Charles Ponzi came to the U.S. from Italy in 1903. In 1919, he established the Securities Exchange Co., which promised investors huge profits in just a few weeks. They were unaware that none of the funds were actually invested and that the profits came entirely from newly invested money. Thus, the Ponzi scheme was born.
Ponzi was charged with 86 counts of fraud in 1920 but pleaded guilty to only one. He died in 1949, but the swindle that bears his name lives on.