In the mountain area, the New Year wasn't much of a festive occasion. First, there was the continuous snow, and second, Brook, being a small county, couldn't compare to the hustle and bustle of New York.
Nyle had a rare moment of leisure. During this time, there wasn't much farm work to do. The only task was taking care of the cows and livestock. But since everyone in the house was restless, aside from shoveling snow in the morning, Patrick handled the rest of the chores on his own.
He was the type of person who couldn't stand being idle. When he had free time, he felt uneasy. Sigh...
Fredrick passed the New Year and not long after left for Chicago to inspect his hotel. Americans didn't really celebrate the Lunar New Year, or more specifically, the German-Americans didn't.
"What does Mr. Wilkie do?" Aunt Jinji asked Nyle as she brought him a plate of oatmeal porridge.
The day before, she had received a large package from Wilkie in New York. At first, she wondered who had sent Nyle so many things. It was only when the mailman mentioned Wilkie that she realized.
"He's a lawyer specializing in taxation and business management, with his own firm," Nyle replied, taking the plate while opening a document.
It was the infamous "Ponzi Scheme" case!
The document talked about Charles Ponzi, the true originator of the Ponzi scheme. He was an Italian-born speculator who immigrated to the U.S. in 1903. Having worked various jobs, including as a painter, he dreamed of getting rich. He had served time in Canada for forgery and in Atlanta, U.S. for human trafficking. After years of chasing the American Dream, Ponzi realized that the quickest way to wealth was through finance.
So, starting in 1919, Ponzi, hiding his past, arrived in Boston and designed an investment plan to sell to the public. The plan seemed simple: invest in something and get high returns. But Ponzi deliberately made it complicated so that ordinary people couldn't understand.
At that time, World War I had just ended, and the global economic system was in chaos. Ponzi took advantage of this. He claimed that buying a certain postal bond from Europe and selling it to the U.S. would be profitable. Due to factors like policies and exchange rates, many financial actions were hard for ordinary people to understand.
In reality, anyone with basic financial knowledge could easily see that this plan would not work. But Ponzi, on one hand, mystified the financial details, and on the other, set up a huge bait.
He promised that all investments would earn over 50% in just 45 days. He also provided "proof" by showing that the first group of investors had indeed received the promised returns, prompting more investors to follow.
In about a year, nearly 40,000 Boston residents, mostly poor people with dreams of wealth, invested in Ponzi's scheme, amounting to about 15 million dollars, with an average of a few hundred dollars each. At the time, Ponzi was hailed by some naive Americans as one of the three greatest Italians, alongside Columbus and Marconi, because he had "discovered money" like Columbus discovered the New World.
Of course, as time went on, the Ponzi scheme was unsustainable. But what about Ponzi's punishment for defrauding $15 million?
A nine-year sentence!
In reality, he served just over a year before being bailed out!
Hahaha, the cost of crime was so low it was outrageous. That $15 million in 1920 was equivalent to about $1.5 billion today. Ponzi declared bankruptcy and got away without paying a single cent to the victims.
Moreover, Ponzi spent over $140,000 just buying jewelry for his wife. The way he transferred assets was blatant and obvious, yet nothing could be done to stop him.
At that time, both the U.S. and the world had virtually no effective regulation on the financial industry. Financial crimes thrived, and the federal government's oversight was almost nonexistent. The only investigation came from the IRS.
And everyone knew that the IRS was negotiable. If you paid a fine, they would either not prosecute or pretend the matter never happened. They were quite "face-saving" at that time—once they collected the fine, they kept quiet, and everything went back to normal, as though nothing had happened.
"Truly a capable man," Aunt Jinji said, genuinely impressed by Wilkie. It was rare to hear her praise someone like this.
"Quite capable..." Nyle put down the document, sighing.
Of course, he wasn't admiring Wilkie's abilities but rather lamenting how the financial industry in America, especially those dealing with loans and credit, could be so lucrative with the right boldness.
Any kind of shady scam could make money, and no wonder the state could boldly set up an agricultural fund without fear of being caught. Even if it were exposed, so what? The people managing the fund would be sacrificed, serving a short sentence in the state prison, and $5 million would end up in someone's pocket.
In this day and age, prisoners, especially hardened criminals, weren't the only ones with connections. There were powerful figures like Charlie Luciano, who could make phone calls from jail at night, or get out on medical parole anytime, living as if in a luxury hotel.
Even if the fund was fraudulent, once the authorities caught the person managing it, they would probably get a few years in prison. The next day, they would be out on bail, splitting the money with their associates, and heading to Cuba to enjoy their new lives.
"What are you looking at so early in the morning?" Patrick came into the house after tending to the livestock, his sleeves covered in hay.
"Nothing, nothing..." Nyle had already understood the state of financial regulation in America.
Real regulation wouldn't happen for decades. Even then, many people would find loopholes in the laws and use regulatory gaps to make a fortune.
For now, there wasn't much anyone could do about what was happening in West Virginia. It remained to be seen who would end up with the loans from the agricultural fund. If they ended up lending to farmers, it might not matter much.
It wasn't worth the effort to try and recover the money or to imprison people for long. Some things just couldn't be done.