Read Ponzi's Scheme for Free Online

who kept business humming, workers coming, and cash flowing. At a parade three years before Ponzi’s arrival in Canada, Cordasco had himself fitted with a crown and declared the “King of Montreal’s Italian Workers.”
    But Zarossi had an idea. Cordasco’s bank and others catering to immigrants paid depositors 2 percent interest on their accounts. It was a simple system: the banks invested in Italian securities that paid 3 percent, then gave 2 percent to depositors and kept 1 percent for costs and profits. Zarossi announced that he would pay depositors the full 3 percent, plus another 3 percent as a bonus, for an unheard-of 6 percent. Asked how he could do it, Zarossi tapped into the public’s widespread suspicions that greedy bankers paid pennies on the dollar while keeping huge profits for themselves. His largesse was possible, he claimed, because he would share his bank’s earnings more fairly with his depositors. Cordasco was furious. Dubious, too. Cordasco considered it impossible to pay such returns. He kept quiet, but he suspected that Zarossi would be paying one man with another man’s money, an age-old fraud known as “robbing Peter to pay Paul.”
    As months passed and business boomed at Banco Zarossi, Ponzi impressed his boss with his intelligence, his easy smile, and his smooth way with customers. Ponzi was especially solicitous of the bank’s female customers, flirting with them and basking in their attention. Even more than the customers, Ponzi liked Zarossi’s pretty seventeen-year-old daughter, Angelina. Soon Ponzi was promoted to bank manager, and it looked as though he was finally making something of himself.
    As the promised interest came due, Zarossi needed to find ways to make the relatively exorbitant payments. If he paid his depositors 6 percent through traditional means, he would soon be bankrupt. An alternative, albeit illegal, was staring him in the face: the money immigrant workers sent to their families via the bank. Zarossi began dipping into those funds, knowing it would be weeks or months before word got back to Montreal that the money had never arrived. He would buy more time by claiming he had sent the money and the fault rested with the mails or whoever received the money in Italy. If a depositor raised a stink, the bank would send money from its fresh deposits. Zarossi figured the cycle of finger-pointing and late payments could keep the scheme afloat long enough for him to come up with another way to pay. If that failed, he would have enough time to gather his profits and his family, and flee.
    But events moved more quickly than Zarossi had anticipated. Depositors wanted their interest, immigrants demanded to know what had become of the money they’d sent home, and authorities began investigating the bank for embezzlement. In mid-1908, less than a year after Ponzi came to work for him, Zarossi packed a bag full of cash and fled alone to Mexico City. In the aftermath, one employee killed himself, and another, Antonio Salviati, disappeared when authorities accused him of stealing $944.85 from a customer named Francesco Charpaleggio, who had come to the bank to send money to his family in Italy. The suicide and Salviati’s disappearance raised suspicions that the fraud went deeper than Zarossi. Eventually the bank collapsed, costing depositors even more. It was unclear how much Ponzi knew, but as bank manager he made a clear target for investigators.
    Yet unlike Salviati, who ran, Ponzi stayed put in Montreal. For several months, though jobless, he watched over Zarossi’s family, which included not just Angelina but three other daughters and Zarossi’s wife. But by August 1908, Ponzi grew tired of domestic life and feared that he might face arrest, deportation, or both. It was time to hit the road. As usual, though, he had spent whatever money he had earned. The twenty-six-year-old Ponzi made a decision he would long regret.
    On