Cracks in the Plan
Charles Ponzi was making a lot of money, as were his investors, but not in the way which had been originally intended. So far, the vast majority of the returns had been paid by simply moving the money from new investors to old ones. In order to do this, every new intake had to be larger than the last, creating the pyramid structure of the business. Despite these massive turnovers, Ponzi hadn’t yet worked out how to convert any profits from trading the IRCs into cash.
There was also another problem, Ponzi would need to move an incredible number of IRCs across the world. 53,000 IRCs would be needed to generate the returns promised to just the initial 18 investors. Ponzi now had over 15,000 investors – there was hardly a ship in existence big enough to carry the number of coupons he would need to transport.
