If you’d like to read the story as told by Ponzi himself, his self-published 1936 autobiography The Rise of Mr. Ponzi can be read in its entirety online here: https://www.charlesponzi.com/the-rise-of-mr-ponzi

> The "racket" of international reply coupons actually fell in my lap like a ripe apple. I did not have to shake the tree to get it. I just reached over, where it had fallen, and took it. It looked good. Luscious. I examined it for flaws. Found none. I had to bite. I wouldn't have been human if I didn't.

And a printed version with lots of supplemental material included is available as well: https://despair.com/collections/books/products/the-rise-of-m...

Thanks for linking to the autobiography.

Just one thing:

> "I had to bite. I wouldn't have been human if I didn't."

Such are the self-serving justifications of con-men, swindlers and criminals everywhere. "I'm only human", "I was just following orders", "I was weak", "other people would have done the same". Nah, I wouldn't rip off people and lead them to ruin even if I had the chance. Nice try, Mr. Ponzi.

The international reply coupon racket was legitimate, though. It was kind of shitty, since it was abusing a loophole in the rules to extract money from postal services, but it was legal. In terms of morality, it’s little different from arbitraging stocks.

The problem was that this racket sucked, and instead of giving up on it he decided to turn it into a proper scam.

He never even began to implement the postal coupon idea, it was a scam from the start. https://www.smithsonianmag.com/history/in-ponzi-we-trust-640...

> Of course, there was no network of agents. Nor, for that matter, did Ponzi expend any effort to corner the market on postal reply coupons. A final audit of his company's assets after the whole business was over turned up $61 worth of the coupons, according to Dunn.

It's a pretty common story for people to discover they have an undiagnosed psychological condition after they have an experience where they say "doesn't everybody do <x>?" and someone says, "No, John, nobody does that."

Like, when the rest of us say 'voice in our head', we mean it figuratively, not literally.

How many of us have 'I had to pay the mortgage' or 'put the kids through college' as an excuse?

Mr. Ponzi is no exception.

I don't have kids, but I have gotten an eviction notice due to non-payment because I was broke and unemployed for a month a few years ago (with a maxed-out credit card, no less). Even then, when I was at my most desperate, it never occurred to me to try and swindle anyone, or mug anyone, or (as far as I know) anything obviously immoral.

I seriously doubt I'm a saint; I think most people don't want to hurt other people.

(If anyone is interested in the conclusion of that story, I was able to eventually find a job and after a million calls to the landlord I got him to let me pay a bit later and keep my apartment).

Most people see themselves as good. The thing is, most people don’t start out with a plan to defraud tens of thousands of people for millions. Even towards the end Ponzi believed he’d pay it back.

It starts off with a small lie to yourself - I’ll just use this money to pay him and when the investment pays off it’ll all work out... and then it grows from there.

Cognitive dissonance is an amazing quality of the human brain. I recommend reading Mistakes Were Made But Not By Me - fascinating stories of how and why it happens.

I do not doubt there are people for whom it works like that. There are also people who do not start like gamblers, but end up with an out of control addiction.

I've known people with "get rich schemes" who ended up lying and stealing from their loved ones.

But the self-serving excuse of "I'm only human" is always a lie. That's not being human; that's being a particular, untrustworthy kind of human. Not all of us, or even the majority, are like that. "But it's just my nature" is such a cowardly excuse for lying and cheating.

Fair enough; I certainly wouldn't purposefully hurt anyone (at least not nowadays), and I don't know that I'm willing to extend the benefit of the doubt to Ponzi, but I have certainly done things that have hurt people transitively, or done things that are somewhat self-serving that I convince myself are good for the other person.

I'd like to think I haven't really done anything like that since I was a teenager, but as you said, cognitive dissonance is amazing. It's entirely possible that I do things all the time that are horrible.

I know I haven't and won't. Of course Mr. Ponzi wasn't the first and won't be the last scumbag out there. And scumbags always make excuses for themselves.

This is completely different to stealing because you or your kids are hungry, let's not delude ourselves.

It reminds me of the lyrics of Pink Floyd's "Dogs":

    You gotta be crazy, you gotta have a real need
    You gotta sleep on your toes, and when you're on the street
    You gotta be able to pick out the easy meat with your eyes closed
    And then moving in silently, down wind and out of sight
    You gotta strike when the moment is right without thinking

    And after a while, you can work on points for style
    Like the club tie, and the firm handshake
    A certain look in the eye and an easy smile
    You have to be trusted by the people that you lie to
    So that when they turn their backs on you,
    You'll get the chance to put the knife in

My grandfather was taken in by a Ponzi scheme a few years before his death. He poured tens of thousands of dollars (his entire savings) into the sceme, despite my father's protestations. At one point my father gathered as much info about the "investments" as he could, and forwarded it to the authorities. He and my grandfather were on less friendly terms after that, even after the scheme's author was arrested and sentenced. My grandfather was convinced that my dad singlehandedly shut down a legitimate operation. My grandfather passed away about 6 months after the swindler was sentenced to 20 years in prison. https://www.forbes.com/sites/billsinger/2011/11/18/botfly-ll...

I can totally understand how people get taken in by scams, but I’m completely baffled at how it’s so common to double down on them after they’re exposed. Human psychology is weird.

Any thoughts on how to handle this better? I imagine many of us will have to deal with this sort of thing at one point or another.

It's not weird at all. The human mind has all sorts of ways of protecting itself from harm or pain. No one likes feeling like a fool or being shown to be wrong. When faced with the (subconscious) choice of either admitting you were tricked and feeling humiliated or a comforting lie that somehow you were right all along, the lie is very tempting.

Con men count on this to keep their marks from balking, and I imagine the bigger the swindle the more powerful the urge to accept the delusion is, since the humiliation and shame are all the greater. Especially when, as in the parent comment's grandfather's case, the man's own son was telling him he was being scammed and he refused to listen. To have to face his son later and admit he'd been had must have seemed far too galling.

You see the same in politics. When you show someone that a thing they are angry about is actually not true the response is often to stay angry at the now proven wrong issue and in addition to be angry at the person who told them.

Ponzi scheme for me the reason of our greed and endeavour of money. And these people are just selling hope that's all. I lost my uncle because of it. He was a jeweller and didn't care as well as he should about the finance and found himself lots of debt.

Sometimes I remind myself we're so much oriented about the money we forget why we need to earn it.

I call it infinite loop problem let me explain very briefly.

Let's say you want to open the door of your house but your keys are in the car so for that you need to open the car first. But car is locked and you're thinking about where did you put the keys then your wife opens the house door.

Some of us still focused to open the car to get the keys although it's unnecessary anymore. They're in the infinite loop.

Excellent question here is, sometimes it's extremely hard to find our own defects, if I would have been Ponzi would it have been possible to realise my way is going down.

Some CS friends call this behavior "depth-firsting," as if the person is doing a depth first search and won't consider trying anything else until they're satisfied the current approach won't work -- that includes exhausting all subproblems that arise.

See also https://xkcd.com/530/

"Sadly, this is a true story."

I was fortunate enough to have avoided disaster with another Ponzi scheme in the early days of the Internet. This particular individual had invested in a company I'd helped start which went on to be quite successful - but my hackles were raised by a few meetings such that I avoided investing with him. Which, on the one hand sucked - because it meant I was shut out of having a whirlwind success with the one company in his portfolio that was legit - the one I'd helped start.

But on the other hand, the relief I felt at not having to deal with the Feds over this guy was huge.

Since then, its been amazing to me just how much crooked behaviour goes on with tech investments. I've managed to avoid further entanglements with Ponzi-style schemes in the decade since, but I'll never forget this one guys' pure sleaziness, how it raised my alarm bells, and yet how others saw it as competence and genius.

If only I'd had the temerity to differentiate between the one good thing (which I had agency over) and all the crud, I'm quite sure I'd be worth millions more today ..

Care to spare some details? Your first hand experience even without the names can be most useful/interesting for HN types.

Well, the nature of the business is that I'd really rather not discuss it, but its enough to say that in the heigh-day of the Internet bubble, late 80's/early-90's, there was a lot of Ponzi going on, around the bandwidth providers. If you look at it, the way the Internet was constructed back then is kind of Ponzi, only back then we called it 'over-subscription' ...

I recall a case study about the telecom industry and how it was a race to the bottom laying undersea cables and then the bubble burst. But that assessment was in hindsight. I guess a distinction needs to be made between a "bubble" which is a part of the market economy, and what can be called a "ponzi scheme" which is malicious from the very beginning.

I guess like most other HN readers, I’ve heard of the Ponzi scheme but didn’t knew the real story behind it. As long as there are naive people there will always be smarter ones taking advantage of them.

A very interesting read and I’m sure this would make a great movie (Di Caprio playing Ponzi)!

It's a mistake to assume all the investors in these schemes are naive or that they all lost money (particularly with the more recent schemes I would imagine). Many fully understand what is happening and know that if they get in early and out again before the music stops there is a very good return in it.

There is a book called "Ponzi's Scheme: The True Story of a Financial Legend" that is a pretty good read. I would recommend it to anyone who enjoys non-fiction.

https://www.amazon.com/Ponzis-Scheme-Story-Financial-Legend/...

Came here to recommend this book! The Audible recording is fantastic too (it’s how I first read it about 12 years ago).

The story is both of Ponzi and the newspaper man that took him down. The two men had a lot of parallels but ultimately ended up very differently.

If you'd like to program / code your own ponzis and ponzi simulations on the blockchain, see the free "Programming Crypto Blockchain Contracts Step-by-Step Book / Guide" [1]. [1]: https://github.com/openblockchains/programming-cryptocontrac...

Ah, I remember reading this story as a young kid in Readers Digest. Important lessons to be learned for everyone, alas a fool and his money are soon parted