Uncharted: Crime and Mayhem in the Music Industry, episode 025: The Boy Band Ponzi Scheme

The 1920s were a time when people were after easy money. Everyone flocked to the stock market buying up shares in small companies with borrowed money. And for a while, returns were good. But this go-go atmosphere also attracted swindlers and con artists. Carlo was one of them. He arrived in the U.S. from Italy with $2.50 in his pocket. He’d boarded the ship with more but lost it gambling during the trip. He eventually made his way to Montreal where, as a bank teller, he was able to make connections with many new Italian immigrants. This bank was a bit weird. It was paying very high interest, higher than all its competitors. Its story was that profits from real estate investments were generating these interest payments. Except that they weren’t. All these payments were funded by deposits from new customers, which was fine so long as the bank kept getting new customers. When the flow stopped, the interest payments dried up and clients demanded to withdraw their money. It didn’t take long for the bank to fail. The owner ran off to Mexico with whatever money was left. But Carlo was intrigued. By 1920, he was in New York City running a company that promised to double investors’ money in just 90 days. And if you were a ground-floor investor, that’s exactly what happened. You were paid promptly. By mid-1920, Carlo’s company had made millions. Investors clamored to give me money, handing over their life savings and mortgaging their houses. But then several people got suspicious. How could Carlo keep offering such amazing returns? He couldn’t, of course. The profits could only keep coming as long as he brought in new investors. In July 1920, it all started to collapse. Carlos’ debts were huge. Six banks involved in his plot failed. At least $20 million—more than $300 million in today’s money—just…disappeared. When he went to prison, Carols was booked under his assumed name: Charles Ponzi. This kind of fraud now known as a “Ponzi scheme.” The world is full of scam artists, many of whom think they can avoid the mistakes of Charles Ponzi, but the math and the finances never work. Ponzi schemes always—always!—fail. People have tried with stocks, currency trading, beauty products from South Africa, the planning of teak trees in India, church donations, fake loans, and even—and this is true—ant farming in China. And, of course, there was Bernie Madoff’s investment club that fleeced people out of an incredible US$65 billion. There’s also one Ponzi scheme that involved a couple of massive groups that legitimately sold tens of millions of CDs and millions and millions of concert tickets, not to mention millions and millions in merch. But behind it all was a financial scam. This is “Uncharted: Crime and Mayhem in the Music Industry,” episode 25. This is the wild story of The Great Boy Band Ponzi Scheme Get Uncharted: Crime and Mayhem in the Music Industry wherever you get your podcasts. Both Uncharted and The Ongoing History of New Music will be heard back-to-back overnights five days a week on these Corus news stations: Showtimes (all times local)

• • Toronto: AM 640 (4-5am)
  • London: 980 CFPL (4-5am)
  • Vancouver: 980 CKNW (1-2am)
  • Edmonton: 630 CHED (1-2am)
  • Calgary: QR77 (770 AM) (1-2am)
  • Winnipeg: 680 CJOB (1-2am)

© 2024 Corus Radio, a division of Corus Entertainment Inc.