Speaker 1: That's exactly the kind of weaponization of charisma that makes
Speaker 1: me extremely uncomfortable. In fact, I need to go take
Speaker 1: a shower right now.
Speaker 2: Can you hold.
Speaker 3: No, we can't wait for you to take We're gonna
Speaker 3: have to go with you into the shower. I'm afraid
Speaker 3: it's just the rules. That's also very creepy. All right,
Speaker 3: Welcome to Snafu, your favorite podcast about history's greatest screw
Speaker 3: ups and a little bit of reflection about what those
Speaker 3: screw ups say about us as human beings. Spoiler alert,
Speaker 3: most of it's not good. Most of the podcast is
Speaker 3: very good. What it says about us not so good.
Speaker 3: I'm at Helms, your host, and today I am joined
Speaker 3: by someone I've gotten to know over the past several years,
Speaker 3: mostly through a delightful pattern of us helping each other
Speaker 3: out with our book events, and last spring he even
Speaker 3: hosted me at Wharton and Philly to talk about my
Speaker 3: Snafu book, which I think makes me a visiting scholar
Speaker 3: at Wharton. Don't fact check that he's also best selling author,
Speaker 3: a tenured professor at the Wharton School of Business, an
Speaker 3: organizational psychologist, and truly one of the most thoughtful, perceptive
Speaker 3: voices on human behavior and culture. His latest book, Hidden Potential,
Speaker 3: The Science of Achieving Greater Things, debuted as a New
Speaker 3: York Times bestseller, which, by the way, is his sixth
Speaker 3: book to do so. I believe he is the wise, witty,
Speaker 3: and dangerously insightful Adam Grant. Adam, thanks so much for
Speaker 3: being here.
Speaker 1: Wow, that's quite an introduction. I feel like if I fail,
Speaker 1: I'll be living up to the podcast, but not my bio.
Speaker 3: I gotta ask the work you do falls under this
Speaker 3: rubric organizational psychology, which to me like I I feel
Speaker 3: like I have a sense of what you do, but
Speaker 3: that term is still kind of cryptic to me. How
Speaker 3: do you define it exactly?
Speaker 2: Like?
Speaker 3: What is your area of expertise? Exactly?
Speaker 1: Yeah, I'm here to figure out why your closet is
Speaker 1: a mess and then clean it up. No, I think
Speaker 1: the easiest way to describe what I do is I
Speaker 1: study how to make work not suck.
Speaker 3: And do you have a pithy answer? Is it just
Speaker 3: pay people more?
Speaker 2: I try to reform the Michael Scott's of the world.
Speaker 3: That's one I can I get. I can latch onto that.
Speaker 3: In your capacity as a business school professor, it's about
Speaker 3: sort of just deconstructing why and how people behave in
Speaker 3: good or bad ways? I guess is that fair?
Speaker 2: Well?
Speaker 1: Put, that's what I should have said. Okay, good, thanks
Speaker 1: for writing my lines for me.
Speaker 3: Ed Well, I also just copyrighted that so so I
Speaker 3: can't use it. You can, but you just have to
Speaker 3: pay me, that's all.
Speaker 2: Yeah.
Speaker 3: I should start by saying, I think you're the perfect
Speaker 3: guest for today's story because we're going to talk about scams,
Speaker 3: and it strikes me that your training and research and
Speaker 3: expertise in human behavior and psychology. Would that make you
Speaker 3: bulletproof from scams?
Speaker 1: No, it just makes me better at analyzing why I
Speaker 1: fell for them.
Speaker 3: Okay, it makes you more arrogant as you walk right
Speaker 3: into them.
Speaker 2: I'm immune to this. This will never affect me.
Speaker 1: And then oh, I have the language and the evidence
Speaker 1: to explain exactly where I just made it.
Speaker 2: Yes.
Speaker 3: Wait, so have you ever? Have you fallen for any
Speaker 3: scams You've been taken in in some way?
Speaker 1: I don't think I've fallen for a major scam like
Speaker 1: those Nigerian prints emails or a Ponzi scheme, but I've
Speaker 1: definitely been duped by people who take advantage of my
Speaker 1: tendency to trust other people. So sure I overpaid for
Speaker 1: my first car, did not realize it was possible to
Speaker 1: negotiate my first job offer. I don't know if those
Speaker 1: are scams, but I definitely got the short end of
Speaker 1: the stick in those situations.
Speaker 3: I feel like some of that that stuff kind of
Speaker 3: rides into scammy territory. Like I agree with you, I
Speaker 3: feel pretty vigilant about this kind of thing in general.
Speaker 3: But I had a plumber up sell me on this
Speaker 3: huge water filter system, and like I had hired him
Speaker 3: to do this thing, and then he was like, by
Speaker 3: the way, you don't have a water filter in your house,
Speaker 3: and if you thought about it in your neighborhood, you
Speaker 3: should have it. I was like, yeah, okay, great, and
Speaker 3: then I wound up having to hire another plumber like
Speaker 3: six months later for a different little job, and he
Speaker 3: immediately launches into his water filter speech, and I was like,
Speaker 3: oh God, and I felt like kind of a sucker.
Speaker 3: I don't know. And also, as I'm ADHD, and I
Speaker 3: feel like there's so much out there that sort of
Speaker 3: tries to prey upon the ADHD mind in a way
Speaker 3: that's like supposed to help an ADHD person.
Speaker 2: So interesting.
Speaker 1: I never connected this to neurodivergence before, but yeah, I
Speaker 1: can see the shiny object sort of put it in
Speaker 1: front of you.
Speaker 2: Oh I want one of those.
Speaker 3: Yeah, Well, it's targeting your shame. It's like the thing
Speaker 3: that has brought you this like sense of discomfort or
Speaker 3: shame or sort of fear in the world. And they're
Speaker 3: saying like, here's a like this app will fix it
Speaker 3: for you or this whatever.
Speaker 1: Well, I feel like this is the appropriate time to
Speaker 1: tell you about the productivity app that I've been building.
Speaker 3: I would trust you. Today's story is about a man
Speaker 3: whose legacy is so shady that practically every major grift
Speaker 3: of the last century bears his actual name. And yes,
Speaker 3: we're talking about the patron saint of financial flim flam
Speaker 3: ladies and gentlemen, the one and only Charles Ponzi. So
Speaker 3: buckle up. We're going to dive into sort of the
Speaker 3: origin of the Ponzi scheme and it is. It all
Speaker 3: starts with this guy, Charles Ponzi born in eighteen eighty
Speaker 3: two in Lugo, Italy as Carlo Pietro, Giovanni Guglielmo Tebaldo
Speaker 3: Ponzi and that's that's a lot of name right there.
Speaker 3: They're not messing around with that. His family had once
Speaker 3: been comfortable, but by the time he was in college
Speaker 3: at the University of Rome, they were not so well off.
Speaker 3: Instead of studying, the young Ponzi spent most of his
Speaker 3: time schmoozing with his rich friends in cafes and drawing
Speaker 3: down with little cash he had. Upon graduation. Broken restless,
Speaker 3: he did what generations of dreamers have done. He bet
Speaker 3: on America, and so off he went, landing in Boston
Speaker 3: in nineteen oh three. After a few years bouncing between
Speaker 3: odd jobs, he drifted north to Canada, and that, as
Speaker 3: it turned out, is where his real financial education would begin. Now, Adam,
Speaker 3: people who knew Ponzi just described him as unbelievably charismatic,
Speaker 3: like he's the kind of guy who could charm the
Speaker 3: paint off a wall. And I feel like we've all
Speaker 3: known these people and they can really cast the spell
Speaker 3: on us. So I'm just curious, like, from your vantage point,
Speaker 3: how do you see that level of charisma? Is it
Speaker 3: in an innate wiring or is it conditioning, or is
Speaker 3: it something we can sort of learn. I would imagine
Speaker 3: in a business school. Charisma is an extremely hot commodity.
Speaker 1: It can be so it is, it being a mix
Speaker 1: like everything else in human psychology of nurture and nature.
Speaker 1: Some people are born more naturally charismatic than others. They
Speaker 1: exude energy and enthusiasm, and they're very quick on their
Speaker 1: feet and flattering, and they often have superficial charm. But
Speaker 1: it does turn out to be a teachable skill. Wherever
Speaker 1: you start, you can improve from that baseline. Actually, it's
Speaker 1: some experiments by John Antinachus and colleagues where they take
Speaker 1: students and they teach them kind of the memes of charisma.
Speaker 1: They you know, they teach them to like to use
Speaker 1: the right vocal inflection and to make eye contact at
Speaker 1: critical moments, and you know, to master the nonverbal cues
Speaker 1: in terms of their gestures. And then they show that
Speaker 1: even six weeks later, when those students are giving a speech,
Speaker 1: they're judged is more charismatic.
Speaker 2: And huh.
Speaker 1: I'd become more and more reluctant to teach that skill because,
Speaker 1: as I think your description of ponzi is foreshadowing, it
Speaker 1: can be used for evil as well as good, and
Speaker 1: even if the intentions of the person wielding it are good.
Speaker 1: It tends to shut down the critical thinking of the audience.
Speaker 1: There's a paper on the awestruck effect that I loved
Speaker 1: showing that if if you're talking to somebody who's charismatic,
Speaker 1: you actually scrutinize their message less carefully. And so I
Speaker 1: like to think of that as the dumbstruck afact, and
Speaker 1: I think we should all be cautious about that.
Speaker 3: Wow, that is fascinating.
Speaker 1: I mean, I've look when we were talking earlier about
Speaker 1: have I ever been scammed? Like, the closest I've been
Speaker 1: scammed is kind of falling, falling for the spell of
Speaker 1: somebody who's very charismatic. Sure, and I think the best
Speaker 1: defense against that spell is not to interact with somebody directly.
Speaker 1: It's to read their writing, because then you strip away
Speaker 1: a lot of the you know, a lot of the
Speaker 1: kind of the irrelevant information that they might use to
Speaker 1: seduce you. And frankly, AI tools that made that much
Speaker 1: more difficult now. But I almost only want to teach
Speaker 1: charisma to people who have already demonstrated generosity, humility, integrity,
Speaker 1: the basic foundations of character.
Speaker 3: Wow, that's really cool. I have to say, if we
Speaker 3: could teach those people to be the most charismatic, then
Speaker 3: we might have hope for humanity. There was that famous
Speaker 3: Neil Strauss right The Game. The Game, which was essentially
Speaker 3: a version of this right, a kind of teaching of
Speaker 3: teaching people to like pick up women was a a
Speaker 3: very sort of skeazy version of charisma, I guess.
Speaker 1: A twisted version of it, where you wear odd clothes
Speaker 1: like goggles on your head to signal I'm above worrying
Speaker 1: about what other people think of me.
Speaker 2: I set my own trends. I'm a nonconformist.
Speaker 1: And then you go and insult women because it suggests
Speaker 1: that you're out of their league, and then all of
Speaker 1: a sudden, they, in some cases seem to take an
Speaker 1: interest in you. And that's exactly the kind of weaponization
Speaker 1: of charisma that makes me extremely uncomfortable. In fact, I
Speaker 1: need to go take a shower right now, can you hold.
Speaker 3: No, We can't wait for you to think we're gonna
Speaker 3: have to go with you into the shower. I'm afraid
Speaker 3: it's just the rules. That's also very creepy. So in
Speaker 3: nineteen oh seven, Ponzi landed in Montreal and scored a
Speaker 3: job as an assistant teller at a small bank serving
Speaker 3: Italian immigrants, and it was there that he witnessed the
Speaker 3: original model of the scam he would later perfect. His boss,
Speaker 3: Luigi Zorosi, lured depositors with absurdly generous interest rates, and
Speaker 3: amazingly he would pay them, of course, by funneling new
Speaker 3: deposits straight to the earlier investors. It was a beautifully
Speaker 3: unsustainable system. So when the bank inevitably crashed and Zorosi
Speaker 3: bolted for Mexico to avoid accountability, Ponzi was left behind,
Speaker 3: unemployed but newly educated in the fine art of financial
Speaker 3: tom foolery. Now most of us would look at this
Speaker 3: whole mess and think, okay, well that backfired. Maybe crime
Speaker 3: doesn't pay. What can you tell us about the psychology
Speaker 3: of someone who definitely does not learn that lesson, in
Speaker 3: fact sort of learns the opposite lesson of like here's
Speaker 3: more opportunity. I mean, do you see like sociopathy at
Speaker 3: play or is it just sort of that healthy or
Speaker 3: or maybe unhealthy ego with a kind of rules don't
Speaker 3: apply swagger. I mean, how dark is that?
Speaker 1: So there are three traits that would normally predict being
Speaker 1: attracted to that kind of that kind of scheme and
Speaker 1: The psychologists call them the dark Triad, and you hit
Speaker 1: on one of them pretty closely. Anyway, they're being a narcissist,
Speaker 1: being Machiavelian, and being a psychopath. H And I think
Speaker 1: we're probably talking about Machiamelianism here more than we are
Speaker 1: being a narcissist or a psychopath or sociopath, because what
Speaker 1: this kind of scheme is really about is it's about
Speaker 1: manipulating other people and using them for personal gain. And
Speaker 1: you don't have to have a giant inflated ego to
Speaker 1: want to do that. You don't have to feel no
Speaker 1: empathy for other people. You just have to be a
Speaker 1: little bit callous around, feeling like, you know what, I
Speaker 1: can use other people a little bit. And in fact,
Speaker 1: I think part of the appeal of a Ponzi scheme
Speaker 1: is you look at that and you say, well, you know,
Speaker 1: if I can keep it going, actually I'm going to
Speaker 1: profit and no one else is going to get hurt
Speaker 1: because each like each each former investor is going to
Speaker 1: get their money back because of a new one. And
Speaker 1: so all I have to do is perpetuate it. And
Speaker 1: you know, I'm just I'm exploiting a loophole in the system.
Speaker 1: I'm not exploiting people so much. And I think if
Speaker 1: you tell yourself that story, you probably sleep at night.
Speaker 1: And it doesn't it doesn't require much more than a
Speaker 1: little bit of machiavellianism.
Speaker 3: Now we're still in Montreal. Ponzi happened to wander into
Speaker 3: a one of the former client's office from the failed
Speaker 3: bank he had been working at, and he found it
Speaker 3: completely unattended peak early nineteen hundred's security at work. He
Speaker 3: poked around, spotted an unguarded check book and thought, well,
Speaker 3: no mind of ad and he wrote himself a check
Speaker 3: for four hundred and twenty three dollars and fifty eight cents,
Speaker 3: which I love the specificity because that seems so official.
Speaker 3: That's like such an amount, right, it seems like something
Speaker 3: that would be like, oh, that's a no, one would
Speaker 3: just make up that number. But that's a lot of money.
Speaker 3: It's worth about fifteen grand in today's money. So he
Speaker 3: forged the manager's signature and he strolled out just like
Speaker 3: he'd been picking up dry cleaning. He was caught almost
Speaker 3: instantly because he spent this dolen money so loudly that
Speaker 3: Montreal police were basically like, how is this broke guy
Speaker 3: suddenly like flashing wads of money and eating in fancy restaurants.
Speaker 3: So Ponzi was arrested and he spent the next three
Speaker 3: years in a bleak penitentiary outside of Montreal. Not a
Speaker 3: great return on investment so far. Here's a mug shot
Speaker 3: from nineteen ten. Let's take a look. I mean, how
Speaker 3: do you not love this guy? Look at the twinkle
Speaker 3: in his eye and the mustache. This is a mug
Speaker 3: shot and he looks like someone I want to just
Speaker 3: have a beer with.
Speaker 2: I will not be joining you for that vier ed there,
Speaker 2: tell me about.
Speaker 3: His smirk under that mustache. That's like it's got a
Speaker 3: little charmed to it. Yes, wedding.
Speaker 1: He sort of reminds me of mister Bean. Mister Bean,
Speaker 1: he could be Rowan Atkinson in love.
Speaker 2: Actually, there you go. That's what I'm seeing.
Speaker 3: That's not as flattering a the piction. Now this part
Speaker 3: kills me. Rather than tell his mother that he was
Speaker 3: in prison, Bonzi wrote home to Italy, proudly announcing he'd
Speaker 3: landed a job as a special assistant to the warden,
Speaker 3: thus explaining his the letters coming from a prison. I
Speaker 3: think we all lie to our parents, right just to
Speaker 3: kind of make ourselves feel better or look good in
Speaker 3: a situation. Any memorial occasions. Memorable occasions, Yeah, Adam Grant
Speaker 3: lying to mom or Dad.
Speaker 1: Oh, I told a white lie to my mom after
Speaker 1: Halloween one year, that I didn't sneak candy with a
Speaker 1: friend from the candy drawer.
Speaker 3: That's as bad as it gets.
Speaker 2: It's the worst one. I felt so much shame after that.
Speaker 2: Never again.
Speaker 3: Yeah, it's funny these formative things like at that moment,
Speaker 3: how old were you? You were young enough that the
Speaker 3: steaks felt catastrophic.
Speaker 1: I think I was ten, and the friend started it,
Speaker 1: and then the drawer was open, and I felt like, okay.
Speaker 2: Yeah, go for it.
Speaker 3: I remember my friend took like, stole a pack of
Speaker 3: his mom's cigarettes and we were I think I was
Speaker 3: about ten, and and he was like, let's smoke a cigarette.
Speaker 3: And I was like, are you insane? This is crazy.
Speaker 3: We can't smoke. Say, we're children. Cigarettes and candy the
Speaker 3: things that get us in trouble as children. Okay. Charles
Speaker 3: gets out of prison and he heads back down to Boston,
Speaker 3: and this is where he would hatch the truly epic
Speaker 3: scam that would make him a legend, and it all
Speaker 3: began with a quirky little nugget of postal Beueru incracy
Speaker 3: known as the International Reply coupon. This was basically a
Speaker 3: prepaid postage voucher, so you'd buy one at your local
Speaker 3: post office, stick it in your letter to someone overseas,
Speaker 3: and then they could exchange it in their country For
Speaker 3: these stamps needed to write you back, so it was
Speaker 3: kind of like putting a prepaid envelope in your letter
Speaker 3: to someone so that they could write you back more easily.
Speaker 3: Here's where things got interesting. The system was created in
Speaker 3: nineteen oh six with fixed exchange rates, but after World
Speaker 3: War One those rates went completely out of whack across Europe.
Speaker 3: So cut to nineteen nineteen. Ponzi received a reply coupon
Speaker 3: from Spain which had been purchased for about one cent
Speaker 3: in Spain, but it was redeemable for six cents worth
Speaker 3: of US stamps, and that tiny arbitrage flicked a switch
Speaker 3: in Ponzi's brain, so he launches a company to buy
Speaker 3: reply coupons in bulk overseas, send them back here to America,
Speaker 3: and then redeem them for a tidy prophet. Not a
Speaker 3: bad idea. But then comes the big leap. Ponzi scales
Speaker 3: up like bigle He invites investors, promising and eye popping
Speaker 3: fifty percent return in forty five days. Bostonians are flocking
Speaker 3: to him, and soon he has started a company called
Speaker 3: the Securities Exchange Company, which has a very sophisticated and
Speaker 3: legit ring to it, and he had offices stretching from
Speaker 3: Maine to New York. Now it's worth pointing out that
Speaker 3: this business model was definitely cheeky, but it was not illegal.
Speaker 3: Investors were getting paid as promised. In fact, and this
Speaker 3: is very wild. A few government officials who went poking
Speaker 3: around to verify the legitimacy of Ponzi's operations actually ended
Speaker 3: up investing with him. For a while there, everything was
Speaker 3: coming up Ponzi. You know, he's got all this newfound
Speaker 3: wealth and in a tasteful new mansion with enough room
Speaker 3: for his wife Rose and his mother, who he brought
Speaker 3: over from Italy. I mean, come on, this guy's what
Speaker 3: a gentleman. He's taking care of his own mother. But
Speaker 3: Ponzi's projected squeaky clean, charitable image was not going to last.
Speaker 3: What's happening behind the scenes is actually getting pretty shady,
Speaker 3: and even the pros who are coming to investigate him
Speaker 3: are missing the signs. So I'm just curious, like from
Speaker 3: your Wharton perspective, like, what are the red flags that
Speaker 3: you can actually you know, like you talked about the
Speaker 3: what was it the triangle of the dark triad? The
Speaker 3: dark triad? Excuse me, but those are things that might
Speaker 3: exist in someone that we can't immediately perceive. So what
Speaker 3: are red flags that we might jump out at us
Speaker 3: when somebody might be perpetrating a scam apart from the obvious,
Speaker 3: like you know, mustache twirling, et cetera.
Speaker 1: Yeah, the best data on this actually are hedge fund
Speaker 1: managers being interviewed, where you see that the most self
Speaker 1: centered ones, the ones who are most likely to take
Speaker 1: advantage of other people, are the ones who just spontaneously
Speaker 1: start grinning when talking about other people failing.
Speaker 2: And if you feel.
Speaker 1: That kind of shot in freuda and you enjoy seeing
Speaker 1: other people flop in your language, ed, if like seeing
Speaker 1: somebody else's snafu makes your day, that is I mean
Speaker 1: that to me is a huge red flag.
Speaker 3: Wow, yeah, that feels that feels like pretty much everyone
Speaker 3: we see on the news these days. There's just like
Speaker 3: gloating is a real problem right now, gloating, which is
Speaker 3: essentially sort of like the what it's like the bragging response,
Speaker 3: the bragging articulation of schadenfreude.
Speaker 1: Yeah, and then there's a there's a cousin of that
Speaker 1: in some ways moral grandstanding, you know, kind of like
Speaker 1: sort of self promoting as just morally superior to other people,
Speaker 1: which tends to go hand in hand with narcissism, and
Speaker 1: I think we also see a lot of that today
Speaker 1: in scammers. If you believe that you operate a higher
Speaker 1: moral plane than other people, then it's very easy to
Speaker 1: justify and rationalize what you're doing.
Speaker 3: Eventually, Ponzi's activity caught the canny eye of New York
Speaker 3: City Postmaster Thomas G. Patton, now, being a master of
Speaker 3: the post patent, knew a thing or two about international
Speaker 3: reply coupons, like, for instance, there simply weren't enough in
Speaker 3: circulation to explain the magnitude of Ponzi's outrageous earnings. So
Speaker 3: it just like his business model was completely incompatible with
Speaker 3: the amount of money he was making objectively, just by
Speaker 3: the math. Patten wasn't the only one to notice funny
Speaker 3: math here. It seems one of the business secrets Ponzi
Speaker 3: kept closely guarded was that he was not buying many
Speaker 3: reply coupons at all. Rather, to maintain the illusion of
Speaker 3: abundant prosperity, Ponzi was using deposits from new investors to
Speaker 3: pay out the returns to old investors. And there you
Speaker 3: have it, the classic Ponzi scheme. Adam. What blows my
Speaker 3: mind is that the Ponzi scheme isn't just risky, it
Speaker 3: is literally impossible to sustain. Like it's a financial Jenga
Speaker 3: tower and it's definitely going to fall over. Why do
Speaker 3: smart people convince themselves that somehow it won't.
Speaker 1: I think that there are a couple of ways to
Speaker 1: explain this. One is, you know, it's just a sort
Speaker 1: of tunnel vision, right, You're only focusing on getting the
Speaker 1: next investor on board, and you're not looking far enough
Speaker 1: into the future or maybe wide enough to see that
Speaker 1: somebody is about to come and knock over your Jenka tower,
Speaker 1: or if even one block it gets pulled out, you're screwed.
Speaker 1: I think that's that maybe one one factor I play it.
Speaker 1: I think another one that that stands out though, that
Speaker 1: we don't talk about enough is what psychologists call the
Speaker 1: availability biased, which is the tendency to weigh events in
Speaker 1: terms of how easy they are to think of instead
Speaker 1: of how likely they are. And if you've never seen
Speaker 1: somebody go down for a Ponzi scheme, you can persuade yourself,
Speaker 1: I'm not gonna get caught. You know this, like this
Speaker 1: is not even something people go to jail for, right,
Speaker 1: But it's it's especially surprising in Ponzi's case because he's
Speaker 1: already done time.
Speaker 3: Yeah, he's paid for it. Well, he paid for a
Speaker 3: false check. But his his previous boss was was, you know,
Speaker 3: caught for it.
Speaker 1: Yeah, And I wonder, I wonder if then he saw
Speaker 1: his boss make some really odd, obvious mistakes and thought, well,
Speaker 1: if I avoid those, I'm clear.
Speaker 3: You know, to your point about sort of the dark
Speaker 3: side of charisma, Sometimes I think there are people who
Speaker 3: believe they can charm their way out of anything, right,
Speaker 3: or or charm or sort of bulldoze, like they can
Speaker 3: rely on their personalities to just plow through anything. I
Speaker 3: don't know, there's something unhinged about that, and the ability
Speaker 3: to kind of keep going and doubling down further and further.
Speaker 3: I mean, he was opening branch offices up and down
Speaker 3: the East coast, like just scaling up in this massive way,
Speaker 3: and then eventually just not even buying the coupons anymore.
Speaker 3: Just fully Ponzi scheming. If I were trying to run
Speaker 3: a Ponzi scheme, the guilt would be weighing on me
Speaker 3: so much. I just be this sweaty, blubbering mess the
Speaker 3: whole time. But then you have someone like Ponzi who
Speaker 3: just like smiles and shakes your hand and can just
Speaker 3: look you in the eye and crank through all of it.
Speaker 3: It's so bewildering to me.
Speaker 1: Well, I just think you just hit on something really
Speaker 1: critical here, which is we often describe someone like Ponzi
Speaker 1: as shameless, but I think they're better characterized as guiltless.
Speaker 1: Being guiltless is I don't even know if I've ever
Speaker 1: heard the term guiltless. But when you said I would
Speaker 1: feel guilty, I think about the psychology of guilt versus shame,
Speaker 1: and the basic distinction is when people feel guilt, they
Speaker 1: think I did a bad thing. When they feel shame,
Speaker 1: they think I'm a bad person. And shame actually tends
Speaker 1: to have pretty negative effects in most cultures, you know,
Speaker 1: when you start to feel ashamed, you either attack or
Speaker 1: you withdraw. Together, you feel small and you either want
Speaker 1: to obliterate whoever's making you feel small or you want
Speaker 1: to withdraw from the situation. Guilt is much more functional.
Speaker 1: When you feel guilty, you think, Okay, I've got to
Speaker 1: right my wrongs. I have to repair whatever harm was done.
Speaker 1: I have to try to recover my reputation. And Ponzi
Speaker 1: sounds like somebody who just was maybe immune to guilt,
Speaker 1: or you know, at least didn't have a normal human
Speaker 1: response to it, because from the pattern of behavior you're describing,
Speaker 1: doesn't sound like he really felt any remorse around the
Speaker 1: people that he was screwing over.
Speaker 3: But isn't that like, isn't that the definition of a
Speaker 3: sociopath or a psychopath.
Speaker 1: It's certainly one of the foundations of it, right, I
Speaker 1: think I think it's possible to be guilt free without
Speaker 1: being a sociopath. Basically, I think most sociopaths would be guiltless,
Speaker 1: but not all guiltless people are sociopaths.
Speaker 2: Would be maybe the way to capture it.
Speaker 1: Maybe he has convinced himself that he's taking care of
Speaker 1: each investor as he brings on the next investor, and
Speaker 1: so the you know, whatever guilt he feels ends up
Speaker 1: quickly evaporating.
Speaker 3: And also there there you get so much reinforcement as
Speaker 3: your sort of as your wealth increases, so does your
Speaker 3: position in society and your you know, your physical presentation,
Speaker 3: your clothes, your style, your cars, all these things these
Speaker 3: sort of signals of success just being a successful human.
Speaker 3: You know, you're well groomed, all these things, these sort
Speaker 3: of like ancillary, uh, just details of your life start
Speaker 3: to have this like resonant vibration of like you're fantastic,
Speaker 3: You're just a great person. Yeah, and you can kind
Speaker 3: of convince yourself of that.
Speaker 2: Yeah, that's validating.
Speaker 1: And you also have all these clients who love you,
Speaker 1: your your investors, they're so pleased with you, like they're
Speaker 1: actually they're fueling your narrative. They're making the rationalization easier. Wow,
Speaker 1: look at all these people I've helped. Yeah, that tracks
Speaker 1: all right.
Speaker 3: So the suspicions that Ponzi's business were fraudulent were eventually
Speaker 3: confirmed with a damning expose that ran in The Boston
Speaker 3: Post on August second, nineteen twenty penn by Ponzi's own
Speaker 3: publicity man William H. McMasters. In the multi page spread,
Speaker 3: McMasters condemned Ponzi as hopelessly insolvent and fest up to
Speaker 3: his own contribution to Ponz's confidence campaign. Definitely kind of
Speaker 3: a dick move here, just selling out Ponzi to try
Speaker 3: to get your nose clean, I guess. But here's the thing, McMasters.
Speaker 3: He had only worked for Ponzi for one week at
Speaker 3: that point, and during that one week, McMasters had accompanied
Speaker 3: Ponzi to various meetings with his investigators and had been
Speaker 3: privy to what he determined to be damning inconsistencies. McMasters
Speaker 3: claimed that Ponzi was well over two million dollars in
Speaker 3: debt and I haven't done the day calculation on that, but.
Speaker 2: It's a lot.
Speaker 3: It's gonna be a lot, millions and millions upon millions.
Speaker 3: It all came crashing down. On August ninth. The Massachusetts
Speaker 3: State Commissioner of Banks, Joseph t Allen, ordered the Hanover
Speaker 3: Trust Company to cease paying out checks signed by Charles Ponzi.
Speaker 3: They said the account was overdrawn, but the final nail
Speaker 3: in the coffin of Ponzi's reputation came two days later.
Speaker 3: On August eleventh, when the Boston Post definitively identified Charles
Speaker 3: Ponzi as a former convict and further revealed his past
Speaker 3: alias Charles Bianci, under which he had committed all kinds
Speaker 3: of various tom foolery and flim flammery and pick your
Speaker 3: period euphemism for a crime, Adam, Is there a kind
Speaker 3: of sense of dissociation that comes from using it alias?
Speaker 2: Potentially?
Speaker 3: Yeah?
Speaker 1: I mean you're you're basically trying to separate your identity
Speaker 1: from your actions, and if if you're playing a character,
Speaker 1: that becomes really easy to do.
Speaker 3: I do use an actual alias, Like in my life
Speaker 3: sometimes if I if I feel like if I'm attending
Speaker 3: a scheduled event and I know that autograph seekers might
Speaker 3: be there, then I might use an alias for my
Speaker 3: hotel reservation or what you know, restaurant reservation or whatever.
Speaker 3: And uh, I'm not going to tell you what it.
Speaker 2: Is, but tell me. Wait, but I'm going to guess it.
Speaker 1: It's Suprice, isn't it Superrice?
Speaker 3: Good? Yes, it's a good. Guess. It's a little too
Speaker 3: close to home though.
Speaker 1: Actually, here's to me the most interesting version of this question.
Speaker 1: So you know I watched you during your entire run
Speaker 1: as Andy Bernard. Do you ever take on some of
Speaker 1: Andy's qualities and feel like you know whatever you do?
Speaker 1: If you just came from a long day of shoot
Speaker 1: or a couple of weeks where you were in character
Speaker 1: a lot, do you start to feel some distance from
Speaker 1: Ed Helms?
Speaker 3: Like I've often said that Andy Bernard is it is me,
Speaker 3: but with less less self control and less of a
Speaker 3: kind of self editing mechanism. So I sort of have
Speaker 3: Andy Bernard's similar instincts, which I'm not proud to admit,
Speaker 3: but it's true, and I just in Andy. In playing Andy,
Speaker 3: I was able to sort of like just exercise all
Speaker 3: of those demons and get it all out there. And
Speaker 3: then in the real world I'm a much more sort
Speaker 3: of like you know, I just carry myself with more
Speaker 3: self awareness and presence or whatever. But if anything, it's
Speaker 3: more the opposite, where playing Andy Bernard makes me realize
Speaker 3: that there's more of Andy Bernard in me than I
Speaker 3: want there to be sometimes or then I might care
Speaker 3: to admit, and.
Speaker 1: Therefore makes you less like him. It sounds like, what
Speaker 1: do you mean looking in the mirror and saying I
Speaker 1: don't like this reflection? Does that then motivate you to
Speaker 1: overcome whatever those tendencies are.
Speaker 3: Yes and no, although I think yes, certainly, I was
Speaker 3: able to sort of bring insights that Andy Bernard gave
Speaker 3: me into my therapy sessions and unpack things a little bit.
Speaker 3: But I'll also say this, which is that I very
Speaker 3: consciously tried to endow Andy Bernard with a good heart
Speaker 3: and a good and like good intentions and a kind
Speaker 3: of an underlying warmth. And I was at times more
Speaker 3: or less successful in doing that, But it was my intention,
Speaker 3: and I think that actually opened a little window from
Speaker 3: additional self compassion for myself.
Speaker 2: I love that.
Speaker 3: August twelfth, nineteen twenty, Ponzi was arrested and later charged
Speaker 3: in court with eighty six counts of mail fraud. Despite
Speaker 3: thinking he could charm his way out of it, he
Speaker 3: pled guilty at his wife's urging and took a five
Speaker 3: year sentence. He assumed that plea would shield him from
Speaker 3: state charges. It did not. While in federal prison, Massachusetts
Speaker 3: hit him with twenty two counts of larceny. He appealed
Speaker 3: all the way to the Supreme Court, which ruled he
Speaker 3: was not immune from state prosecution. It took three trials
Speaker 3: for the charges to finally stick. In the first, he
Speaker 3: represented himself and walked on ten counts. In the second,
Speaker 3: the jury deadlocked, and then the third his luck ran out.
Speaker 3: He was convicted and given another seven to nine years.
Speaker 3: Do you think the hubris of representing oneself might have
Speaker 3: been his downfall?
Speaker 1: I don't think it did him any favors from what
Speaker 1: I've heard. Yeah, so wild.
Speaker 3: September nineteen twenty five, he finished his federal sentence and
Speaker 3: was released on bail while appealing his state conviction. And
Speaker 3: you know, no lessons learned. He immediately high tailed it
Speaker 3: to Florida, where he tried to enact the same essential
Speaker 3: scheme selling tiny parcels of swamp land. Scammers just somehow
Speaker 3: have this incredible ability not to adapt to negative reinforcement.
Speaker 1: There's a longstanding trend in psychology to talk about the
Speaker 1: bad is stronger than good phenomenon, or it's sometimes called
Speaker 1: negativity bias, where the same bad experience or snafo or
Speaker 1: failure is going to weigh on us much more heavily
Speaker 1: than an equivalent good event or success. And we you know,
Speaker 1: there's a lot of evolutionary handwaving about this. It's like Okay,
Speaker 1: if you didn't pay attention to the threat in the jungle,
Speaker 1: you literally could not survive to pass on your genes.
Speaker 1: But if you underreacted to a celebratory event, nothing bad happens.
Speaker 2: And so we're kind of wired.
Speaker 1: To write to be vigilant in the face of threats.
Speaker 1: But there's obviously variation in the population. We know is
Speaker 1: that the kinds of people who tend to reverse the
Speaker 1: bad is stronger than good pattern and really respond to
Speaker 1: rewards and be extremely optimistic, tend to be highly extroverted
Speaker 1: and low in neuroticism. And actually America is I think
Speaker 1: the most extroverted country on Earth in the national comparisons.
Speaker 1: And the argument around that is, well, the the kind
Speaker 1: of tendency you had to have to sail off for
Speaker 1: a new land based on the promise of a very
Speaker 1: uncertain upside, like you got to be pretty reward seeking
Speaker 1: and optimistic to do that. And so you know, we
Speaker 1: see a parallel in Ponzi jumping ship literally the US,
Speaker 1: And I wonder, is this somebody who's extraordinarily extroverted, who
Speaker 1: you know, experiences the dopamine rush but not the punishment cues,
Speaker 1: not the sense of threat and fear associated with being
Speaker 1: put away, even after he's had to be in jail
Speaker 1: for a couple of years.
Speaker 3: Yeah, a lot of years. He did three years in Montreal,
Speaker 3: seven years in Massachusetts. It's adding up. And now he's
Speaker 3: caught and charged and found guilty yet again in Florida,
Speaker 3: but he gets off on appeal after posting bond, and
Speaker 3: this time Ponzi tries to flee the country on a
Speaker 3: ship bound for Italy, but he wound up getting arrested
Speaker 3: in New Orleans, where the ship was making a final
Speaker 3: port of call. He was returned to Massachusetts to serve
Speaker 3: seven more years in prison until his release in nineteen
Speaker 3: thirty four, when he was immediately deported to Italy on
Speaker 3: October seventh. His wife Rose stayed behind and they eventually
Speaker 3: divorced a few years later. Whatever lucky penny he'd been
Speaker 3: carrying around for the last decade, it finally fell out
Speaker 3: of his pocket. Charles Ponzi would die in a charity
Speaker 3: hospital in Rio de Janeiro, yes, all the way down
Speaker 3: in Brazil, on January eighth, nineteen forty nine, with only
Speaker 3: just enough to his name to cover his burial. The
Speaker 3: dude was just scamming around the world right there, all
Speaker 3: the way to the end.
Speaker 2: Wow.
Speaker 3: And for their dogged pursuit of the Ponzi story and
Speaker 3: the investigative journalism that aided in his arrest, the Boston
Speaker 3: Post was awarded the nineteen twenty one Pulitzer Prize in
Speaker 3: Public Service. And that Adam Grant concludes the story of
Speaker 3: Charles Ponzi. It's quite a whirlwind, you.
Speaker 1: Know, now that I kind of know the ending to
Speaker 1: the story, one thing we haven't talked about yet is addiction.
Speaker 1: I mean, one version of Ponzi's arc is he is
Speaker 1: a gambler. He's chasing the next high every time he loses. No, no, no,
Speaker 1: If I just double down like double or nothing, right,
Speaker 1: I can turn this thing around. And you know, I
Speaker 1: wonder if this was an outlet for a form of
Speaker 1: a gambling addiction.
Speaker 2: Wow.
Speaker 3: That's so that's that's a really interesting.
Speaker 2: Chasing the thrill.
Speaker 3: It's so interesting to think about someone like Charles Ponzi
Speaker 3: and how they might fit into modern society. Obviously, there
Speaker 3: have been so many huge Ponzi schemes, Bernie made Off
Speaker 3: being one of the most famous ones. And again and
Speaker 3: and there's he's a fascinating study in psychology. Have you
Speaker 3: do you know much about his story.
Speaker 2: A little bit, not as much as you do history buff.
Speaker 3: Well, I I know just enough to know that I
Speaker 3: want to know more. But it's Yeah, he's a fascinating figure,
Speaker 3: and I think he definitely falls into the category of
Speaker 3: the delusion that he wasn't harming people, or at least
Speaker 3: that's what people who've interviewed him seem to think. The
Speaker 3: scale of his operation. That's what's so mind blowing is
Speaker 3: that like the buy in from so many different people,
Speaker 3: like the goodness to want, like the desire for this
Speaker 3: to be true is and for this all to be
Speaker 3: like a functioning, healthy way to make money. It's like
Speaker 3: the things we can force ourselves to believe, like he's
Speaker 3: the perpetrator, Ponzi or Bernie made off like they're the perpetrators.
Speaker 3: They're either deluding themselves or they're just like criminals or
Speaker 3: whatever they're whatever's going on with them. I mean, there's
Speaker 3: the investors who are just pure victims. But then there
Speaker 3: are people who are in the organization, right, they're in
Speaker 3: the running of these things, and they have to have
Speaker 3: a sense of like this doesn't add up, or it's
Speaker 3: just like I'm gonna keep my head in the sand.
Speaker 3: I'm not gonna like this spreadsheet looks weird to me,
Speaker 3: but I'm just not gonna ask, because, boy, it feels
Speaker 3: good to trust this, like nice old man Bernie, who
Speaker 3: just seems to know who's been venerated by the great
Speaker 3: financial institutions.
Speaker 1: For decades, there are terms that have been coined to
Speaker 1: describe what happens to a lot of people in the
Speaker 1: orbit of a ponzi or a madeoff BENDERA called it
Speaker 1: moral disengagement. Ten Brunzel and Mesk have called it ethical fading,
Speaker 1: where you just you stop applying a principled lens to
Speaker 1: the situation you're in because other people are accepting it,
Speaker 1: and you assume, well, you know, surely these are not
Speaker 1: bad people.
Speaker 2: I see them, you know, the their.
Speaker 1: Decent parents and partners and carrying bosses, and you know
Speaker 1: they couldn't be doing anything bad, and you lose sight
Speaker 1: of the lines that are being crossed. I think that
Speaker 1: that could be part of what's happening in their orbit.
Speaker 1: And maybe the other piece of this is I was
Speaker 1: thinking about Maria Kanakova, a psychologist turned poker champ who
Speaker 1: wrote a book called The Confidence game. And there's a
Speaker 1: quote in that book that shook me. Maria wrote, the
Speaker 1: true con artist doesn't force us to do anything. He
Speaker 1: makes us complicit in our own undoing.
Speaker 3: Adam, what are you and I complicit in right now
Speaker 3: that we have no idea? Is part of our own doing?
Speaker 2: I really hope nothing.
Speaker 1: But you know, just thinking about what happens to the
Speaker 1: early employees, in the early clients, they are to recruit
Speaker 1: other people into the scheme. Of course, you you try
Speaker 1: to get your friends hired at this great company.
Speaker 2: You try to get your you know, your.
Speaker 1: Family to invest in this you know, this fund with
Speaker 1: incredible returns, and pretty soon you have a strong incentive
Speaker 1: to see no evil.
Speaker 3: I want to bring this into the present moment a
Speaker 3: little bit. I love digging into this story because of
Speaker 3: how hyper relevant it feels today in the age of
Speaker 3: Internet scammers and just this sort of like new generation
Speaker 3: of con artists that have emerged. I mean, it's it's
Speaker 3: funny to think of Charles Ponzi as perhaps now him
Speaker 3: being like an Instagram influencer, you know, who's just like
Speaker 3: taking people in. But here's just a few stats. The
Speaker 3: FBI reported that Americans lost sixteen point six billion dollars
Speaker 3: to online scams, which is a thirty three percent increase
Speaker 3: from twenty twenty three. Do you think that there is
Speaker 3: also a way that sort of the online distance from
Speaker 3: a con artist and like us when we're in our
Speaker 3: own bubble and we don't have other people to sort
Speaker 3: of cross reference with or bounce an idea off of,
Speaker 3: does the solitary nature of internet interaction make us additionally
Speaker 3: more vulnerable or less vulnerable? Or I mean, does seem
Speaker 3: like the Internet is just a cesspool of scam Yeah.
Speaker 1: I would love to see some data on this. I
Speaker 1: have not seen a good analysis. I think I have
Speaker 1: a similar hunch to yours, which is the isolation can
Speaker 1: make it really easy to fall for a scam. I
Speaker 1: think the other piece of it is you're missing some
Speaker 1: of the cues that would normally you know, sort of
Speaker 1: you know, even if you didn't recognize them consciously. You know,
Speaker 1: you interact with a con artist face to face, and
Speaker 1: you start to get a gut feeling sometimes like I don't.
Speaker 2: Quite trust this person.
Speaker 1: I don't know why, but you know, maybe maybe I
Speaker 1: should verify or maybe I should you know, wait a
Speaker 1: little bit, and you're just deprived of a lot of
Speaker 1: those cues over the internet. Sometimes you don't even know
Speaker 1: if it's a human or a bot that's you know,
Speaker 1: that's pitching you. And so I think that that probably
Speaker 1: makes it harder for people to use whatever intuition they
Speaker 1: have around judging people's trustworthiness. What's the what's the New
Speaker 1: Yorker cartoon on the internet? No one knows you're a dog?
Speaker 3: Yeah, of course, Well that's more of a catfish joke. No,
Speaker 3: but I guess it's uh, I guess it works here
Speaker 3: just as well, Adam Grant, This has been really, really
Speaker 3: fun and I just love going down these curiosity rabbit
Speaker 3: holes with you, and I love that your response to
Speaker 3: my questions it very often starts with I'd like to
Speaker 3: see the data on that. Thank you so much for
Speaker 3: coming on Snafoo.
Speaker 2: Thank you for having me.
Speaker 1: I leave it to your listeners to judge the number
Speaker 1: of snaffooss committed recordinated this podcast.
Speaker 3: Snafu is a production of iHeart Podcasts and Snaffo Media,
Speaker 3: a partnership between Film Nation Entertainment and Pacific Electric Picture Company.
Speaker 3: Post production and creative support from good Egg Audio. Our
Speaker 3: executive producers are me Ed Helms, Mike Falbo, Glenn Basner,
Speaker 3: Andy Kim, and Dylan Fagan. This episode was produced by
Speaker 3: Alyssa Martino and Tory Smith. Our managing producer is Carl Nellis.
Speaker 3: Our video editor is Jared Smith. Technical direction and engineering
Speaker 3: from Nick Dooley. Additional story editing from Carl Nellis. Our
Speaker 3: creative executive is Brett Harris. Logo and branding by Matt
Speaker 3: Gosson and the Collected Works. Legal review from Dan Welsh,
Speaker 3: Meghan Halson and Caroline Johnson. Special thanks to Isaac Dunham,
Speaker 3: Adam Horn, Lane Kleine and everyone at iHeart Podcasts, but
Speaker 3: especially Will Pearson, Kerrie Lieberman and Nikki Ator. While I
Speaker 3: have you, don't forget to pick up a copy of
Speaker 3: my book, Snaffoo, The Definitive Guide to History's Greatest screw Ups.
Speaker 3: It's available now from any book retailer. Just go to
Speaker 3: Snaffoo dashbook dot com. Thanks for listening, and see you
Speaker 3: next week.