A Geek History of Time - Episode 385 - Happy Bobby Bonilla Day part I

Episode Date: September 4, 2026

When I think nuclear annihilation, I think... La la la la la la la la la la la la la la la la I'm gonna drink a metric fuck time of coffee and hope that I stop right before I start seeing sounds That's one of my one of my favorite I don't know if you know like yeah favorite awful thing I get it I get it Like bitch took the ice trees meanwhile this guy is going into a unicorn cave This is better than the what is the orientation of the chicken strapped to your head question the essential part of democracy to me is not that I should spend a lot of time in governing myself, for I have many more amusing things to do. But I want to be quite certain that I can change the

person who governs me without having to shoot him. That is the essence of democracy. You mean herge? Probably. Okay. Well, I mean, yeah. I don't know if that's just, you know, my inner drama queen. Okay, so this is really hard because you're talking about like serious important things to you. The amount of jokes that, like, I think they're funny as shit. Connected nerdery to the real world. My name is at Blaylock. I'm a world history teacher here in Northern California.

And this week, I completed the first chapter of my master's thesis. And the end is now in sight. And it's just another. eight weeks of putting it down basically um yeah uh i have i have four more chapters and an intro and a conclusion to write um and then pardon me and then uh yeah and then and then i'm done uh which is a weird feeling. So yeah, the end is in sight, but this is the last, the last slog, last hill to get over, steep ridge to climb. I don't know. I'm trying to get across the idea that, no, no, this is, there's going to be hard work for the next several weeks. This is not like, you know, oh, hey, the end is

in sight and it's all downhill. No, I got a grind. So, yeah, that is the biggest thing I have had going on this week that has taken up basically all of my time. How about you? Well, I'm Damien Harmony. I am a U.S. history teacher up here in Northern California at the high school level. I'm just glad that like you're heading toward the end and nobody has caught you for the fraud that you are. I think that's great. You know, you still got a few weeks for them to catch you. So yeah, I know. I got to work really hard to stay ahead of them for realizing what a fraud you are. Yeah, what a complete absolute fake. I'm so happy for you I love like when I did my

master's degree I first off then we can both say stupid pompous shit like that but when I did mine I took such a different approach to it because I was not a good writer I didn't have that to rely on

so I had to go balls deep and then some into all the research and make sure that all my shit was there like that's how I wasn't it wasn't really an imposter syndrome it was I know how bad I am at these parts. So I have to make up for it in these other ways. So when you were like telling me about your process, I was horrified because I'm like,

what do you mean you don't have it all done in your head and all the papers done? You're still researching while you're writing, but I'm like, oh, right, he knows how to write. So that's probably going to be easier for him. Yeah. A little bit. But let me tell you this week. So I was writing chapter one while I was researching chapter four. That's just so fucking weird to me.

I'm like, you don't write any of it until you've got it all researched. Until you've got it all figured out. Until it is undeniable. And then the struggle begins because then it's like, now how are you going to make this clear to anybody but yourself? Yeah. Because that was my big problem. In fact, my advisor, Dr. Mona Siegel, who's been on the show.

Yes. told me straight up. She's like, this is, you know, a hundred and something pages of good information. It doesn't tell me anything. That was my rough draft. I was like, oh. Yeah.

There's no there. There was no thesis. Like, yeah. I was like, oh, oh, dear. So, okay, so a question about that. When you got your masters, because I know, I know the way the program works that I'm doing,

we spent 10 whole weeks making sure we data thesis. Yeah, we didn't do that. Oh, okay. Yeah. No, so what we did was you take any classes you want to qualify. And so I did. And the idea was you kind of find what you're interested in, right?

You take the historiography classes, which was awesome. And then you start taking upper level, you know, grad level seminars, right? And so you've just like, and they're based on whatever theme that that professor is teaching, right? So there was one on the medieval times. And I decided I don't want to write it right about medieval shit because while I know Latin, it's a lot of calligraphy. And you know, having to learn medieval French is going to suck. Yeah. So I was like, okay.

And then it's like, well, people have already done the Lawlards. So I can't do them, you know, so I'm going to have to read some other language. So then I was like, okay, I can't do that. I'm not an internationalist, but I don't want to be an Americanist. either because a lot of that has already been tread. And then I took a class from a guy who was Dr. Bonden Steinen. And he was, I think it was just like a seminar on British history. Okay.

And I was like, well, that'll be easy to read. And because of the European historiography class I'd taken with Dr. Siegel, I was very intrigued by the working class movement and stuff like that. like that. And so eventually, like, he put me on to the Fabian Society. And I was like, oh, okay. These are some people that had some interesting ideas. And so, and we had the entirety of the Fabian Society's books in our library.

And that was the other thing is like finding shit that's nearby, you know? Right. And so I started pouring through those. And then I realized that the interests that I had in American history were such. that I really focused on women's suffrage and women's reproductive rights. I just fell into those as far as American history went. And by that time, I was a teacher, and I was teaching these things, right? And so I was like, well, women's suffrage in American history,

why not look at it across the pond and maybe do a comparative? And then I dug into, well, not everybody was down for the suffrage movement. So let's look at who was down for it and who wasn't. And were there any similar? And so it ended up being the reactions of socialist reform groups to the concept of women's suffrage and their use of biological sex as a determinant as to whether or not women should be granted the franchise. Nice. So that basically married several of the things that I enjoyed, right? So you got the working class stuff.

You got the socialism. You got the women voting thing. and I knew that because women's place in history is a relatively newer field, you know, so I was like, okay, well, let's, you know, there will be more there that I can do. Right. And so, you know, I just kind of kept going along those lines. I knew somebody who was writing about the Spanish main and Sir Francis Drake and shit like that because, you know, that kind of stuff.

But like I focused there and some of it had to do also. with the lesson that I learned was find an advisor you like and do something that they know about. And I, you know, we can tell by the episodes where we interview my former professors how much regard I hold them in. So I was like, all right, here I go. And just turned out I was a bad writer.

So it was, I think it was in her class where she said, you know, it was for like a three-page paper. She's like, no more than seven sources, Damien, or yeah, no more than seven sources. sources. So yeah. Again, you know, what I lacked in writing I made up for in just sheer volume of research. Right. Right. So I assume yours is a much more common and healthy way to go about doing this by the way. I think mine is more, more, certainly more common. I don't want to say more normal but I yeah well I would I would say more normal um yeah I would also say yours is probably found

more frequently in people who are deep into their career already and then are adding a master's onto it probably yes whereas I mean I was I was not deep into my career but I was clearly entrenched to my career right but yeah I had no children yet yeah so all right yeah well Well, you've dated this a little bit because people who know you, they'll see the chevrons on your sleeve from here on out. But so. Yeah, by the time this actually winds up getting broadcast, yeah, I might already be walking around wearing my master's police. Yeah. Well, actually, and maybe I'll talk about this in the next episode.

We've had a bit of hiatus because of multiple absences on both of our parts. and I'll talk about that in the next one. But as a result, we're actually starting to get close to the, you know, record one, release one, release one. We're not there yet, but I'm uncomfortable. Okay. So we'll work on building up the bank. Got it. Me being uncomfortable means we have fewer than 12.

So, you know. Just anyway. Again. Yeah. All the research has to be done ahead of time. Yes. Yes. Have to be.

Yeah. Oh, yeah, yeah. But, all right. So do you know what July 1st was back when it happened? No. I do not. Without any other context provided, no. Sure.

I don't know what you might be getting at. Sure. So July 1st is the beginning of the new fiscal year. Okay. Yes. All right. Yeah. And so I'll just leave that there.

Okay. And so let's set the way back machine to about 1900. Okay. Around 1900, the son of a formerly well-to-do family in Parma, Italy, which is in the Amelia Romagna region in the kingdom of Italy. So think of the calf right near the knee. Okay. Okay. So the back, the easternmost part and almost northernmost part of Italy, well, of the kingdom of Italy, right?

Yeah, okay. Now this family, whose mom still used the title, Donna, went the son of this family. He first went into the postal service, and then he went off to college. And he spent most of his time in college, carousing and enjoying the company of his wealthier friends, who kind of saw college as like, ah, it's just what you do. between, you know, growing up. And he didn't really take seriously the privileges that he had. So basically standard, you know, 18-year-old shit. And so by 1900, this young man had run out of money, and he had no degree and he had no real prospects.

Now, given that this is near the turn of the 20th century, the amount of young men migrating from Italy to the United States for work was enormous. and like to give you some context by 1920 from 1880 to 1920 4.2 million 4.2 million Italians came to the United States. Right. Yeah, huge. Yeah. And their sex ratio was not quite 10 to 1, but I think it was like something at 4 or 5 to 1.

Like it was, and you find this when it's it's because they're economic refugees, not political refugees, right? So by contrast, now four or five to one. Yes. Female to male or male to female? Male to female. Male to female. Okay.

All right, got it. Because most Italians were coming over, make money for 10 years and go back, right? So it's going to be men seeking work, right? Okay. So when you have economic push or pull, right, you're going to see the sex ratio skewed more. Whereas when you see political or radical or. religious or any kind of persecution. Yeah, persecution or oppression.

It's going to be a more, yeah, it's going to be a more even. Exactly. Okay. And it's also not going to be as class-based, right? Because you're going to have like, for instance, if you are Jewish and in the pale of settlement, the Cossacks are coming and they don't care if you're rich or poor. Like, yeah. And so whole families will go, right?

Right. And so you're going to see. the age ratio and the sex ratio skewed differently for different immigration groups. Right. And so in this case, there's an awful lot of relatively young, demographically, they're going to also, I assume, skew younger. Yes. Young unattached men.

Yes. Coming over looking. And most of them are making the assumption when they come over. As you said before, that this is a short-term thing. A sojourn, if you will. Yeah, essentially they would be coming over on what today would be on a work visa to work. And then they planned on going home having made their fortune in America. Okay.

All right. And also, because of that sex ratio being what it was, and it's from 1880 and 1920, right? So it's about a 40-year period. There's plenty of families that do live over here, plenty of Italian families that do live over here. Now, that being the case, there was a significant number of. of there was a high degree of distrust within the Italian communities of young men because you're not going to date my daughter because you're going to leave. Right, right, right.

So there's, there's, you know, you're supposed to be married, God damn it. Like, you know, it's that kind of thing. So, like, there's a lot of pressure. So he, this young man figured he could do the same and come back with a bunch of money and reestablish his family's former wealth. And with his family's blessing, Charles Ponzi went to the United States. Okay. Arriving in Boston on November 15th, 1903 on the SS Vancouver.

He had $2.50 in his pocket, having gambled away the rest on the trip. That tracks. Okay. Yeah. Now, Charles Ponzi had a very compelling eyes. He had a very easy smile that bordered on a smirk, which just kind of belied a magnetic kind of charisma. and he had soft but thick features that were fairly handsome. So he looked like,

he looked like, you know, that picture of Joseph Stalin when he was young and everybody was like Zaddy Stalin? Right, yeah. Imagine him, but with like more handsome lips. Okay.

Less smoldering, too. But like, same kind of thing. If you look up one of his, one of Ponzi's mug shots, you'll see what I'm talking about. So he famously told the New York Times later in an interview, quote, I landed in this country with $2.50 in cash and a million in hopes, a million dollars in hopes.

And those hopes never left me. And so then he said about his work-a-day lifestyle. He learned English actually relatively quickly. He learned to steal occasionally from the people that he was waiting tables on. And he went up and down the East Coast for a spell. finding different jobs, either waiting tables or working in the, as a, what do you call it as dishwasher and stuff like that.

Yeah. Finding ways to make it to the next town. Now, in 1907, he moved up to Montreal to work as an assistant teller in a bank that catered largely to the influx of Italian immigrants who were coming into the area at the time. Now, you might remember from the professional wrestling episodes, one event,

that Montreal had a very large Italian. population. Yes. And so Italians who are making money need a safe place to put their money, and the result is that there is a need for banking and for banks that have people who speak Italian. And so he spoke English, French, and Italian, and he worked for the owner of the bank, a Mr. Zarasi, Z-A-R-O-S-S-I. I'm going to assume it's Zerasi, just because I used to live near Rossi Park in San Francisco. Yeah. So put a Zah in front of it.

So he saw the owner of that bank offering double the normal interest rates to his depositors, which is amazing. And he saw that that drew more people to the bank. So win-win. Now, how could he afford such returns? Easy. He robbed Peter to pay Paul. Right.

He would use the deposits of others who came after because his real estate developments and investments still didn't work out. There were not the same regulations on banks in Montreal as there would later be in the 1930s and 40s in the United States. Right. So his real estate investments didn't work out at all, and I mean at all. And eventually, the numbers caught up and the bank failed. And Zerasi fled to Mexico with a huge stack of money. All right. So mentor figure here to a young Ponzi. Yes. He's the Obi-Wan of Ponzi's keeps.

Oh, Juney Christmas. Now, Ponzi stayed in Montreal, tending to Zarassi's family, whom he'd abandoned when he left. And after all of this, Ponzi was again left broke and needing to start over all over again. So there is a through line here of him making sure to take care of people. Yeah. But also. Now, he committed bank fraud immediately by writing himself a check. from the Canadian warehousing

company because he walked in there. They had been a depositor for Zarassi's bank. He walked in there, saw nobody who's standing around, saw the checkbook, wrote himself a check, went and cash the check. Shit. And then he got caught. And when he got caught, he just held out his wrist.

He's like, yeah, you caught me. Like, there's this, like, I remember when a teacher, I was a wise ass in school, shockingly. Big surprise. Yeah, right. And a teacher asked me once, are you messing around with us? And I said, well, yeah.

And to me, you got me, you asked, I told we're done. I don't need to lie. He kind of had that same, I almost, I dare say honor about him with it. But yeah. So he confesses, he spends three years in the St. Vincent DePaul Federal Penitentiary just outside

of Montreal. Okay. And I'm soft. I don't want to spend any time in any penitentiary ever, but in turn of the century penitentiary Yeah. Sounds awful. Yeah, I'm sure it was no

walk in the park. Yeah. So now, here's the thing. He wrote a letter to his mom to let her know where he was staying and he told her that he got a job as a special assistant inside the prison. So so mom

Didn't know. So mama wouldn't worry. Right. Yeah. And so he could, you know, like keep sending her letters and stuff like that. Yeah. Yeah. How come it's postmarked from a penitentiary? Oh, yeah, yeah. I'm special assistant there, you know. Right. So in 1911, he gets released from a prison in Montreal. And he sets about immediately smuggling illegal Italian immigrants to the United States. Well, I mean, you got to make a buck somehow. Exactly. Exactly. There is no social safety net. So. He gets caught again. And, oh, Jesus. So I didn't, you know, you hear, you hear about him. Yeah.

And, and I had heretofore not realized he was so bad at being a crook. Oh, yeah. Like, charmingly bad. Yeah, okay. Like, my game is being awkward, you know, like that kind of thing. So, yeah, he now spends two years in a prison in Atlanta this time. Oh, my God. It's just worse

Now remember Atlanta is where Some of the Hatfields Who had been sheriffs Had gotten sent right This is not a good place In fact Atlanta is also a place Where a mobsters start getting sent Because it pulls them away from their power base

And it's a federal penitentiary Yeah federal pen in Atlanta Yeah okay So he starts working as a translator for the warden Because there's a lot of Italian criminals caught. Okay. Or there's a lot of Italian prisoners in Atlanta,

whether or not the criminals, hey. And he actually ends up befriending the Italian mobster that the warden wanted him to spy on. So I think that there's some double agent shit going on there. Now that guy's name is Ignacio Lupo. And he goes by Lupo the Wolf,

which is just Wolf the Wolf. Yeah, well. Yeah. Which I like. Yeah. So Lupo the Wolf was suspected of over 60 murders. Oh shit.

Yeah. So this is a guy you want to let him know, I'm supposed to spy on you, but I'm your friend. Yeah. Please, please, please, please, please, please don't. Yeah. So Lupo the Wolf committed his first murder, allegedly, at the age of 20 when he was in Palermo Sicily. And he had a business rival that he shot to death.

And Lupo said, well, it's because he came at me with a, uh, with a dagger. So then he fled from Sicily in 1898 to avoid prosecution. He was convicted in absentia in March of 1890. In absentia because he went to New York. His parents were like, go to go, go, go, don't. Which I love just like the through line here of the law is not a legitimate thing. Like it is, it is your job to try to escape it.

Right. Yeah. And so his parents are like, no, don't stay for justice. No, no, no, get, get. And so he sets up a store in Manhattan, Lupo does. But then he moves it to Brooklyn after he has a disagreement with his business partner, who is also his cousin. But then a couple years later, he moves back to Manhattan. And then he sets up a saloon across the street from that same store.

I think it was a retail store. He sets up a saloon. And then his dad comes over, Lupo's dad comes over in 1902. and the two of them open up a grocery store as well. Okay. So now they've got three businesses, and with these three businesses, you've got enough places to put your money

that you can start running an extortion ring. So La Manan Negra, the black hand. Oh. Yeah. Yeah. Okay. Now, Lupo, while doing all this, had also married into the Morello Terra Nova family,

which was an up-and-coming mafia family and Little Italy and in New York. And Lupo married, I think, somebody's sister. And now he was part of the Morello family. And with him and the family, it grew a lot more successful. And it's partly due to the fact that he was ruthless as fuck. He killed one of his own relatives because he suspected that his relative would betray him. And so, yeah, it got so bad that, like, I read several accounts of when Italian immigrants would speak his name, they would do the cross.

like to ward off the evil eye to ward off the evil eye yeah so loop of the wolf suspected of 60 plus murders and often other often the murders were of other criminals by the way he he was accused of killing a guy named Giuseppe Katanya

known as Joe the grocer who allegedly was just talking too loud about a counterfeit operation the two of them were running so he has to be silenced Jesus. Katanya also might have just been killed because he had been snitching, and Lupo wanted him silenced because he had testified against several men back in Palermo. And if he's willing to do that, who knows, right?

Right. So regardless, Joe the grocer, or grocer, was found stabbed to death and stuffed into a potato sack. Okay. Yeah. Now, as often happens in American history, it's not the murders that get a guy caught. it's if you fuck with the United States is money. Right. We don't really care if you kill people

that we deemed unworthy of whiteness anyway but for the fact that you're fucking with our money. So Lupo gets busted in 1910 for counterfeiting and he got 30 years in Atlanta as a result. Yeah, okay, that tracks. Now he gets paroled in 1920. And actually there's a fun story about his parole. I believe it's Harding who actually

speaks to him and says, look, we're going to parole you, but you got to promise not to engage in any more illegal shit, not to do this, not do this, not do this. And Lupo just, you know, he kind of blows him off. But Lupo gets paroled. And so it was during the time in Atlanta that Ponzi befriended Lupo, whom he was supposed to be spying on for the warden. Now, he also, in addition to befriending a mob boss or a mob high-end functionary, he also befriended a guy named Charles Morse, known as the Ice King.

Charles Morse was the mainborn son of a toower, almost a tower, who went on to be a student at Bodoin College and graduated from there, but kept the towing business going that whole time. So by the time he graduates in 1877, Morse has a ton of money because he's grown his business. He and his cousin formed C.W. Morrison Company, and the two made a killing at shipping specifically ice and lumber, hence the ice king.

Right. Now, by 1890, Morse and C.W. Morrison Company held a monopoly on ice via the holdings that they had in New York and in Boston, which was valued at about $60 million in 1890 money. Holy shit. Yeah. Now, the way that people got ice back then was you cut it out of frozen rivers.

And up in Maine, they had a lot of that. Right. So that's how he was doing it. Now, Morse did what all successful businessmen do when they have a monopoly. He tried to jack up the price of ice. Okay. He was ice gouging. But um...

Yeah. So, of course, he over-extends himself. He drew attention to himself and his ties to Tammany Hall way too much. And that meant that he drew ties to, I think, the first governor of all five boroughs, or the first mayor of all five boroughs, drew attention to him and just made it kind of messy for everybody. So he ends up having to sell his business, but he leverages it so that he still walks away with a $12 million profit. Oh, wow.

Okay. So then he switches to steamship lines because those are really big, especially along the Hudson. And he purchases the People's Line and the Citizens Line. And then he combined those to be, he created a new organization to run those called the Hudson Navigation Company. And then they all conglomerated into the Hudson River Knight's Line. And the money he made from that then allowed him to buy a bunch more steamships and steam lines in the air. including but not limited to the New York and Puerto Rico steamship company, which you can guess where it went, which he purchased in 1907. So now with all of this, Mr. Morse has the money and the capital needed to control the National Bank of North America and the New Amsterdam National Bank and to have a controlling interest in the Mercantile National Bank, all in New York.

Oh, wow. Okay. Now, having this much control over banks and again, remember, this is 1990s. or so. So no regulations, or minimal regulations. This is before you even have the, oh, God, I just, it just left my brain. There's 13 districts in the United States. Federal Reserve.

That, yes. Yeah. This is about six years before that, right? Right. Now, having access to these banks means that he also has access to really high-end depositors, right? So that means copper magnets and newspaper magnates specifically. And that then gave him the capital that he needed to work with copper magnets and newspaper magnets to try to corner the market on copper.

Oh, man. Because telegraphs and telephones require and the electrification of things, there's a lot of copper. I say try because he failed to do so in 1907. And because he failed, speculators start panicking, which leads to the death of the death of, of New York's third largest bank. Completely, right? And so, and that, of course, has plenty of downstream impact. And because it was all semi-legal and hurt a lot of investors,

the federal government went after him. Specifically, Henry L. Stimson, who was the Attorney General at the time. Oh, wow. Okay. Yeah. Now, as a result, Morse was sentenced in 1908 to 15 years' time in Atlanta. but he spent two years trying to appeal unsuccessfully,

and he ends up starting his sentence in 1910. It's kind of a deferred sentence. Okay. Okay, but it's a 15-year sentence. And that's where he meets Charles Ponzi. Okay. So Ponzi is working with Italian mob criminals. Right.

Main-based magnates who are like all about expanding their shit and again, being very, very speculative. And he's seeing these things happen. He's making friends with them, and they talk about various schemes and whatnot. And so, interestingly enough, Charles, yeah, C.W. Morse, he gets out a couple years later because he fakes having Bright's disease by eating soap shavings. And so I think.

think it was President Taft at the time. He... Sounds right. Give him a pardon. And remember, Taft ends up becoming like the Supreme Court Chief Justice. Chief Justice. Right. Crazy fucking smart guy.

Which is the job. Which is the job he always wanted. Yes. He didn't even want the presidency. Right. Right. But, you know, the presidency is my path to that. So he's a really smart guy.

He said something along the lines of like Morris's case calls into question any expert ever. Like, you know. He fooled them by eating soap shavings. Yeah. So then Morse goes off to Europe and continues shipping and finding ways to make money, doing speculation instead of earning. It was a fun story. But that leaves Ponzi in prison until 1913. So he gets out and then he makes his way back to where he first entered the country, Boston.

Now, here in Boston, Ponzi gets married to a woman named Rose and he works at several businesses and fails at every single fucking one of them. he then tries to sell business ideas to people in Europe and this leads him to one of the first schemes and this scheme becomes the bedrock of the Ponzi scheme and this is called the International Relay Coupons scheme do you know what international relay coupons are? I'm going to assume it has something to do with like sending remittances. I don't know what sending remittances is.

Wiring money. Oh, no. Oh, okay. No, this has to do with buying stamps. Okay. All right. I'm here. I'm here for it.

All right. Explain. I barely understand this stuff. But, okay. Essentially, he found a weakness that would net profits for somebody if they speculated in the right direction on the cost of postage stamps. So if you buy postage stamps in Italy, this is right around World War I, right? Right.

Okay. So Italy is not doing well against the dollar. right so you buy stamps in Italy and and then you exchange them for the same class of stamp in the United States using the International Relay coupon then you have spent three cents to get a 10 cent stamp and then you can pocket the seven cents okay honestly it sounds like just stock market shit to me and if you can imagine really that's I mean basically so high right yeah crypto Yeah. Shit.

Yeah. Yeah. And so now this is what's called arbitrage. Arbitrage. Yeah. And to me, it just sounds like stock market. Like I said. But you can imagine if somebody used a bunch of capital to buy a bunch of

fucking stamps. So. Guaranteed money. right? Yeah. Yeah. You see the values. Boom to boom, you know, X to X, here we go. And so all Ponzi had to do was raise a bunch of capital. So he starts up a stock company and starts getting money from investors and the public. And then because he's got so much money coming in from investors or so many people who are so interested, he then charms and sells the idea to different Boston banks. And then because he's got Boston banks on board with doing this, hey, if you just give you. me 5% of it, then you know, you get a return. He promised double their investment in 90 days. What bank wouldn't want double your investment when you're getting 5% annual interest on most stuff, right?

Yeah, yeah, yeah. So if you've got the banks on board, then other people are going to be like, oh, okay, well, if the banks are doing it, I could do that. And if more people are doing it, you say, hey, banks, do you want to miss out on this? And on and on and on and on, right? Yeah, yeah, yeah. So I, yeah, go ahead. Oh, just, just I'm, I'm watching the, the Cohen Brothers movie, Coalescing.

It's all about stamps. You know? Yeah. Did you ever watch, what was the, did you ever watch Tabletop with Will Wheaton? Yes, I did. There was, I watched when he did, I think it was called Titans Fall. He did that 12 or 13 episode thing It had the gal who

She's on critical role now I think her name's Laura It had her in it I think But anyway Well the the The show of his that I'm thinking of Was where he would talk about a A tabletop game

And in this case The game was Fiasco Okay Which is a cooperative game That in which the players Take on roles in a movie like Fargo or some other kind of Cohen Brothers movie. And the whole point of it is, this is all going to end up being a complete disaster.

And we all know it's going to be. Yes. But we cooperate and, you know, you create scenes and individuals can win essentially by, you know, coming up with the best ideas in a scene. Sure. And so I'm just watching. I'm listening to you describing this scheme. And I'm just thinking of the back and forth at the table playing fiasco around the, like, this is going to end really badly.

Yeah, yeah, it is. Okay. All right. So I got an article from the Smithsonian that talked about it, made it more clear than I could. So I'm just going to quote from that. I'm quote, it came to him, Ponzi, while opening his mail one day in August 1919. As Ponzi relates in his shamelessly exuberant autobiography, the rise of Mr. Ponzi, a business correspondent from Spain, interested in learning more about Ponzi's aborted journal, had enclosed a small paper square that put the well-oiled wheels of Ponzi's imagination into overdrive. The little scrap of paper was an international postal reply coupon, and the Spanish correspondent had enclosed it in a prepayment of reply postage.

purchased in a Spanish post office for 30 centavos, it could be exchanged for a U.S. postage stamp worth five cents, a redemption rate that was fixed by international treaty. But the Spanish peseta, Ponzi knew, had fallen recently in relation to the dollar. Theoretically, someone who bought a postal reply coupon in Spain could redeem it in the United States for about 10% profit. Purchasing coupons in the country with weaker economy. could increase that margin substantially, he reasoned. It should be possible, then, to make a financial killing by buying huge quantities of these coupons

in certain overseas countries and redeeming them in countries with stronger currencies. Ponzi called his new business the securities exchange company and set out to promote his idea. Wow. Right? The thing that gets me is the extent to which this is this is the idea that okay if I can just make this work on a big enough scale and and you know do you remember like having that one classmate who would look at something in science class

and immediately think okay well I can figure out now how to invent perpetual motion because I've learned this one formula sure and all you got to do is figure it and it's like okay what you're not seeing is that there's energy lost their right you know that's that's not how physics works you can't just scale that up you can't just reverse that and make it way it's like oh that i feel like that's the exact kind of kind of quote unquote genius that ponsie had yeah a bit a bit like there's there's there's all kinds of issues with this idea that you're not seeing yeah or there's all kinds of issues

that you're going to stay ahead of okay fair So in January 1920, Ponzi starts his new business, benignly called the Securities Exchange Company. This was the beginning of what we would now know is a Ponzi scheme. People invested a total of $1,800 with him on the first day. And the next month, they got paid everything that he promised them. And that's because he got money from other investors. Okay. So now my question is, was this at this.

point was he doing that because the initial, you know, postage exchange idea not working out? No, the postal exchange was the bedrock of it. Okay. So he was saying, look, if you invest this money, I'm going to get these stamps and they're going to pay off big. Well, he never bothered to get to get the stamps. He just used other people's money to pay those people. Got it. Got it.

Okay. Now, if you just, that was kind of what I was asking. Yeah. Okay. So if you just invested $100 and you got $150 in return, you're going to tell your friends and you're probably going to reinvest. And now you and all your friends are investing $120. Yeah. And then the next month, you get $180 in return.

Holy shit. This guy's a wizard. Right. Right. Right. And he keeps paying everything he promises because he keeps getting money from new investors. So by March, so January he starts this with like 18 people. Right.

By March, he is hiring agents and paying them generous commissions, which this sounds to me like Charles Keating level shit. Yeah. And then they went and they would get more people to invest and more people to invest so that in March, remember in January he took an $1,800. In March, he took in $25,000 in investments. Fuck. And he was doing it from Boston down to New Jersey. Now, Holy crap.

Word of this spreads. And so did the investments. And so by June, the Boston newspapers can't write enough about him. And he's just almost daily stories about his financial wizardry. And so word, spreading. So by July, he's getting a million dollars a day. Now, I just want you to keep an eye on the calendar for this, okay? Started it in January with $1,800. By July, it's a million dollars a day. Right. So you've got this constant flow, and that means that Ponzi now has access to a

tremendous amount of capital, and he now is able to buy a controlling interest in the Hanover Trust Bank of Boston. Oh, shit. So now he's taking people's money. He's putting it in there, right? And now that account is just fucking huge. And then he's moving money through that. And then he's putting it in another account and on and on and on.

Now, by this point, he's got more legitimacy, more access, and he's expanding his reach. And his company is stretching from Maine down to Jersey. And people who invested their money loved making that money. Oh, my God. So they're going to reinvest. Why wouldn't you? Right. People were mortgaging their houses so that they could invest more.

And so long as the money was flowing, everybody was making money. And Ponzi had built this business model on the lessons that he had learned from Lupo and Morse in Atlanta, as well as looking at what Zerasi had done in Montreal. And so he realized Zerasi's mistake was, oh, you invested your money. I'm just going to put it in this account and then use next month's deposits to pay these people. and on and on and on. Now, the other thing was if you keep the money flowing like that, you could promise huge amounts to people, and then you could pay off those huge amounts to people,

and those people are going to do word of mouth advertising for you. Right. And he largely targeted just the Italian working class immigrants, too. Okay, yeah. Because remember, you've got all these young men coming to America to try to make their fortune and go home. So he's praying on their hope. So, and here's the thing.

They're all making money. Right. Right. So if you take your hand out of the thing, if you don't reinvest, you did it, dude. Well done, right? Yeah.

Yeah. But who wants to do that, right? So reinvest. And of course, Ponzi's very, you know, and he's paying people to get you to keep doing that. Now, and then he would use the capital that he was just flowing through him. You use the capital to buy controlling interests in more banks and expand more.

And so he's using the international relay coupons to give him the leverage needed to keep things going. Because when banks would be like, well, what's your collateral? I was like, oh, check out this thing we've got going. And, you know, it's just, we're just going to cash these in. And the math does math on that. And, you know, the thing. is he never actually fulfilled the promise of doing that, and we'll get to it in a minute, and it's July. So as long as more investors keep coming in, he can take care of the investments

without generating any real profit, and he can use this model to give the appearance of capital, which is going to then attract businesses, investors, and banks. Now, eventually, the old Boston Brahmin wealthy people get wind of this, and you know they want to make some of this money. Right. Three quarters of the Boston police force was investing in this scheme. Oh, no. And the money kept coming in. And he never actually had to tend to the things that he promised the profits on, the IRCs.

Now, logistically, the IRCs was not going to work at all. I think it was something like, in order to pay off all of the investments that he had promised, I think he had to have like two Titanic's full of IRCs. Yeah. And like I forget the exact number that they needed, but, uh, and maybe I wrote it down somewhere, but I think there were only 16 million in total circulation. And he knew this, right? So now he is, he's using the money to live it as large as he can.

He gets himself a mansion with like 14 rooms. He buys two cars. He gets a custom car made for him because it's, It's honestly, it reminds me of those guys who do prosperity gospel, right? You got to look like it so that people will give it, right? And then he starts buying businesses in all sorts of other or buying interest in all sorts of other businesses. Again, not real estate, businesses that are working. And the reason why he's doing this is because he knows at some point someone is going to ask the important question.

And he has to be able to like pull from somewhere. Right. So I think he buys like a macaroni company. He buys a couple other import expert companies. I think there's a wine company involved, which is interesting to do in 1920, but I think it's a Canadian wine company. Anyway, business profits aren't normally as high as what he's promising, though. So it doesn't matter really how much he diversifies.

He's going to end up falling short when the bill comes due. All it takes is somebody to point out that the emperor has no clothes at just the right point and the panic will set in right and destroy everything um but in july of 1920 people don't want to listen to that so early july a boston financial writer tries to call it all into question so Ponzi does what what comes you know what what normally uh that you would do uh which is to sue the guy for libel okay now This has a chilling effect, right? Right. Or it's supposed to, at least.

He got $500,000 in damages because it was on, the burden was on the writer, not on the person being liable. So. Okay. Now, no newspaper thereafter is going to be very comfortable challenging the narrative. And I believe it's the Boston. Oh, fuck, I forget what it's called. It's a newspaper that no longer exists. It's the Boston something else.

but they kind of keep after it, but they're kind of the only ones. No other newspaper was willing to challenge the narrative. I kind of feel like the attorneys, the defense attorneys, failed there in terms of discovery. Because that should have been a thing like, okay, well, we're saying, you're fraudulent, we want to see your books. Right. Like, you know, we, our assertion is you're keeping up a fraud, that you don't really have the money, you know, that you're not actually doing the thing you say you're doing. Right.

Let's see the books. Well, okay. So let's, let's put this into like more vulgar terms. Newspaper writes an article about you. And Blaylock fucks goats. Okay. You don't have to prove that you're not fucking goats. It's on them to prove that you're fucking goats.

Yes. So, I think that's where it's coming from. Okay. Yeah. You would sue them, and you don't have to sue them proving, here are all the goats I haven't fucked. Right. You have to tell them, produce proof that I have fucked a goat.

Okay. So I think that's what's going on. All right. All right. Okay. Yeah. Now, a lot of newspapers were eager to get on his good side. he's raking in a million dollars a day

there was the Boston Post actually wrote a paper a story about him in their paper and it was just basically a puff piece on him and it seemed to imply that he was going to do 50% returns in as short as 45 days you know one person even got this much

that was in the story man okay and Ponzi was charming the investigators and charming the newspapers And he's like, if you would like, like regulators come after him. And he says, if you'd like, I can stop taking deposits while you guys investigate. And like, no, no, no, that won't be necessary. That's just silly. Like, he's bluffing right up to the edge there.

Wow. What's funny about this article in the Boston Post was right underneath it is an advertisement for a bank that's offering a 5% annual return. And that's good. but think of the contrast of having these two things be in the same column yeah yeah now as happened so often when you survive the first question you often won't survive the second question because ultimately you're all sizzle and no stake uh he he did not have solid footing to defend himself on and sure enough people kept asking the same basic questions that charm could only deflect for so long uh by the end of the end of the end of

of July. July. Remember, this started in January. By the end of July, a financial journalist pointed out that Ponzi himself was not investing in his own company. What's up with that? Because the money didn't exist. Right.

He couldn't. Yeah. Yeah. And then on top of that, this same journalist pointed out that the foundation of this whole thing was these IRCs and that the number, okay, so I did find this, the number that it would require of IRCs to cover all these investments, which he's promising, would need to be more than six times than what actually existed. And that's if he owned all the ones in circulation, which he most assuredly didn't, right?

Never mind that there weren't even that many that were in circulation and being bought and sold. So at the end of July, beginning of August, a panic ensues. But on the first day of the panic, Ponzi pays out $2 million to people who wanted to cash out. And he does it. And he's doing fine, right? And he's like, I can stay ahead of this. And he basically goes out there. And he charms people while he's doing this.

Oh, yeah, of course I'll pay you. By the way, we have donuts. We have coffee. I mean, he's straight up principals, you know, the staff. as it were. Who wants pizza for lunch? Yeah. Yeah.

Hey, I'll give you extra coupons so that you can wear jeans on Friday. Like, yeah. Yeah. I'm so glad I work in a union state. Oh, Jesus.

Oh, my God. So he's offering free coffee and donuts. He's charming everybody. He actually gets a lot of people to change their mind and reinvest. And he quelled. what could have killed everything right then and there. He gets people to reinvest,

which allows him to keep paying people out. Wow. Now he turns around and hires a publicist. Got to spend money to make money, right? Right. He hires a publicist, but he doesn't realize that the publicist has a conscience. And because who's going to guess that?

Right. Yeah, I mean, fair. Yeah. So the publicist actually asks a lot of questions about the scheme and sees that there's no there there. And then he sells his story to the Boston Post for $5,000. Oh, shit. Now this article runs.

Oh, shit. And see, that's the turn. Yeah. That's the moment at the table where everybody goes, oh, fuck. Right. But Ponzi, he takes it all in stride, doesn't blink, and's like, right, pivot. it and you know so it's early august the article runs like second or third of august and by this time ponzi is unable to stay ahead of it but he's still doing all he can to charm people and and

he's throwing ninja dust everywhere and stuff like this uh and like this is where he gives the interview about like i came here with you know 250 in my pocket and a million and dreams and the dreams have stayed and he's like absolutely just so good at pufferizing and himself, but from the article, people figure out that Ponzi was not $7 million in the black. He was actually $2 million in the red. And actually, if you factor in the interest owed, the number is closer to $5 million in the red. Now, if you find out that your bank or that your investment fund is losing money, what are you going to do? You're going to pull your money out.

Yeah. And so is everyone. else. So this massive run, Ponzi was actually able to cover it, but he was overdrafting like a motherfucker. He was also running for cover at the same time. He was desperate to build up some sort of conglomerate of export-imported-imported-import businesses that would cover these debts, which no such thing exists. And still, the publicist who he'd hired, who had betrayed him, actually admiringly said later, quote, no wonder Ponzi is confident. He sees an apparently unlimited pile of cash.

The public is dippy about him. And Wall Street experts who never did anything like it themselves were offering sure-thing explanations of his operations. Is it any wonder that this thing has gone to his head? Now, all the banks see that, like, he's having to withdraw tons and tons and tons, and some of them start to realize that the money he's controlling, if he overdrafts more, he's going to crash the bank. And sure enough, they start refusing to honor more of his withdrawals.

Now, by August 9th, he is $7 million in the red. This started in January. Wow. But Ponzi is forever the publicity hound and the charmer. And you know what people do when they feel their backs against the wall sometimes? They swing for a home run. And so he's doing that. Now here's a little bit more from the Smithsonian article, because they did it a lot better.

Quote, the public circus escalated. On August 10th, Ponzi gave a luncheon address at Boston's Hotel Bellevue for the Kiwanis Club, which had invited him for a battle royale with mind reader named Joseph Dunninger. I should have looked up Dunninger. But the idea was that Dunninger would, quote, throw the x-ray of clairvoyance on the subtle brain of the little Italian and reveal what he found to the audience, end quote. the Boston Globe reported. But the spectators were so enthralled by Ponzi

that the contest apparently never came off. I just love that, like, they were alive at a time where robbing Paul to pay Peter was detectable by a clairvoyant for the Kiwanis Club. And he was like, yeah, I'll go. It never came off. At 2.45, Ponzi was still fielding questions from the audience. Ponzi audaciously implied that he dealt directly with foreign governments in order to purchase the vast quantities of coupons needed to support his enterprise.

Because the governments from whom he bought coupons profited themselves, they, quote, naturally would not care to reveal, end quote, the exact nature of their business, he explained. The Globe shouted from its front page, Ponzi tells Kiwanis Club how he got his millions. editors at the Chicago Tribune, which also reported on the Kiwanis affair, were more skeptical. The headline read, Ponzi reveals philosopher's stone, zero plus zero equals dollar sign, the headline ran. Wow. On August 11th, the Boston Post made the sensational revelation that the financial wizard was a former jailbird, having served time from 1908 to 1910 in Canada for forging checks. The article, the result of the post's own investigation, ran complete with mugshots of Ponzi from

Montreal police. Later, it was learned that Ponzi had served another term into federal prison in Atlanta for smuggling five Italians from Canada into the United States. So, the Smithsonian wrote about it. I just, I think they were much more concise than I would have been. His criminal past had absolutely seeped into the story and the banks began to actually fail. This scheme killed six Boston banks. Yeah, well.

Yeah. because they'd gotten suckered. Yes. Yeah. Investors got less than 30% of what they'd invested. And in 1920, that came out to a total loss of about $20 million, which comes out to about $321 million in today's dollars. The Boston Post got the Pulitzer Prize for this.

Wow. Yeah. Now, it's November, 1920. Ponzi pleads guilty to one count of mail fraud. He was charged with 86. and he does a plea deal. He says all plead guilty to this one and then we'll do that. And the judge said before sentencing, quote,

here was a man with all the duties of seeking large money. He concocted a scheme which on his counsel's admission did defraud men and women. It will not do to have the world to understand that such a scheme as that can be carried out without receiving substantial punishment. Okay. He served three and a half of a five-year sentence. sentence, but as soon as he got out, he then got charged by the state of Massachusetts. Now, Ponzi, this was a surprise to him, and he thought that, hey, I pled guilty. I made a plea deal.

And state of Massachusetts was like, yeah, that was federal. It was the state of Massachusetts. And he's like, no, no, no. And again, like not understanding the system necessarily or just maybe feigning ignorance, it goes up to the Supreme Court. and Supreme Court ruled in Ponzi versus Fessenden that the federal plea bargains have no bearing on state courts. Yep.

So he was not facing double jeopardy, as these were separate jurisdictions and separate charges. Federally, he got busted for mail fraud, and he did a plea deal for that. For the state of Massachusetts, it was grand larceny. I think it was like 11 counts. It didn't matter that it was the same action and the same crime. these were different charges.

Yeah. Now, Ponzi at this point was insolvent and poor again, so he had to represent himself as his own attorney. Oh, that had to be. Oh, oh, to have been in that courtroom. He got acquitted on the first 10 charges. Fuck me. He, uh, the next five charges left the jury deadlocked.

And in the third trial, now this is October 19, 1994. Okay. He was found guilty and sentenced. to seven to nine years in Massachusetts. Okay. Now, he's Italian. It's 1924. So in addition to this, there's also an effort to get him deported as an undesirable alien.

Okay. Ponzi appeals to state conviction, and he was released on bail in September of 25. Oh, no. Yeah. Okay. He fled to Florida and immediately tried to get in on the land boom in Florida. Shit. He offered investors.

very small tracks of land in Florida and a 200% return on their investment within 60 days. Have you ever heard of the phrase swamp land in Florida? This is what that was. So in February in 1926, he gets

arrested and indicted in Florida for fraud and he gets sentenced to a year in Florida state prison. He then appeals. Probably the worst place he's been sentenced to. Oh, yeah, yeah. By far.

And then he gets freed on $1,500 bail. Where does he run to this time? Tampa. Yeah. And in Tampa, he shaves his head. He grows his mustache again. He sails to Texas. And he's, it's Texas to New Orleans to Italy.

And so he sails to Texas. Oh, my God. And he gets to New Orleans. But because he told people on ship who he was, he gets pulled off the boat on the last port of call in New Orleans, and he gets arrested again. Now, at this point, he pleased to be deported. Okay.

Right? Now, Calvin Coolidge is predictably silent on this matter, but Mussolini also didn't answer his plea. He wrote letters to Coolidge and Mussolini. Wow. So then he gets sent back to Massachusetts to finish out his term seven more years. In 1934, Ponsie gets released and ordered to be deported immediately. From the prison. Yeah.

To the dock. Yeah. So walk him down the pier in cuffs. Get him on the goddamn boat. But because we have due process in this country, he immediately requested for a pardon from the governor. The governor rejected that. And so by October of 34, he finally... finally.

Exactly. You know, what do you got to lose? You know? I mean, I suppose, yeah. But could Lord. So by October of 34, he's officially deported. His wife divorces him in absentia in 1937 and squeaks out a living in Boston. He goes to Italy and then immediately goes to Brazil because he was friends with some,

it was either like a brother-in-law of his or a friend of his who was somewhat high up. up in the the Italian fascist apparatus and they told him oh well we have a airplane company working with Brazil and so he worked for an airline company I forget what he was doing like maybe selling selling commercials or something um and so for a couple years he's doing pretty well but then Brazil enters in on the side of the allies and they kill the business with the Italian airline so he ends up broke and he ends up dying in 1949 in Rio de Janeiro in like a Popper's hospital or something. Somebody had to pay for his burial even.

Now, we've got to go back to the original bedrock of his scheme. The IRCs, right? So back to the Smithsonian article I found for this. It was a big idea, one that Ponzi managed to sell to thousands of people. He claimed to have elaborate networks of agents throughout Europe who are making bulk purchases of postal reply coupons on his behalf. In the United States, Ponzi asserted he worked, or in the United States, Ponzi asserted,

he worked his financial wizardry to turn those piles of paper coupons into larger piles of greenbacks. So he's basically rumble stillskin. Right. Pressed for details on how this transformation was achieved, he politely explained that he had to keep such information secret for competitive reasons.

Of course, there was no network of agents, nor for that matter, did Ponzi spend any effort to corner the market on a post-re-re-reply coupons. A final audit of his company's assets after the whole business was over turned up $61 worth of the coupons, according to his autobiographer, according to his biographer. $61. Yeah. But man, did he convince people?

Wow. Okay. So Ponzi was not the first to do the Ponzi scheme. In fact, he'd seen it done in Montreal, right, by Zer Rossi. I also found that it had been done at least by three other people. There was a guy named William 520% Miller. Because we promised that much in an annual return. Wow.

And it worked until it didn't. And then he ends up, like, opening up a grocery store and settling in quietly making money honestly. There's a woman named Sarah Emily Howe. And there was a woman named Adele Spitzer in Germany. Spitzer, there was no law against such a scheme yet, so she got busted for something like poor accounting or something. How, Sarah Emily, how, she ran a women's bank for unmarried women in Boston. Okay.

From 1879 through 1887. So Boston had a history of these schemes already happening, and this kind of fraud already happening, but people forget quickly enough. Okay. And when you're motivated by greed, you forget things pretty quickly. Yes. Yes.

And I would say I'm going to push back just a little bit. It's not just greed. It is there's no social safety net back then. Yeah. It is easy to pray on people. Yeah. You know. So I'm looking, let me see.

Yeah, I think I think I can do this. So that brings us to a man named Bernie Madoff. Yeah. Okay. Now, I'm going to kind of speed run us through this because there's a lot of parallels.

Bernie Madoff started a penny stock exchange in 1960 that turned into Bernard L. Madoff Investment Securities. Right. The name, right? And it's kind of exactly what we... Did you ever see Wolf of Wall Street? No. I've seen clips, but I've not seen...

Did you see the clip where he's like doing the penny stocks, the pink sheets? Yeah, okay. So it's that. It's exactly that. This became the largest market maker on NASDAQ, which was the, and it was the sixth largest market maker on the S&P 500. Bernie Madoff in early 1960s innovated a lot of things like computer use, payment for order flow. So payment for order flow, I do need to kind of explain a little bit. essentially like if you want to buy a stock you go to a stock broker the stock broker then goes over to the wholesaler and brokers the deal for you right and he then sells it and da-da-da-da okay so payment for

order flow is essentially a legal kickback the stock broker broker gets paid by the market maker in exchange for the broker sending clients to that market uh so the profit made on the spread which is purchase price versus sales price, right? That is the profit for the market maker. And a portion of that becomes the rebate commission that gets paid back to the stock broker. Okay. Okay?

So I want to buy a stock. You sell me the stock. You direct me to Leanne Limited Holdings, right? And the difference in what it sells wholesale and what you're charging me, there's the profit for Leanne Limited Holdings. And Leanne Limited Holdings knows that you're bringing business her way, so she kicks you a percentage of that. So you are now incentivized to direct more people to Leanne Limited Holdings.

Got it. It's totally legal, as it turns out, which, okay. Now, Bernie Madoff was also at one point the chairman of NASDAQ. So he's got the legitimacy. He's got the financial success. He's got access. And of course, he gave lots of money to charity. I didn't mention this with Ponzi, but he gave a lot of money to benevolent societies.

Because he's throwing the money around, right? Right. So Madoff gives lots of money to different philanthropic causes, philanthropic causes, as well as donates to a lot of different political campaigns. And a lot of the money that he made that went to these organizations was later frozen and taken away from those organizations harming some of them to the point of their dissolution. Oh, wow.

Yeah. Now, I could go into the same level of detail on the Madoff and his schemes, but it's the only difference really is the scale. It's the same basic pattern, the same basic mechanics, although there was an instance in 1992 where he could have gotten caught,

and he answers very honestly about this when asked, and he said, yeah, the SEC thought that they were Colombo, and they never asked the right fucking questions. So I got to keep going. So they fumbled and bumbled a couple times. They did the same thing in 1999 and in 2001. So Bernie Madoff was allowed to continue. He was allowed to gain steam, gain legitimacy,

and made a lot of money by this kind of fraud. Now, interestingly, by this point, there's tons of regulations. Right. As a result, the banks don't want to touch him. Okay. Yeah. They were better regulations. and they were run by people who wanted to stay

at least close enough within those regulations. And so most major derivatives firms also refuted to trade with Bernie Madoff because they disbelieved his numbers. There's no way you could be doing this. The investigators missed the play, but people who were making money didn't. And in fact, not one single major Wall Street firm

invested with Bernie Madoff. And plenty of those firms' high-ranking executives looked at him suspiciously. Well, yeah. But the investigators totally missed it. And this means that he's not as big a danger to the economy as he could have been. He was just a danger to the individuals and the small groups that invested with him. So who came to me?

Now, Bernie Madoff's sons were the ones that reported him to the government, by the way. Oh. Yeah. Okay. Now, if I recall correctly, they basically, there was an issue of, You're going to pay off all these bonuses to these people, but we can barely cover our investments, what's going on. And he basically waits until, I think he waits until his wife is in the room with him.

And he just says, yeah, it's been a scheme the whole way. It's been a Ponzi scheme from the beginning. And he was unable to pay off the investors' dividends anymore. And that's December 9th, 2008. Wow. So had incoming trade just slowed down? Eventually, you run in. to what you can do with 20 people,

you can do with 40 people, what you can do with 40 people, you can do with 80 people. Well, you can do with 80 people, you can do with 160 people. Well, you can do with 160 people, it's harder to do with 320. You can get it done.

Well, you can do with 320 people, it is much harder to do with 300 or at 640. Got it. It becomes impossible at the 1280 range. Because the scale of expansion necessary becomes too great. Yes. Yeah.

So you just can't stay ahead of it. Like, there's not enough hours in the day. Quite honestly. Yeah. And there's not enough people. Yeah. You know, that's the thing about pyramid schemes. Like, you're going to run out of people for your pyramid.

Yeah. So he admits to it, he gets arrested on December 11th because his sons are working for him. And they don't want to be fucking busted on this shit, right? Yeah. So he gets arrested on December 11th and he posted a $10 million bail. So the, he remains on house arrest. but after he pleads guilty so he comes for the arraignment

just straight up pleads guilty well the judge decides that because of his age his wealth and the possibility of spending the rest of his life in jail I don't remember if this was this judge chin I recall I don't remember if it was Judy Chin or a different name

so I'm not sure if the judge was a man or a woman but the judge rejects his bail because they deemed Bernie Madoff to be a flight risk And he ends up remanded to the correctional facility in New York pending sentencing. Okay, yeah. So people can learn. Now, Madoff also learned because he didn't seek out the publicity that Ponzi had sought out.

In fact, he urged his investors to keep quiet about his work with them. Okay. Similarly to Ponzi, though, Madoff made use of a lot of in-group connections. So, you know, Ponzi started by targeting Italian immigrants. Right. And then he expanded it as the months were on. Madoff did this for much, much longer, but he kept it largely, largely, not all the way, but largely restricted to wealthy Jewish investors because he himself is wealthy and Jewish. So he's using that kind of in-group trust, right?

Right. And he's giving a lot of money to Jewish-based charities. So he gets to do this for a lot longer from 1992 to like 2001. He pled guilty to 11 federal felonies. I'm sorry, not 2001, 2011. He pled guilty to 11 federal felonies. He straight up just pled guilty every single one. He did not offer a plea bargain or anything.

He just said, I did them all. I am guilty. I am not looking for a plea bargain. It was me and me alone. He wanted to keep his sons out of jail. I think so. And other co-conspirators. Because there were other guys.

This didn't protect everyone. For instance, his accountant and auditor, a guy named Dave Freeling, cooperated but got a plea deal, and he was sentenced to a very light sentence in 2015. His financial chief, Phil DePascali, pled guilty to 10 charges and cooperated and turned on five other former colleagues. But he also died of lung cancer before he could be sentenced.

made off in his formal plea admitted that he'd been doing the Ponzi scheme since 1991 straight up called it that he was depositing money into his own account and paying people out of the same account all of this was at the jp morgan chase account and he straight up said yeah it was robbing peter to pay paul uh made off also admitted to false trading activities there's a whole thing where he had uh people back dating when the trade was made so that it would represent when the profit was, et cetera. So let's just say real quick, you know, you buy stock in harmonium at $10 and you sell it at $15. Well, the day that you bought it, it actually was selling for 12. So we're just going to backdate it to last Wednesday when it was selling for 10 for you. And then you sold it at 15.

Well, the day you sold it, it actually sold for $12.50. So we're going to post date it to the day where it goes to 15. Well, we just committed fraud there. Yeah. but since I'm already doing fraud shit, you know. Yeah, for a penny and for a pound. Yeah, pretty much. Yeah. So he admitted to false trading activities and using foreign transfers and false filings with the SEC to hide them.

And he said that he'd always meant to go to legitimate, but it was never the right time. It was always, quote, difficult and untimely and impossible to reconcile his practices and his client accounts. because it gets ahead of you, right? And so he knew that it was just a matter of time before the bill came due, because that's how these things work. Now, on June 29th, 2009, so sorry, he did it from 91 to 08 in December of 8.

And he admitted guilt, right? So it was not a long, drawn-out trial, and he basically tried to center it all on him. Right. He was sentenced to 150 years in federal prison. He was 71 years old. Wow. his statement at his sentencing was as follows.

Quote, I have left a legacy of shame, as some of my victims have pointed out to my family and a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. This was something I will live with for the rest of my life. I'm sorry. I know that doesn't help you.

Okay. I kind of like, there's something earnest there for me. Yeah. Fuck them. But there's still something. Something, you know. Yeah.

Good for him. Now fuck him. Right. Interestingly, nobody wrote any letters of support trying to mitigate his sentence. You'll often get people writing letters of character, right? So fraud? Fuck you. Sexual assault?

Oh, half the cast of your TV show will write what a good guy you are. Mm. Mm. So his wife also begged ignorance as well. And here's what she said, because people were. like, how can you be so heartless? And she says, I'm breaking my silence now because my reluctance to speak has been interpreted as indifference or a lack of sympathy for the victims of my husband Bernie's crime, which was exactly the opposite of the truth. I am embarrassed and ashamed. Like everyone

else, I feel betrayed and confused. The man who committed this horrible fraud was not the man whom I have known for all these years. Now, you can't compel a spouse to testify against another one anyway. Right. She didn't have to make this statement in some ways I'm wondering if this is one of those cases of, don't ask me about my business and I'll take care of you forever. Yeah. Or if this is an instance of, honey, you got to say these things, you got to burn me because this will keep you safe. I don't know what it is. They're performing very well for me. Right. But but also fuck him. But so the judge called this fraud, quote, extraordinary evil, end quote, and went on to say how staggering and unprecedented it was.

And thus the sentencing needed to be similarly unprecedented to discourage any further fuckery. That's me, phrase, not his friend. Right, yeah, yeah. And since federal sentencing guidelines stop at 400 million, and his fraud was to the tune of 65 billion. Gee, me, Chris. That means the guidelines stop at 6.1,000th of what he did. So

Holy shit. Yes. Even when you adjust for inflation, Ponzi was responsible for $321 million of fraud. That's still within the guidelines. This was, yeah. Wow. All right.

Now, two years later, in 2011, one of his sons hanged himself. In an interview in 2011, Bernie's wife admitted that she and her husband actually failed at a suicide pact just before the trial. They took a bunch of pills and didn't die. In February of 2022, Bernie's sister and her husband were found dead, and they're really old. It seems to have been a murder-suicide pact. If he served with good behavior, Bernie Madoff was scheduled to be released on January 34. first 2137.

2137. Yeah. However, given that almost immediately upon being incarcerated, another senior citizen in the prison yard attacked him, giving him facial fractures of broken ribs and a collapsed lung, he's not going to get out with good behavior. Wow. Yeah. He befriended a mafia boss almost immediately, who also quite probably slapped him at one point

for changing the channel. And in 2019, he asked then-President Donald Trump for a pardon or a reduced sentence. The request was ignored. I know. Well, this is 2019. Oh, okay. Now, in February 2020, Bernie's lawyer, Madoff's lawyer, cited hypertension, kidney failure, and lowered immunity just as COVID was starting to ravage the lands. He was trying to get a compassionate release from prison.

The request was denied. because of the magnitude of his crimes. In April 2021, Bernie Madoff died of a mixture of old guy diseases. Like there's heart shit. Kidney shit, I think there was a lung thing. There was a blood pressure thing. And then he was cremated, which actually went against his family's wishes, which I'm not cool with. And they still haven't picked up his ashes, which I found out today that his ashes were called cremains.

Yes. Yeah. Okay. Now, I did some digging and I found 100. 63 investors in the Bernie-Madoff Ponzi scheme. This might not be all of them, but this was what I found. Amongst them were Spanish banks, a Dutch bank, Austrian banks, several Swiss banks, an Irish bank, several French banks, clothing magnate Carl Shapiro,

a fuck ton of investment in hedge fund banks, the Yeshiva University, Japanese banks, French insurance companies, Hasada, or Hadassah, which is a women's Zionist, group, a Korean insurance company, another Korean insurance company, huge Boston-based real estate and newspaper mogul, guy named Mortimer Zuckerman, his charity firm, one of the founders of Violator, which is a record company that put on like, oh, fuck, a tribe called Quest was on the violator album, a guy named Chris Lightley. The Foundation for Humanity, which is Eli Viesel's charity. The Vessel, Vessel?

Viesel. Viesel. Viesel. Very sure. Eli Viesel's charity. Israeli insurance companies. Eli Viesel himself, a Korean teacher's pension company, multiple colleges around the world, very often specifically tied to the Jewish faith, but not always.

A few synagogues. The North Shore Long Island Jewish health system, which was a pension fund. Larry King, the former owners of the Philadelphia Eagles, Norman Barman, the former owner of the New York Mets, Fred Wilson, Stephen Spielberg's charity Wunderkind Foundation, Elliot Spitzer's various family members,

Eric Roth, the screenwriter, Liverpool City Council, which was a pension for workers in the UK. Sandy Kofax, the founder of Bedbath and Beyond Leonard Feinstein, and Kevin Bacon and Kira Sedgwick, were amongst this 163. Wow.

I couldn't trace down how much all of them stood to loss. I think there was a column that said like exposure. I couldn't find out how all of them, how much all of them were, but there were plenty who were. And it's actually that group that I want to talk about in the next podcast. Okay. Yeah. But just to get you to wet your whistle, do you know who Barry Bonds is? Yeah.

Okay. Do you know who is former. teammate on the Pirates Bobby Bonilla is? I've heard the name. Next episode is going to be entirely about Bobby Bonilla. Okay. Okay. So, what have you gleaned?

Oh, man. That if something sounds too good to be true, it probably is. Yeah. And that every single. successful con man Mm-hmm. Has within him a

con victim Yes. They are, they are in many ways their own biggest victims because they successfully convince themselves of

the viability of the scheme Yeah. They buy their own K-Fab. Yeah. Yeah. Yeah.

They kind of have to in order to sell it to everybody else. Mm-hmm. And so, like, even though they know it is K-Fabe, they believe in the power of it. Oh, yeah. And that they can, you know, and when they get tripped up, it's because they've kept it going too long. Yeah, hubris takes over. Yeah. If they had just been quieter.

Like if he had just quit in March, $25,000 is pretty good fucking money. Yeah, I mean, dude. Yeah. Yeah. You know. And yeah, it's just, it is in every way conceivable. A better, wiser, healthier thing to do to. you know, live ethically.

Certainly less stressful. Like, yeah. Like, you know, going back to the whole Cohen movie thing, like, one of the things that always shows up in those, in those films, in those, I don't know if thrillers, the right word for them, but in, in those, you know, movie disaster, human disaster movies is there's always the point in the film where the anti-eastern. hero, you know, central character protagonist is desperately sweating and flailing. Yeah.

You know, and you can see, you know, the, the necktie completely askew, the collar on button, the face flushed. Oh, totally. Yeah. And the complete manic panic. Yes. In their eyes. Yes.

Like, is it William H. Macy in Fargo? Mm-hmm. Yeah. Yeah. Oh my God, how just he's so far over his skis. Yeah. And, and like just imagining actually living through that. Oh, God.

I mean, I don't know about you, but I have had times where I sacrificed my integrity for what I thought was a greater good or a better cause. Right. I was wrong. Yeah. I kind of don't fault myself for doing that because I know. I'm trying to like talk around a thing But I know that

I tried literally everything And still failed And I don't ever have to wonder if I didn't go far enough Right yeah yeah And I still failed and then I had to rebuild my own sense of integrity to myself Right Never mind other people

To myself and that fucking took a while Yeah Because look what I I let myself become Right yeah And again, I'm okay that I did that because it was like, well, can't say I didn't try everything. Right. I didn't sit there and go, well, my honor demands. No, fucking I went for everything.

Yeah. And so my failure was complete and therefore my failure was largely excusable on my, not my failure at integrity, but my, my failure at the thing I was trying to save. At the goal that you were trying to achieve. Yeah. I was able to process that so much cleaner because. of how I had sullied myself to try to accomplish it. That being said, that was some of the most stressful time in my life. Right.

And since then, here's the interesting thing. Since then, there's no fucking way I'm ever doing that kind of thing again. Like, it's not even a question. It's not like, well, you know, I almost, no. No, it's never worth it. I know better. And it's so much like, oh, here's a horrible thing that's going to happen. I guess I have to gird my loins a little because I'm not going to try to get out of it.

It's time to take it head on. And that's how I am. As a union rep, like totally unrelated to that incident, as a union rep, I tell them exactly what I'm going to do. Right. I don't need to keep any powder dry. I'm going to do this now. And here's the contract and all this kind of stuff. Well, you know, I'm like, no, no.

I'm not going to stress about this. Yeah. Now, you might do something that thwarts what I'm trying to do to protect people, and then I'll deal with that. Yeah. No stress. Like, so much nicer. Yeah. And you have now proven to yourself.

You now, you now know from experience that when you wind up in a situation where it's like, well, you know, you could do this thing to get this done. You're like, no, no, I have tried that. Yeah. did that it failed and and making you know the when I say it is not worth my integrity that is not a cop out right and it's not it's not me sitting on a throne somewhere it's no I've I've called through that like like no no I've been there done that I got legitimately know exactly how much it's not worth yeah yeah it's um yeah I don't know there's there's something kind of liberating there, you know, about that is like I forever know.

Yeah. That kind of thing. And, and again, I don't, and I talk about it all the time, how lazy I am. Yeah. I don't have to put that kind of thought into things. Yeah. A lie? Yeah.

Lying, you got to keep, okay. So in, in my first marriage, I, I, I was incentivized by emotional, uh, abuse. to lie about dumb shit like all the time because, you know, if I tell the truth, it's going to be, it's going to be an argument. There's going to be drama. Like, you know, I'm just going to tell her. You know, that got handled. You know, whatever. Right.

And like that by itself, on top of everything else that was shitty background noise in that relationship. The stress of. of having to remember what I had said. Right. Like, oh, my God. Like, I am so glad, like, I'm glad to be in a healthier relationship now just because I don't have to spend the time during the mental bookkeeping. Mm-hmm.

Yeah. Oh, God, it's so much less stressful. Fuck. Yeah. You know, don't get me wrong. There's still going to be uncomfortable instances. Yeah, well, yeah. breaking up with somebody at one point because just didn't feel the spark.

And it's like, I got to stop this. I'm having thoughts about other people. And, you know, you don't have to tell all truths, but you do tell the truth. You know, it's like, this has been wonderful. It's gone as far as it's going to go. I'm very sorry. Yeah. And that's deeply uncomfortable to have to deal with.

Yeah. Beats the shit out of line to someone. Oh, my God. Yeah. Like, yeah. And, and, you know, that's relatively on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, on, is, is microscopic compared to. Oh, yeah.

How many billion dollars? Uh, 65. 65 billion dollars in, in, in everybody's money. Yeah, I just, um, and he was living really well, right? Yeah. It's not worth a story. to me. It's just not. And again, I certainly, you know, fuck, if that washer breaks down again, I'm going to be pissed, right? Right. But it's not, I don't think that $65 billion for lying is

going to do it for me. No, indeed. So, but. So, yeah, that's, that's my kind of takeaway. Well, besides your master's thesis, what are you going to recommend people to read? Um, partly because I want to find people to play it with when I get done with my master's thesis. I'm going to really strongly recommend the Lancer role-playing game. Ah, there you go. It's a mecca combat RPG that takes place in the very, very, very far future. And the system is intriguing the world building, like, I finish doing my reading every night for my thesis, I went up, you know, going to bed and I wind up spending more time reading now fictional history.

Because the world building for this game is evocative and amazing. And yeah, so I'm very strongly recommending the basic rule set, the player facing, so it doesn't have the GM stuff. but the player-facing part of the rules is available for free as a PDF from the publisher, Massif Press, M-A-S-S-I-F. Cool.

Throw that in our Google Drive at some point. Yeah, we'll do. And so, yeah, that is my recommendation. How about you? I'm going to recommend Ponzi, the incredible true story of the King of Financial Cons by Donald Dunn. That's the Smithsonian article

that I found was discussing that book. In fact, some of the quotes came from Dunn's book. So, yeah, you should read that biography of Charles Ponzi. Because it's such a short slice. And yet, I mean, our, let's see, where we are now, yeah, like 17 years ago, it really made the news for a while. Yeah.

Oh, yeah. That was the first time I'd ever heard of a Ponzi scheme, I think. Yeah, it was a big deal. Yeah. So, anyway, give that a read. All right. All right. Well, where will they find us? We collectively can be found on our website at wabawabwabwabwabh.giquehistorytime.com.

Our archive now is up on YouTube as Geek History of Time. And this podcast can be found on the Apple podcast app, on the Spotify, and on the Amazon podcast app. There we go. That was the one I was trying to find. And wherever you have found us, please take a moment to subscribe and give us the five-star review that you know we deserve. And, sir, where can you be found? Oh, let's see. On occasion, you can find me at the Crocker Art Museum doing cool shit. So just kind of check the art mixes and see if I'm not doing something there.

But also, you can find me at Comedy Spot in Sacramento on the first Friday of every month. Let's see. I'm going to assume that you can make it to the September 4th show and the October 2nd show of capital punishment. We are now in our 11th year. We just finished 10 years in the summer. And we are just going strong gangbusters, new folks, new faces. Came close to losing the belt a couple times this summer too. So come and check us out. See if we lose the belt that time. I have shifted over to hosting because our host, and referee, Emily, is on maternity leave. So we have guest stars every month, too. So come check us out. You can get your tickets at sackcomitiespot.com and go to the calendar section, find capital punishment, capital with an O, and buy your tickets. $15.

And, yeah, come treat yourself. Very cool. All righty. Well, for Geek History of Time, I'm Damien Harmony. And I'm Ed Blaylock. And until next time, keep rolling 20s. And if you don't roll a 20, then you can get somebody else to roll for you. No, no.