Tag: embezzlement

The true story behind the Ponzi scam

Ponzi Scam Steve Sorensen


If someone tells you that a business proposition is a Ponzi scheme or scam, you automatically assume that no good can come off it. There are many ways to describe scams, but calling it a Ponzi scam is quite popular. This is because the originator of this idea, Charles Ponzi, became a notorious figure when it comes to embezzlement. Here is Charles Ponzi’s claim to fame. Steve Sorensen.

Charles Ponzi was almost flat broke when he came to America from Italy. After trying several honest jobs, Ponzi landed in prison after forging a bad check, and again for smuggling Italian immigrants to the US.

After moving to Boston and getting married at 1918, Ponzi started buying international reply coupons (IRC) used for replying to overseas mail, and exchanging them for more expensive stamps in other countries. He would hire people overseas to buy IRCs and send it to him in the US where he would exchange them with local stamps which he would then sell. Steve Sorensen

Wanting to earn more, Ponzi looked for potential investors who were looking for a quick buck. He promised 50% in returns in just 45 days, or 100% in 90 days. Ponzi paid past investors with the money he got from newer investors rather than using the profit as payment. At the height of his career, it was told that he made $250,000 a day. Steve Sorensen.

It was only in 1920 that people began suspecting Ponzi of illegal activities. The Boston Post began an inquiry to investigate his returns. The results led to his arrest and was charged with 86 counts of mail fraud, with a debt of over $7 million. For his crimes, he was sent to prison for 14 years. Steve Sorensen

What are The Requirements for Filing an Embezzlement Charge?

When embezzlement is mentioned, it commonly refers to employee theft. But it is just one form of embezzlement as any act of misappropriation of funds that have been entrusted to someone’s care can be considered as the crime as well.

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Image Source: entrepreneur.com

For example, take someone who works in or manages a rental car business that does not own the vehicles. If he allows anyone else, like a relative or friend, to just show up and use one of the cars, even if there is no intention of keeping it, they could be charged with embezzlement.

For an embezzlement to be charged, the following factors must be met:

  • The two parties involved must be under a fiduciary relationship, which means one of them has the power to act on behalf of the other. The relationship or partnership is based trust, honesty, and loyalty.
  • The defendant or accused should have acquired the property because of the said relationship. It is either it was his responsibility to take care of the property, or it was entrusted to him.
  • The defendant or accused must be proven to have taken ownership or fraudulently used the property in question.
  • The actions of the defendant or accused were intentional or intended to deprive the owner of its use.
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Image Source: restaurant-hospitality.com

Hi, Steve Sorensen here, a Certified Public Accountant and a business consultant who helps advises organizations on varying issues, including employee embezzlement. To know more about me, visit this Facebook page.