Almost thirty years ago, a balding Romanian bookkeeper who set up a get-rich-quick investment fund had millions of Romanians in his thrall.
That was until his ‘miraculous’ venture turned out to be a Ponzi-style pyramid scheme and came crashing down, leaving hundreds of thousands without their life savings.
This week it was reported that Ioan Stoica, a Transylvanian clerk, who some said had the Midas touch, had been made homeless after he was kicked out of his rented studio flat in the central city of Brasov after years of unpaid utility bills.
Caritas was founded as a limited company in 1992 in Brasov with just 500 U.S. dollars start-up capital.
Two months later, it moved its headquarters to Cluj, the capital of the northwest Transylvania region.
It advertised itself a „mutual-aid game,” using the Latin word for ‘charity’ and promised an eight-fold return in six months to Romanians. Many were struggling to adapt to capitalism after decades of a centralized economy under communism were attracted by the scheme.
Initial investments were small, ranging from 10 dollars to 50 dollars. Later the fund demanded much higher investments as it gained publicity and more and more people invested.
It grew in size and fame as public figures, from television stars, the Cluj mayor, and at least one minister praised the scheme and said they’d invested. Reports claimed they were reimbursed earlier in exchange for their endorsement.
Authorities estimated millions of Romanians had invested at between 1 billion and 5 billion dollars according to economists. At least 300,000 were swindled out of their money.
Caritas began to run into trouble in the autumn of 1993, as doubts were spread about the viability of the fund, before finally collapsing in April 1994.
After it went bankrupt, Mr Stoica simply disappeared from public view. Rumors spread that he had fled the country to escape the wrath of thousands who had thrown all their money into the fraudulent scheme.
He was finally arrested in August 1994, when it was clear that there was no money left in the fund.
He was arrested in Cluj and escorted to Bucharest by police officers on a regular commercial flight.
A trial followed and he was sentenced to seven years in prison in 1995, which was subsequently reduced after he appealed. He was freed in June 1996.
Foia Transilvania reported that Mr. Stoica, 76 had been evicted from his flat with the help of police over non-payment of bills. He moved back to Brasov, his hometown, after he was released from prison.