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Quick answers
What did Charles Ponzi claim to be doing?
He told investors that profits would come from buying and redeeming International Reply Coupons across borders. Investigators in 1920 showed that coupon issuance could not support the money he was taking.
When did the scheme collapse?
Public unraveling came in July-August 1920 as the Boston Post published its investigation and investors sought redemptions. Ponzi surrendered to authorities in August 1920.
What was he convicted of?
He pleaded guilty to federal mail fraud in 1920. Massachusetts later convicted him of larceny after a 1922 mistrial and a 1925 guilty verdict. He served federal then state time.
How much money was involved?
Contemporary estimates commonly cite about $15-20 million in 1920 dollars of liabilities or take, with tens of thousands of note-holders. The figure is not comparable, unadjusted, to late-twentieth-century cases.
Did the Boston Post really break the case?
The Post's July-August 1920 reporting, using Barron and postal facts, is the investigation the Pulitzer board later honored. State and federal officers were already looking; the newspaper made the arithmetic public.
Was this the first such fraud?
No. Earlier promoters had paid old investors with new money. The 1920 Boston collapse is the namesake event in English, not the first instance in history.
The public story is short: a Boston promoter, a postal instrument, a newspaper that did the arithmetic, and a pair of criminal judgments.
The beats below follow the Post, the federal plea, and the Massachusetts larceny record.
Beats
- A promoter finds a story
Ponzi, after earlier scrapes, advertised a coupon-arbitrage business from Boston and issued short-term notes at rates no ordinary bank could match.
- Money arrives faster than coupons
Agents and word of mouth filled the office. The cash intake outran anything the international coupon market could have supplied.
- The Post prints the gap
July and August 1920 articles, with Barron's coupon-market facts, made the mismatch a public document. A run followed the reporting.
- Surrender and federal plea
Ponzi surrendered in August 1920 and pleaded guilty to mail fraud that November, receiving a five-year federal sentence.
- State larceny and a lasting name
Massachusetts convicted him of larceny in 1925 after a hung first trial. English-language law kept the surname for the pattern.
The story on the public record is a completed 1920s prosecution and an etymology -- not an open question about hidden coupon warehouses.
Public-record encyclopedia. Not legal advice. Not a how-to. Graphic detail is withheld. Wars belong in a separate atlas.