In July 1920, the Boston Police Department assigned officers to School Street because the crowd trying to give Charles Ponzi their money had grown large enough to stop traffic. Seventeen years earlier, Ponzi had arrived in Boston with $2.50. Six months after founding the Securities Exchange Company, he had become one of Massachusetts’ most famous men—and his investors’ money was about to disappear.

Who was Charles Ponzi, and how did the Ponzi scheme work?

This episode of Unleashed 101 traces the mechanism behind one of history’s most famous financial frauds. Ponzi promised investors 50% returns in 45 days or 100% in 90 days, when American banks were paying roughly 4–5% annually. His story began with something real: International Reply Coupons, whose fixed exchange rates had become badly distorted after World War I. A coupon bought che ...