Charles Ponzi - fraudster

Name forever linked with investment scam

Charles Ponzi set up in business in Boston
having twice previously been in jail

The swindler Charles Ponzi, whose notorious fraudulent investment scheme in 1920s America led his name to be immortalised in the lexicon of financial crimes, was born Carlo Ponzi in the town of Lugo di Romagna on this day in 1882.

Ponzi, who emigrated to the United States in 1903 but arrived there almost penniless, had been in prison twice - once for theft and a second time for smuggling Italian immigrants illegally into the US from Canada - when he came up with his scheme.

Always on the lookout for ways to make a fast buck, Ponzi identified a way to make profits through exploiting the worldwide market in international postal reply coupons.  This was not his scheme, simply the starting point.

These coupons, which allowed a correspondent in one country to pay for the cost of return postage from another country, were sold at a universal cover price but variations in exchange rates meant that a coupon bought in one country might be worth more in another.  Coupons bought in Italy, for example, could be exchanged for stamps in the US that could then be sold for several times more than the dollar-equivalent cost of the coupon in Italy.

The difference was big enough, Ponzi reckoned, to generate as much as 400 per cent profit. He planned to use his profits to fund an investment scheme by which he could offer returns much higher than any available at the mainstream banks and yet make a handsome margin for himself.

Ponzi's natural charm and snappy dress
was very persuasive in attracting clients

It seemed a guaranteed winner. Although his efforts to borrow money to get the venture started did not work out, Ponzi approached some of his wealthier friends in Boston, Massachusetts, where he had married a local Italian girl, Rose Maria Gnecco, and was working as a translator. He promised to double their money within 90 days, or deliver 50 per cent profit in 45 days, and duly did so.

His next step was to set up his own company and attract investment from the wider public. His Securities Exchange Company attracted $1,800 in the first month. Ponzi delivered his clients vast returns as promised. Word quickly spread.

The more investors he was able to satisfy, the longer the queue to join in. By July 1920, only six months after his launch, Ponzi was accepting investments totalling almost $1 million every day.

He spent lavishly, buying a mansion in Lexington and the most expensive car available. He booked a stateroom on an ocean liner to bring his mother to America from her home in Parma.

Unbeknown to his clients, however, Ponzi’s plan to reinvest their money in international reply coupons had been massively flawed at the outset. To generate the profits he needed would have required him to import millions of coupons. In fact, there were only 27,000 in existence.

Ponzi signs a cheque for a delighted investor in his
Boston office in the spring of 1920

Instead, when clients’ investments matured, Ponzi was paying them with money he received from new investors. There was no external profit at all.  Logically, it was foolhardy to continue. Yet with his total of clients growing every day, he always had a surplus of cash and so long as that was the case he could continue in business. In any event, many of his clients simply reinvested their returns.

The problem for Ponzi was schemes that look too good to be true tend to attract the attention of the disbelieving. In this case, it was the Boston Post newspaper, who began to carry articles posing questions about his success.

After one such article, he sued for $500,000 libel damages and won, yet the seeds of doubt had been planted. More investigations followed, investors began to panic and soon Ponzi was paying out more than he was taking in.

The cover of a recent reprint of Ponzi's
 autobiography, written in the 1940s

His final mistake was to hire a former Post journalist, William McMasters, as his publicity agent. McMasters came across documents that showed Ponzi had kept going by effectively ‘robbing Peter to pay Paul’. He sold his story to the Post for $5,000.

More panic followed and then an investigation by the Massachusetts Bank Commissioner. It was the beginning of the end for Ponzi. His bankers stopped honouring his cheques and three of his clients filed a petition in court to declare him bankrupt. In November 1920 he was sentenced to five years in jail. His investors had collectively lost around $20 million.

After further prison terms, in between which, while on bail pending an appeal, he attempted to set up a property scam in Florida, he was deported to Italy in 1934. Divorced in 1937 - his wife stayed behind in Boston - he tried various business schemes without success and eventually settled in Brazil, where he died in 1949, although he did first write his autobiography.

Despite Carlo Ponzi’s inevitable demise, countless others down the years have tried to make money using the same methods. The most high-profile example this century involved the financier and investment advisor Bernie Madoff, who was sentenced to 150 years’ jail in 2009 after running a Ponzi Scheme through his Wall Street brokerage that was ultimately outed as the largest financial fraud in US history, worth $64.8 billion.

The Rocca Estense in Lugo di Romagna now serves as
the town's municipal offices

Travel tip:

Lugo di Romagna is a town of 32,000 people about 30km (19 miles) west of Ravenna and 18km (8 miles) north of Faenza in Emilia-Romagna. Its most famous monument, the Rocca Estense (Este Castle), was partially rebuilt during the French occupation in 1500. The interior houses portraits of famous lughesi and a lunette attributed to Mino da Fiesole. It has been Lugo’s town hall since 1797. Also of note is the 19th century covered market hall known as Il Paviglione and the restored 18th century Teatro Rossini. Apart from Ponzi, famous lughesi include the First World War fighter pilot Francesco Baracca and a former world motorcycling champion, Mario Lega.

The Teatro Regio in Parma, while not so well known as La
Scala in Milan, is considered one of Italy's top opera houses

Travel tip:

Parma, where Ponzi claimed to have grown up after his family moved there from Lugo, is an historic city in the Emilia-Romagna region, famous for its Prosciutto di Parma ham and Parmigiano Reggiano cheese, the true ‘parmesan’. In 1545 the city was given as a duchy to the illegitimate son of Pope Paul III, whose descendants ruled Parma till 1731. The composer Giuseppe Verdi was born near Parma at Bussetto and the city has a prestigious opera house, the Teatro Regio.

More reading:

Michele Sindona - the fraudster with links to the Vatican

The mysterious death of Roberto Calvi

Joe Petrosino - the immigrant who became a New York crime fighter

Also on this day:

1578: The death of Venetian doge Sebastiano Venier

1585: The inauguration of Palladio's Teatro Olimpico in Vicenza

1768: The death of composer Nicola Porpora

Selected books:

Ponzi: The Incredible True Story of the King of Financial Cons, by Donald Dunn

The Rise of Mr Ponzi, by Charles Ponzi

(Picture credits: Rocca Estense by Lalupa; Teatro Regio by Stefano Sansavini; via Wikimedia Commons)


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Agostino Codazzi - soldier and map-maker

Italian who mapped first route for Panama Canal

Agostino Codazzi became a national hero
in Venezuela after fighting for Napoleon

Agostino Codazzi, a soldier, scientist, geographer and cartographer who became a national hero in Venezuela and plotted the route for the Panama Canal on behalf of the British government, was born on this day in 1793 in the town of Lugo in Emilia-Romagna.

When the canal was eventually built by United States engineers, they followed the precise route that Codazzi had recommended, although the Italian has not been credited in the history of the project.

Known in Latin America as Agustín Codazzi, he was born Giovanni Battista Agostino Codazzi.

As a young man, he was excited about the French Revolution and the idea of the ruling classes being overthrown by the people in pursuit of a more equitable society.  After attending the Scuola di Artiglieria military academy in Pavia, he joined Napoleon’s army and served with them until the Napoleonic empire collapsed in 1815.

It was then that he decided to travel further afield, finally settling in Venezuela, where he offered his military knowledge to another revolutionary, Simón Bolívar - known as El Libertador - who played a leading role in the establishment of Venezuela, Bolivia, Colombia, Ecuador, Peru, and Panama as sovereign states, independent of Spanish rule.

Codazzi produced extensive and detailed maps of Venezuela

Apart from military duties, in which he was elevated to the rank of colonel, he gave Venezuela the benefit of his expertise in geography and cartography, mapping the the borders between Venezuela, Colombia and Ecuador.

His creation of an Atlas of Venezuela led to him being awarded the Legion of Honor by the King of France in 1842, on behalf of the French Academy of Science.

Venezuela, on whose behalf he quelled many revolts during the establishment of the republic, honoured him with citizenship, and the president, José Antonio Páez, made him Governor of Barinas, a region of southwestern Venezuela.

The monument to Codazzi
in Colonia Tovar

When a military insurrection led to the fall of Páez, Codazzi fled to Colombia, where he continued his geographic and mapping activity and took on military duties for the Colombian government.  In was in 1852, commissioned by the British government, that he studied the geography of Panama and outlined the route he felt would be most suitable for a canal through the territory.

Codazzi died of malaria in February 1859 in the small town of Espíritu Santo in the Colombian mountains, which was subsequently renamed Aldea Codazzi.

Venezuela honored the memory of Agustín Codazzi by placing his remains inside the National Pantheon of Venezuela in 1942, which is reserved for those considered national heroes.

He is also honoured with a monument in Colonia Tovar, a small German settlement in the Venezuelan central mountains that he helped establish and which still exists today.

The Este Castle in Lugo di Romagna

Travel tip:

Lugo di Romagna is a town of 32,000 people about 30km (19 miles) west of Ravenna and 18km (8 miles) north of Faenza in Emilia-Romagna. It was overrun by Napoleonic forces while Codazzi was a child. Its most famous monument, the Rocca Estense (Este Castle), was partially rebuilt during the French occupation. The interior houses portraits of famous lughesi and a lunette attributed to Mino da Fiesole. Also of note is the 19th century covered market hall known as Il Paviglione and the restored 18th century Teatro Rossini. Apart from Codazzi, famous lughesi include the First World War fighter pilot Francesco Baracca.

The Duomo and Baptistery in Parma, one of several great
medieval cities in Emilia-Romagna

Travel tip:

The Emilia-Romagna region in northern Italy, which borders Apennine mountains to the south and the Po river in the north, has something for everyone, from its wealth of medieval cities, such as Parma, Modena, Reggio Emilia, Ferrara and Ravenna, to lively seaside resorts such as Rimini, Riccione and Cattolica. The capital, Bologna, is a vibrant city with an 11th-century university, and arched porticoes lining the streets and squares of its medieval centre. The area is famed for its gastronomy, producing many of Italy’s most famous foods, such as grana parmigiano cheese, balsamic vinegar and prosciutto di parma.

More reading:

The first comprehensive map of Italy

When Napoleon became King of Italy

The story of Lugo's famed flying ace Francesco Baracca

Also on this day:

1664: The death of Stefano della Bella, sketch-maker to the Medici

1884: The birth of tragic artist Amadeo Modigliani



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Francesco Baracca – flying ace

Italy’s most successful First World War fighter pilot

Francesco Baracca alongside his Spad XIII with the
family's prancing stallion logo displayed on the side

Italy’s top fighter pilot of the First World War, Francesco Baracca, died in action on this day in 1918.

He had been flying a strafing mission against Austro-Hungarian ground troops in support of an Italian attack on the Montello Hill, about 17km (11 miles) north of Treviso in the Veneto, on which he was accompanied by a rookie pilot, Tenente Franco Osnago.

They split from one another after being hit by ground fire but a few minutes later, Osnago saw a burning plane falling from the sky.  Witnesses on the ground saw it too. Osnago flew back to his base but Baracca never returned.

Only when the Austro-Hungarian troops were driven back was the wreckage of Baracca’s Spad VII aircraft found in a valley.  His body was discovered a few metres away.

A monument in his memory was later built on the site. Osnago, fellow pilot Ferruccio Ranza and a journalist recovered his body. It was taken back to his home town of Lugo in the province of Ravenna, where a large funeral was held.

Francesco Baracca in his airman's
uniform in 1916

It is thought that Barocca was seeking to provide Osnago with cover from above as he swooped on enemy trenches when he was attacked by an Austrian plane and downed.  The official version of events, written in the interests of propaganda, was that he had been hit by groundfire but records later showed a kill claimed by the crew of an Austrian two-seater, who noted the exact time and location of the engagement and took a photograph of the shot-down aircraft.

Mystery surrounded the condition of Baracca’s body, which reportedly bore the marks of a bullet to the head, while his pistol was out of its holster. This led to speculation that he had taken his life as the plane fell, rather than be killed in the crash or taken prisoner.

Baracca had claimed a total of 34 aerial victories, which made him the most successful of all Italy’s First World War flying aces.

His first came in 1916, flying a French-built Nieuport II, equipped with Lewis guns.  His victim was an Austrian Hansa-Brandenburg CI, which he hit in the fuel tank.  It was also Italy's first aerial victory in the war, brought about by what would become his favourite manoeuvre, which was to zoom in unseen behind and below an enemy.

The monument to Baracca erected
on the spot where his plane fell

From the 1a Squadriglia Caccia, Baracca transferred to the 70a Squadriglia, where he was promoted to captain, before moving again, with nine victories, to the newly formed 91st Squadriglia, known as the "Squadron of the Aces", flying the Spad VII and Spad XIII planes. Soon, his ever-increasing list of victories made him nationally famous.

He had entered the Military Academy of Modena in October 1907 and became a cavalryman with the prestigious Piemonte Reale Cavalleria Regiment on his commissioning in 1910. He became interested in aviation and learned to fly at Reims, France, receiving his pilot's licence in July 1912.

From a wealthy landowning background, Baracca had the title of Count. The family’s coat of arms bore the black prancing stallion symbol he attached to all his aircraft.

  

Baracca's mother is said to have presented the emblem, the Cavallino Rampante, to Enzo Ferrari, who incorporated it as part of the badge displayed by cars belonging to his Scuderia Ferrari racing team and in time all Ferrari automobiles.

Lugo's main square contains a huge memorial to Baracca

Travel tip:

The town of Lugo, Baracca’s place of birth, is situated in the Emilia-Romagna countryside between the cities of Bologna and Ravenna.  From above, coincidentally, some say the shape of the town resembles an aircraft. The town’s landmark is the Rocca Estense, an Este-family fortress that now contains the town hall. Next to the fortress is a monument to Baracca erected in 1936 and town also has a museum dedicated to him, in his former house, which displays mementos, uniforms, medals from Baracca's life, as well as rudders and guns taken from shot-down aircraft.

Artillery shells stockpiled in Crocetta, which
was on the front line in World War One

Travel tip:

The village of Crocetta del Montello, once known as Crocetta Trevigiana, the nearest community to where Baracca was shot down, suffered badly because of the First World War. It had become prosperous after the construction, in 1882, of a vast hemp rope mill, providing employment and helping the area acquire resources including electricity, thanks to water-driven generators set up on the Brentella river. But the mill was destroyed during the 1918 battle that Baracca was supporting – the Battle of the Solstice. It was rebuilt only to be hit by global financial crises, forcing it to close in 1938, leaving an unemployment problem and triggering the bankruptcy of many local businesses that depended on it

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