founders — can develop resilience, face challenges head-on and thrive in uncertain environments by embracing reality, problem-solving effectively and pushing through struggles.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Business News

Thieves Steal $40,000 Worth of Eggs in a Massive Trailer Heist: 'Liquid Gold'

Egg prices are expected to continue to rise in 2025.

Growing a Business

What Our Digital World Is Missing — and How I Turned It Into $100 Million After Dropping Out of High School

I went from high school dropout to $100 million CEO by sticking to one very important learning principle.

Leadership

Entrepreneurs Drive the Economy — But Are We Doing Enough to Support Them?

Are we doing enough to encourage innovative entrepreneurs to take risks for the benefit of society at large?