Stamp collector

So with the news that Bernard Madoff mailed his family jewelery to the tune of a million smackers one gets the feeling that he's preparing for a move in the near future. The architect of a 50 Billion Ponzi scheme, bigger than the GDP of a third of the world's countries, is settling in for a battle.

So where did he get the idea anyway? From Charles Ponzi, an Italian immigrant who arrived on our shores in 1903. Not knowing what to do and having no special desire to get a crappy job he looked around for a way to make some bucks. He didn't have the people skills for customer service and got too many customers pissed off by either shorting them on goods (or cash) or by just plain old lying. He did a bit of time for forged checks and when he got out put his mind to a lazy way to riches.

He discovered there was money to be made with international reply coupons, or chits that could be turned in for postage stamps. These were commonly used in foreign mail when the sender wanted a reply. The idea was the recipient would cash in the chit for return postage and the sender was sure of a nice friendly letter back. The money to be made involved the difference in postage between some countries. Stamps could be bought and exchanged for higher value ones.

This was not going to make Ponzi his fortune but for a while he made amodest living. He decided to recruit more people into the scheme, the idea being that with hundreds, maybe thousands of stamp trading transactions he could really rake it in. But his dishonest streak looked a little beyond this. His new "recruits" bought into the "business" for a flat fee with a promise of doubling their money in six months. So many people thought it was an amazing deal that he was swamped with investors.

Trouble is, no one was selling postage stamps. He was paying out his investors with the money he raised from new subscriptions. So popular was his scheme it is estimated he did 4-5 million dollars a month.

Money like that will draw the feds to have a look. Actually it was Clarence Barron, the Wall Street Journal owner who smelled a rat. He used his newspaper and power to uncover the truth and shut him down. Oddly enough many of Ponzi's biggest supporters when he went to jail were his former investors, who hailed him as a financial wizard.