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Ponzi's investment strategy wasn't illegal, and the postal coupons could, in theory, have yielded a profit.
It turned out that Ponzi had never actually got around to buying many postal coupons and that it was all a colossal hoax.
But after offering depositors high interest rates, Ponzi never really dealt in postal coupons, which turned out to be too unwieldy for large-scale speculation.
Soon after he announced his scheme, postal authorities in Italy, France, and Romania suspended the sale of postal coupons, destroying any chance that Ponzi could implement his plan or reward investors with outsize returns.
Is a modern version of Charles Ponzi (who you will recall claimed to invest in international postal coupons) smuggling in Oyster cards to the US as part of a massive investment fraud?
That helped him persuade American investors in 1920 that he could deliver returns of 50% in just 45 days by exploiting a loophole in the pricing of international postal coupons.
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To make a donation to the Guardian appeal, phone 0800 083 9921, go to theguardian.com/christmasappeal or complete the postal coupon in the main section of the newspaper.
To make a donation: Phone: +44 (0)800 064 0212 (staffed 24 hrs) Online: theguardian.com/christmasappeal A postal coupon appears regularly in the appeal adverts in the paper.
By the summer of 1920, he was soliciting investors with offers of "international postal reply coupons" -- in Mr. Ponzi's description, postage stamps that could be sold again and again.
In 1920 Charles Ponzi promised investors he would earn them 50% in 45 days by arbitraging international postal reply coupons.
He eventually returned to Boston and devised a novel scheme to build a financial empire based on prepaid coupons that nations issued for postal replies.
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