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In December 1919, with a capital of $150, Ponzi began the business of borrowing money on his promissory notes. He borrowed the money on his credit only. He spread the false tale that on his own account, he was engaged in buying international postal coupons in foreign countries and selling them in other countries at 100 per cent profit, and that this was made possible by the excessive differences in the rates of exchange following the war. He was willing, he said, to give others the opportunity to share with him this profit. P made a written promise to pay in ninety days $150 for every $100 loaned. P was the consummate con artist and paid the amount due in 45 days. In eight months, he took in $9,582,000 for which he issued his notes for $14,374,000. He paid his agents a commission of 10 per cent. The only problem with the venture was that it was all a fraud and a con. Those paid off were paid with incoming payments. He attracted the attention of the police and ceased selling notes. Ponzi offered and continued to pay all unmatured notes for the amount originally paid in, and all matured notes which had run forty-five days, in full. The report of the investigation caused a run on Ponzi's Boston office by investors seeking payment, and this developed into a wild scramble. Ponzi was insolvent from withdrawals and was in overdraft of $331,000. A petition in bankruptcy was filed. The total withdrawals from July 19th to August 10th were $6,692,000. The claims which have been filed against the bankrupt estate are for the money lent and not for the 150 per cent. promised. Ps took six suits in equity to recover the sums paid to Ds by Ponzi within four months prior to the filing of the petition in bankruptcy, on the ground that they were unlawful preferences. Ds claimed they rescinded their loan contracts for fraud and thus were entitled to the money. All the bills were dismissed, and the dismissal was affirmed by the appeals court. Ps appealed.

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