The profit that could be made by taking advantage of the differing postal rates in different countries to buy IRCs cheaply in one country and exchange them for stamps of a higher value in another country was the intended profit generator for a scheme operated by Charles Ponzi, which became the fraudulent Ponzi scheme ; in practice, the overhead on buying and selling large amounts of the very low-value IRCs precluded profitability.

Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, ( March 3, 1882 – January 18, 1949 ), commonly known as Charles Ponzi, was an Italian businessman and con artist in the U. S. and Canada.

Charles Ponzi promised clients a 50 % profit within 45 days, or 100 % profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the United States as a form of arbitrage.

Ponzi aka " Charles Bianchi " under arrest circa 1910

It was another prisoner who became a true role model to Ponzi: Charles W. Morse.

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1910 police mugshot of Charles Ponzi, the namesake of the scheme

The scheme is named after Charles Ponzi, who became notorious for using the technique in 1920.

Ponzi did not invent the scheme ( for example, Charles Dickens ' 1844 novel Martin Chuzzlewitt and 1857 novel Little Dorrit each described such a scheme ), but his operation took in so much money that it was the first to become known throughout the United States.

* Charles Ponzi and the Ponzi scheme.

" In the run up to the Savings and loan crisis of the 1980s and early 1990s, control frauds like Charles Keating were able to get legislators like Speaker of the House Jim Wright, the Keating Five Senators and majorities in both the US House and Senate to suppress investigations of massive criminality until their Ponzi schemes finally collapses.