Pulling off a con is not easy. It requires boldness, brazenness, and a fair amount of ingenuity. Over the centuries, there have been many great cons. However, for sheer audacity and scale of achievement, the following are two of the all-time most impressive cons.
The Ponzi Scheme
The Ponzi scheme was so daring that it became one of the first to be known across the country. Named after Charles Ponzi, the man behind the con, the Ponzi scheme was essentially a fraudulent investment operation.
Little is known about Charles Ponzi’s past because he was very good at spinning stories about his origins. However, what is confirmed is that he was born in Italy and arrived in America in 1903 with only two dollars and 51 cents in his pocket.
Ponzi did not let that stop him, and he soon got involved in several different rackets, some of which landed him in jail. Shortly after he married in 1918, he discovered that international reply coupons (IRC) could be exchanged for currency.
Ponzi claimed the profit that could be made from exchanging cheap Italian postage for more valuable American stamps was as much as a 400-percent gain, before he realized that the postal bureaucracy made it too difficult to actually cash in.
Sensing an opportunity, however, he set up a business, the “Securities Exchange Company,” and began to offer investments that would pay back 100-percent interest on the original investment after 90 days. Predictably enough, he was soon swamped with hundreds of investors who wished to increase their earnings. Ponzi encouraged this by hiring marketers to advertise his investment office. It worked.
Ponzi had made $5,000 by February of 1920 (more than $50,000 in 2010 dollars), and by May, his company had made $420,000 (the equivalent of $4.5 million). At the end of the year, Ponzi had so much money that he was able to buy a controlling interest in his bank.
Of course, Ponzi was not really investing people’s money. He knew the IRC investment was a flop. He was simply paying off his old customers with the cash he got from new ones.
It wasn’t that difficult. Most people were choosing the option to reinvest their money instead of walking away with their profits. In the few instances where people actually asked for their investments, Ponzi simply paid them from this accumulated wealth.
Ponzi was able to make a lot of cash with this method. In total, he maintained the illusion for almost two years. At one point, he was making $250,000 a day.
It did not last long. A financial analyst revealed that Ponzi’s claim of investing in reply coupons could not be substantiated. To cover the number of investments he had, there would have needed to be about 160 million postal reply coupons in circulations. However, in reality, there were less than 30,000 in print.
Investigations by the government quickly unraveled the fraud behind his company, and he was sentenced to jail for five years on mail fraud. After he was released he was again tried for larceny, and after serving his larceny sentence, he was deported to Italy. He eventually moved to Brazil, where he died without a penny to his name.
The Man Who Sold the Eiffel Tower
Victor Lustig is known as the man who successfully sold the Eiffel Tower. Twice. Born in 1890, Lustig quickly earned a reputation of being a con artist who preyed on the weakness of others. Before arriving at his Eiffel Tower con, Lustig committed memorable frauds in countries across Europe and in American cities.
Lustig was so good, he even successfully conned Al Capone. Lustig persuaded Capone to invest $50,000 in a project he was working on with the promise that he would double the investment in 60 days. When Capone agreed, Lustig simply left the money in a bank, waited, and returned to Capone with a sob story of how the deal had failed. Capone was so impressed with Lustig’s honesty that he gave Lustig $1000—which is exactly what Lustig had planned.
But of all his exploits, his best con was selling the Eiffel Tower. In 1925, Lustig was in Paris and noticed an article in the newspaper that debated the merits of repairing or selling the Eiffel Tower. Inspired, Lustig thought up the idea of selling the tower to metal dealers.
To pull off the con, he gave himself an impressive government title, posing as the Deputy Director General of the Ministry of Posts and Telegraphs, and got an accomplice, Dan Collins, to pose as his secretary. Using the fictitious official title, he then mailed several of the top scrap metal dealers in Paris with the request that they come for a meeting, held at the prestigious Hotel de Crillon.
During the meeting, Lustig revealed to the dealers that the Eiffel tower had become too costly to repair, and that the country had decided to auction off the 7,000-ton iron structure to the highest bidder. Secrecy was necessary, he explained, because the government did not want to start a public outcry.
One of the dealers, Andre Poisson, fell for Lustig’s pitch, and after touring the Tower with Lustig, he handed over a check. In return, Lustig gave him a phony contract that stated that he now owned the tower and then fled to Austria with his accomplice after cashing the check.
Delighted with his success, Lustig waited a month, and—after noticing that Poisson had not reported the incident to the police because of his embarrassment—he decided to do it again.
He was successful a second time. He replicated the same scheme, inviting a different batch of metal dealers for the pitch. However, Lustig’s second victim was not as concerned about public opinion as Poisson. He reported the fraud to the police, forcing Lustig to flee.
Lustig was never arrested for his second con, and eventually came to America. However, he was later arrested and sentenced to 20 years in Alcatraz for counterfeiting currency. He died of pneumonia while serving his time.
All Cons Must Come to an End
While Ponzi and Lustig led impressive careers based on their deceptions and manipulations, the law was always on their tails. Con men–and in this day and age, online scam artists–thrive on the weakness of their victims. In these two famous cases, the jig was up when each man was caught in a lie. This is inevitable for anyone whose success is based on dishonesty.
If you find yourself in a deal that doesn’t feel right, speak up and tell the truth. And if you’ve been scammed, don’t make Andre Poisson’s mistake—tell your story. It might be able to stop your con man before someone else becomes a victim, too.