Charles Ponzi And The Madoff Scheme

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This research paper will be focusing on the subject of Charles Ponzi and the entourage of people who has been influence by him. The reason of this paper is to give the reader another opinion on how important one investment with another could lead to lose it all. The first part will examine the history background of Charles Ponzi and the creation of the Ponzi scheme, as well as Bernie Madoff scheme impact on the market and its consequences on the its investors. The second part will be studying the social psychology and neuropsychology of how and why were they both successful while it lasts. A Ponzi scheme is an arbitrage opportunity for Schemers to ruin thousands of people life savings in a matter no time but I say that it ruins people’s life…show more content…
Dollars, which he only paid one sixth of the value in Spanish pesetas. However, the dilemma behind this profit opportunity is that if too many started exploiting this currency arbitrage, the Internationals bureau would readjust the currencies. In 1920, Charles Ponzi founded the “The Security and Exchange Company” in which its sole purpose was to exploit the coupon system but eventually he preferred the value of money than a coupon. He begin by offering a forty percent return in ninety days which ended being one – hundred percent return in ninety days or fifty percent return in forty – five days. He originally came with this idea when he was looking for someone to lend him money in order for launch “The Security an Exchange Company”. He convinced a local furniture owner that if he lends him money that he would give him back forty percent in return in forty-five…show more content…
Becoming famous as him, a reporter for Boston Post published an article stating that The Security and Exchange Company was not financially possible because of the fact that there was not enough international postal reply coupons sold for Charles to promise those amounts of returns. The reporter was completely true, in reality; the only profit that he would make would be five percent interest of bank deposits. Therefore, while investors were looking into his financial scheme, others decided to look into his past. Another article was published where reporters had learned that he had severed time in prison for forging signatures on checks, which at this point, some investors wanted their money back. In just a month, Charlie Ponzi cheated off his investors a total of 20 millions dollars which is the equivalent of 222 millions dollars of today currency, including six banks
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