Ponzi's Scheme_ The True Story of a Financial Legend - Mitchell Zuckoff [48]
With the help of Boston’s assistant city clerk, Ponzi filled out paperwork declaring that he would do business as the International Security Company, with him as sole proprietor. He was pleased that the transaction set him back only fifty cents, little more than the cost of three boxes of his favorite Murad Turkish cigarettes. But Ponzi soon cooled to the name he had chosen for his company. He returned to City Hall the day after Christmas, determined to get it just right. He paid another fifty cents to register a more descriptive and less exotic-sounding name: the Securities Exchange Company. With the new name painted on his office door, he ordered a stack of printed certificates to give to investors. Inside a decorative border, in a style reminiscent of the International Reply Coupons on which the business was based, the certificates read:
Although the certificates said that the 50 percent would be paid in ninety days, almost from the first Ponzi told investors he would shorten the payoff period to half that. As soon as he was ready for business, Ponzi began his hunt for investors who had as little as ten dollars to spare. He instinctively knew he would find them: “We are all gamblers,” he believed. “We all crave easy money. And plenty of it. If we didn’t, no get-rich-quick scheme could be successful.” Ponzi called around town, visiting people he knew and people who knew people he knew, talking about his company and describing the coupons-stamps-cash continuum in enticing terms. He made a point of never directly soliciting investments, preferring to whet his listeners’ appetites and make sure they knew where to find the offices of the Securities Exchange Company.
A few days after he began spreading his gospel, Ponzi was sitting alone in his office, waiting for the seeds he had planted to take root. Someone knocked on the door, and Ponzi invited him inside.
Customers line up at 27 School Street to invest money with Ponzi’s Securities Exchange Company.
The Boston Globe
CHAPTER EIGHT
“ASMALL SNOWBALL DOWNHILL”
Ponzi’s visitor was an acquaintance named Ettore Giberti, a grocer in the northern suburb of Revere. During the dozen years since he had come to America, Giberti had followed a sedate path, working steadily and painstakingly to build his business. Married for two years, the thirty-two-year-old Giberti and his eighteen-year-old wife, Edith, a fellow Italian immigrant, had recently welcomed the arrival of a son they’d named Frederick. When he climbed the stairs to Ponzi’s office, Giberti’s net worth was perhaps twelve hundred dollars. But with a growing family to support, he hoped that would soon change. People were talking about this Ponzi fellow and his investment idea, and Giberti wanted to learn about it firsthand.
Ponzi poured it on thick, just as he had done with Daniels, talking about the Rome treaty writers, fluctuating currencies, and the incredible potential for a visionary like himself who knew the secret of how to turn International Reply Coupons into piles of cash. The one thing he did not explain, the one thing he would never tell anyone, was precisely how he exchanged the coupons for greenbacks. But like a magician who focuses his audience’s attention on one hand while performing feats of prestidigitation with the other, Ponzi knew that the details of the transactions were less interesting than the promised results. Indeed, Giberti listened attentively but impassively until Ponzi mentioned the 50 percent return on investments. Ponzi could tell from the expression on Giberti’s face that his countryman was doing some mental calculations, pyramiding some imaginary investment over and over again to figure out how much he might have in three