Caritas, or How I Learned to Stop Hating and Love the Ponzi

Cas Piancey
7 min readOct 15, 2019
Ioan Stoica, the creator of Caritas

There are too many financial frauds pockmarking history to ever discover them all. But some frauds are greater than others, both in scope and the trickery involved to bring in investors. This is why Caritas is such a beautiful example of what I’m terming a “Pure Ponzi.”

A Hiztory Lesson

If you know what a Ponzi scheme is, you likely know who Charles Ponzi was. Charles’ story is a sad and funny one, because what he stumbled upon was a rare and genuine arbitrage opportunity. Though the logistics are difficult to explain (and ultimately would have proven impossible to carry out), he quit his job and ran with it. What he discovered was far more valuable than actual arbitrage: it was “arbitrage.”

Trust me

Charles knew better than to seek out his fortune alone. He set up a stock company, got investors, and then created “arbitrage.” His arbitrage was explained via three basic, nonsensical words, “international reply coupons.” No one uses these today, and the mechanics underlying his supposed arbitrage could be dismantled with enough questions, but few in the public realized this. As investors piled up, more investors came knocking, and soon they were flooding his office, essentially begging him to take their cash. With enough income to pay investors the insane rates he’d initially promised, he was able to acquire more investors. And therein lies the scam.

What Ponzi performed excellently was presenting a misunderstood product to unsuspecting individuals who thought his ideas gave an air of financial confidence and wizardy. The product was real, even the arbitrage was “technically” real, but Ponzi did nothing except collect and redistribute.

Purifying the Ponzi

Seventy-two years after Ponzi’s Scheme, in 1992, Ioan Stoica is fabricating his own Ponzi in the ashes of Nicolae Ceaușescu’s failed communist Romanian state. With the collapse of the oppressive regime in Romania comes a strong sense of optimism and freedom: the Romanian people have released the shackles of a 20+ year dictatorship and are ready for the benefits.

Unfortunately, these benefits are few and far between. The Romanian economy takes a turn for the worse (with perceived instability and high inflation).

High inflation, combined with increasing unemployment, lower GDP per capita, and political insecurity is a recipe for disaster. (image courtesy of Wikipedia)

These conditions create a perfect breeding ground for financial fraud. Enter Caritas.

It’s extravagantly plain: a “mutual-aid game designed to help needy Romanians weather the transition”¹ to democracy, promising to, “multiply depositors’ funds in eight months.”¹ There’s no explanation as to how those returns will materialize. There’s no capital, no fame, no plan. Caritas is nothing — the product is the promise.

The Pure Ponzi. The Purest of Ponzis.

A newspaper clipping showing depositors who received a return of 800% or more. Many of these people would take the full return and immediately reinvest it into Caritas.

DeMoCrAcY iS aWeSoMe

Everyone loves to see a dictator fall, so when Ceaușescu is executed on Christmas Day, 1989, it is no different. Romania rejoices, the world rejoices, the Soviet Union… worries. But in typical worldly fashion, the Romanian Revolution is abandoned as soon as it begins, and a similar group of Communist leaders fashion themselves democratically-elected, social advocates. They’re lying.

Ion Iliescu, the leader of Romania following Ceaușescu’s fall. He’s currently being tried in Romania for Crimes Against Humanity.

In 1992, after years of parlaying accounting into being a Communist fixer, and finally becoming a black market currency trader, Stoica starts Caritas for the equivalent of $500. The company begins in Brașov, but migrates to Cluj-Napoca when the ultra-nationalist mayor (Gheorghe Funar) gives it his blessing — this blessing being unfettered access to a stadium to conduct business (collect deposits) and a request for the local newspaper to carry a daily list of all depositors who received a return of 800+%.

The stadium in Cluj-Napoca where Caritas took in deposits.

This proves to be just the marketing that Caritas needs, and with rules designed to make people desire a Caritas investment even more (one deposit per person, initial investment limited to 160,000 lei, must be Cluj resident), the Ponzi becomes unstoppable.

Give Me All Your Money… No, Seriously. I Need It.

Soon the demand for depositing into Caritas is so high that all rules are lifted. By 1993 you just need to know a Romanian to be able to make a deposit. People are being bussed in from other cities, far and wide. Newspapers print 44 pages of depositors with 800% returns. Tents line the stadium while citizens camp out waiting to give Caritas their life savings.

Now, competing with inflation rates that are already exceedingly high, Romanians have ‘that Caritas money.’ An American in Romania at the time proclaims, “Two Romanians were lining up the other day to pay the equivalent of $750 for a Whirlpool washing machine. I paid $275 for a perfectly good one at home.” ² Meanwhile, prices for condominiums in Cluj surge, going from a modest $6,000 to $18,000 in six months. Car ownership goes from nothing to the 5th most in Europe.

The Unraveling

For over a year, Caritas is going strong. At its peak, between two and six million Romanians (or 10–25%) deposit, expecting sizable returns. It’s estimated that 33% of total government issued leis are deposited with Caritas. Word spreads to the elite in Bucharest and beyond the borders of Romania. Before long, Western media is reporting on the“Caritas mutual aid game” — and not in a becoming light. The equivalent to the FBI in Romania reports to Ion Iliescu that Caritas is sure to fail, but fearing rebellion and civil unrest, he does nothing.

By November of 1993 magazines like The Economist and newspapers like The New York Times are reporting that depositors are waiting progressively longer to receive their payouts and that the scheme — which was doomed from the outset — is cracking at its foundation. Stoica is quick to deny this, though the qualms of investors are hardly eased by his posh lifestyle and nasty treatment of depositors. To quote The New York Times , “The founder of Caritas — who until recently, had been transformed from a little-known bookkeeper into an almost unassailable national folk hero — harshly told a desperate elderly man at the scheme’s office… that he was ‘ruining the game’ by demanding gains from money deposited in July.” For months, no one gets money from Caritas, and then…

And then it ends. On May 19th, 1994, Caritas announces, officially, that the mutual aid game is ‘game over.’ In August, after a few months of promising to return everyone’s money and subsequently refusing to do so, Stoica is arrested and charged with fraud. His sentence is 7–8 years, reduced to 18 months. It’s estimated somewhere between $1–5 billion disappears.

Wh… Why? Why Would Anyone Have Fallen For This?

Besides the desperation of a struggling middle-class stuck with high inflation and a crashing GDP per capita, 1992 Romania found itself nestled between many volatile areas in Europe: the Soviet Union was in the process of being dismantled, the Yugoslav Wars were going full-swing, and the IMF was considering a large loan. When asked how Caritas could possibly offer 800% returns in three months, people had plenty of outlandish theories: black market currency movements, gun running to Serbia, human trafficking, and, of course, “arbitrage.” None of these are in and of themselves impossible.

Additionally, it’s important to remember that the Romanian people had been kept under the thumb of a communist dictatorship for over 20 years, and under a communist regime of some kind for nearly half a century. This is to say they were unfamiliar with the ways of capitalism and privatized corporations. With a childlike naivety, millions of Romanians tumbled headfirst into hundreds of Ponzis and pyramid schemes that sprang up like weeds from the grave of authoritarianism.

Blame the Banks

The easiest explanation for why Caritas failed is that it was doomed to begin with: it depended on ever increasing deposits to fund exponential returns for depositors. But that’s a hard pill to swallow, especially for those who’ve been victimized and those doing the victimizing.

Ioan Stoica was quick to place blame squarely on the shoulders of Western media and journalists. Those who never saw returns were more than happy to blame the banks, Hungarians, the Jews, and George Soros, in no particular order. Some even blamed Transylvanians, who they believed were keen on separating from Romania. None of these were true.

Similar to the famed Russian MMM Ponzi — which began the same year and collapsed the same year as Caritas — desperate citizens rushed into an investment scheme that was too good to be true and came out scratching their heads, absolutely certain their was a vast conspiracy involving (insert theory here). What was actually true was, in both cases, a single man stole billions and billions from millions of people. No conspiracy necessary.

Great, What’s the Moral to This, Bruh?

I’m not sure there is one. The lesson is the same one as always: it’s easy to lose everything and be manipulated. That’s what makes us human. Your only weapon is skepticism.

Stay skeptical, frens.

¹ Verdery, Katherine. “Faith, Hope, and Caritas in the Land of the Pyramids: Romania, 1990 to 1994.” Comparative Studies in Society and History, vol. 37, no. 4, 1995, pp. 625–669. JSTOR,

² Perlez, Jane. “Pyramid Scheme a Trap for Many Romanians” The New York Times