Top 10 Frauds In The World You Must Know About
It is often said, ‘No fraud is small, it is just that they have not reached their full potential’. From the mass of frauds that erupted across the world, we will discuss the top 10 frauds in the world that shook the masses.
Did you know that during the reign of the Roman Empire, the special guards killed the current emperor and attempted to sell off the empire?
And they succeeded, too!
Julianus bought it for the astronomical price of 250 gold coins per soldier, which equals a whopping 1 Billion Dollars in today’s money! Unfortunately, he was deposed in a short time, and the soldiers were executed for selling something that did not belong to them.
Read on to learn more interesting facts about these frauds.
Top 10 frauds in the world You Must Know About
Financial crimes, from small to massive, have been scattered throughout humanity’s history. The below mentioned frauds in the world will leave you perplexed and shocked.
1. The Original Ponzi Scheme
Total scammed value: estimated $15 million ($220 million today)
Year of fraud: 1920
Criminal Mastermind: Charles Ponzi
When we look at the history of scamming, this scheme has a special position as we see variations of the “Ponzi scheme” or “Pyramid scheme” even today. The recent Ponzi scheme that occurred in 2018 was Bitconnect’s cryptocurrency investment program scam, which ended with a market capitalization of $2.6 billion. Therefore, if we are going to look at the greatest cons of all time, then we cannot miss the original Ponzi scheme.
Charles Ponzi came to America in 1903. In 1919, he set up a small export-import business where he learned about arbitrage, the purchase of assets from one market and selling them to another. Ponzi could buy IRC (International Reply Coupon – which is accepted instead of local postage stamps in other countries) from Italy and sell it in the US for a considerable profit.
The scheme quickly became illegal when he promised 50% profit in 45 days, and he paid the early investors with subsequent ones, thus raking in a massive fortune. Eventually, he was discovered, made to flee the country and die in abject poverty.
2. The Great Insider Trading Scheme
Total scammed value: $200 million
Year of fraud: 1970s
Criminal Mastermind: Ivan Boeski
Ivan Boeski started a brokerage company in the ’60s that bet on mergers and corporate takeovers and, within a short duration, had risen in fortune and amassed a wealth of $200 million. Boeski had been involved with the company’s internal dealings and was aware of corporate mergers even before they were made known to the public – a practice also known as insider trading.
When he was convicted of fraud in 1986, several other scammers were also caught red-handed, and Boeski was charged a $100 million fine and barred from the securities industry.
3. The Madoff Pyramid
Total scammed value: $65 billion
Year of fraud: 2008
Criminal Mastermind: Bernard Lawrence “Bernie” Madoff
If you compile a scammer list for Ponzi schemes, then Bernie Madoff will top off the list where he led a chain of deception that separated $65 billion from his investors within 17 years!
Madoff had a securities firm that he co-founded with his wife known as Bernard L. Madoff Investment Securities LLC. At a point in his business journey, he introduced an investing journey that promised attractive, steady returns.
Just like a classic Ponzi scheme, he paid out to customers who wanted to cash out from the investments made by his subsequent customers. The scam unraveled when the market plunged to the bottom, and more people wanted to cash out.
Madoff was sentenced to 150 years in prison and told to forfeit $170 billion. The US government auctioned off all his assets.
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4. Nick Leeson
Total scammed value: $1.3 billion
Year of fraud: 1995
Criminal Mastermind: Nick Leeson
Nick Leeson’s case is less of an embezzlement case and more of a famous accounting fraud where his fault was not greed but incompetency.
Nick Leeson’s career took off when he was promoted to Barings Singapore’s futures options. According to Barings, he was a trading superstar who raked in millions in profits for the company, but in reality, he was losing money fast. He hid the fact with some clever accounting tricks and falsifying records.
The lie came raveled down when the Kobe earthquake hit Japan, and the Nikkei fell when Nick had based his bets on the hope that Nikkei would rise. He was eventually arrested and sentenced to 6.5 years in Singapore prison, and the Barings bank went belly-up because of this loss.
5. Jordan Belfort
Total scammed value: $200 million
Year of fraud: 1999
Criminal Mastermind: Jordan Belfort
If you have ever seen the movie The Wolf of Wall Street, then you have already seen Jordan Belfort at play. Jordan wrote the original book, which was later adopted by Hollywood and immortalized him.
Jordan Belfort started the financial firm Stratton Oakmont, which forced investors to place money-invest insulative securities promising exorbitant returns. The firm consistently faced some legal action. Belfort confessed to his financial fraud. He served 22 months in prison.
6. Theranos
Total scammed value: $711 million
Year of fraud: 2015
Criminal Mastermind: Elizabeth Holmes
This is another scam story that has hit the screens. The HBO documentary The Inventor: Out for Blood in Silicon Valley details the rise and fall of Theranos. This company competed to conduct multiple tests with a single drop of blood. Founded and run by Elizabeth Holmes, a Stanford Dropout, Theranos was valued at 9.5 Billion Dollars. However, within a year, the company was exposed as fake, and Elizabeth Holmes was convicted of four counts of fraud, each with a maximum of 20 years in prison.
7. FTX
Total scammed value: $7 billion
Year of fraud: 2022
Criminal Mastermind: Sam Bankman-Fried
When cryptocurrencies were all the hype, many crypto exchange platforms arose. One such platform was FTX, founded by Sam Bankman-Fried. Within two years of its inception in 2019, FTX grew to a valuation of $32 billion.
Everything came crashing down when it was revealed that the customer funds were diverted towards another hedge fund, Alameda Research, which Sam also owned. FTX is now facing bankruptcy, and Sam was arrested and is facing a 115-year prison sentence.
8. The Enron Bankruptcy
Total scammed value: $124 billion
Year of fraud: 2001
Criminal Mastermind: Jeffrey Skilling
What is the biggest financial crime? It’s more like the biggest bankruptcy filing!
An energy pipelines and commodities trading company, Enron made creative accounting its middle name and hid its massive debts from its shareholders. The shareholders, in this case, were the employees of the same company whose managers persuaded them to invest in the company stock.
In 2001, the company’s actions imploded, and it filed for bankruptcy. Their accounting firm, Arthur Andersen, also came under heavy scrutiny and was subsequently dissolved.
9. WorldCom
Total scammed value: $18.2 billion
Year of fraud: 2002
Criminal Mastermind: Bernard Ebbers
A bad business decision and some creative accounting tricks landed Bernard Ebbers 13 years in jail. WorldCom was all set to ride the internet adoption era and came prepared by buying service providers and setting up infrastructure until the dot-com bubble burst.
To hide their potential losses from investors, they cooked books, which an internal auditor later reported.
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10. Bre-X Minerals
Total scammed value: $5.5 billion
Year of fraud: 1997
Criminal Mastermind: Michael De Guzman
A Canadian Mining company struck gold (literally!), or that is what they claimed in one of their mines, which led to the rapid increase in their stock prices. But, when another company acquired rights to mine in the same mine, they found no trace of said gold.
The prospector neither denied nor accepted the fact and fell or jumped to his death from a helicopter, and the company filed for bankruptcy. The founder, David Walsh, was also convicted for insider trading.
Caution!
The above mentioned top 10 frauds in the world have shaken the economies and created havoc among people. Financial fraud has been found time and again since the beginning of time. Therefore, as an investor, it is your responsibility to invest in genuine instruments by doing thorough research. Be a vigilant investor and earn the benefits of your hard-earned money.
