|Type of paper:||Research paper|
|Categories:||Criminal law Banking Sales Criminal justice|
Charles Ponzi was born in Northern Italy. He is considered to have been one of the most famous people that ever engaged in white-collar crimes. In the year 1903, he went to Boston having in his pocket only 3.00 dollars which he acquired through gambling on the ship as he was heading to America. He secured a stateside job, which was the first one in his life, but it never lasted since he was fired for involving the customer's fraud. Ponzi was a college dropout, and the progress of his life started when he worked as a teller.
From there, He became a manager of a bank in Canada called Banco Zarossi. It is there where Ponzi witnessed how the bank was able to double the interest that customers deposited. This was never done by other banks, and hence, the bank grew quickly. However, it reached a time where the bank's estate loans went bad, and since Zarossi was the founder, the bank had to use new customer's deposit in funding its competitive interest payment. This is where the bank failed, and eventually, Ponzi lost his job, but he had learned a lesson during the time he was working in this company. (Van2016)
In 1919, Ponzi earned himself an opportunity to put into practice what he had learned, which was pure exploitation. He made it a practice of arbitraged for instance; he may purchase an item in a particular market and goes ahead to resell it in a different market with a high price. The arbitrage, in this case, were international reply coupons (IRC). What Ponzi did was to Purchase an IRC right from Italy and resell it at a market rate in the United States of America where he could get a 400% profit. Later, the banks ceased from funding him, and he shifted his idea into a company referred to as Security exchange company. What he offered here was to give people 50% return after investing for a period of 45 days and 100% for 90 days. In regards to the rate he had offered, Ponzi paid most of his early customers, but the problem was that he did not buy products and sell them to aid in funding his scheme.
Ponzi engaged himself in using the money of new investors to pay the old ones. His idea of incredible rates spread widely, therefore, attracting investors from various states, and this resulted in huge profits. It reached a point where most of the Boston police department had invested a lot, and some of the people had even mortgaged their house to invest. Ponzi had no intention of buying other IRCs nor even converting the ones he had bought earlier into actual profits. Had he purchased other IRCs, then this could have helped him in settling the promises he had made to his investors. What Ponzi did instead was that he focused on maintaining the system. Ponzi used his money in other legitimate ventures, for instance, buying of Macaroni company, and also concentrated on taking control of the interest in most of the banks. Most financial analyses of securities exchange companies and Ponzi at that time could have revealed the scam which had reached at the pic. In a week, Ponzi earned himself million dollars and sometimes exceeding that.
Unfortunately, the 4th estate revealed the scam although Ponzi had managed to fight the earliest criticism that had originated from the journalist who has successfully sued him for libel and this had questioned his legitimacy business. Ponzi wanted to cover the investment that the securities exchange company had made, and therefore, he needed around 160 million IRCs. At that time, there were around 30,000 IRCs circulating, and hence, this could have led to a substantial profit.
A series of stories speeded and it was found out that Ponzi got himself money that amounted to 2 million dollars to shaken investors. In addition, he gave donuts and coffee to his investors and told them not to worry because he was working out the issue. This time around, it has gone too far since banks, and State attorneys had been involved. When the books were checked, none of them was found, but it was found out Ponzi and Security Exchange Company was around 7 million dollars in the red. All investors of Ponzi lost approximately 20 million dollars, and this resulted in Ponzi being charged with fraud. He was sentenced for three-and-half imprisonment, and after his release, he again faced charges of ten larceny charges where he acted as his own lawyer and pleaded not guilty. While he was still appealing his case, he started another scheme in Florida. He started selling swamp land to various investors and promised them a 200% return within a period of 60 days. Ponzi did not succeed, and he was sent back to jail and later deported back to Italy, where he spent the rest of his life in poverty.
According to my observation of this matter, White collar crime is generally just like any other criminal crime and should be handled with the seriousness it deserves. It involves a huge amount of money, and it may lead those who are affected, or rather the investors into becoming bankrupt since they may tend to invest all of their money only to come and lose them at last instead of earning themselves a good return. Therefore, those who engage in this crime should not only be jailed but also they should be made to return the money to the citizens. Like in this case, Ponzi was sentenced to two and half year imprisonment, and after he was released, he went ahead and committed the same crime leading to people losing their money.
Van, S. S. R. (2016). The Oxford handbook of white-collar crime.
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