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Top 14 Financial Frauds of All Time

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With the documentary  Inside Jobwinning an Oscar, you’d think that massive financial fraud is a modern invention.  Well, think again.

History is full of scams and frauds that removed billions of dollars from the pockets of investors and destroyed entire economies.  This post contains some of the most memorable.

There is one huge difference, though, between the Great Wall Street Ripoff and the all the rest of these history-making scams.  See if you can figure it out, before you get to the end of the gallery.

The Sale of the Roman Empire (193 A.D.)

The Sale of the Roman Empire (193 A.D.)

During unrest in the Roman Empire, the Praetorian Guard (a special army supposedly loyal to the emperor), killed the current emperor and offered the empire to the highest bidder.  The “winner” was Julianus, who came up with a truly astronomical price: 250 gold pieces for every member of the army, which comes out to somewhere around $1 billion in today’s money.  Unfortunately, the guards had sold something that didn’t belong to them, a classic, if simple, financial fraud.  The new “emperor” was never recognized as such and was quickly deposed.

Fun fact: The first offical act of the real emperor who “deposed” Julianus was executing the guards who ran the scam.

Top 14 Financial Frauds of All Time

The Mississippi Scheme (1719)

The Mississippi Scheme (1719)

When Scottish financial genius John Law started a company to develop the then-wilderness Louisiana, he saw nothing wrong with hyping the possibilties rather than the reality.  He convinced investors (including the French government) to back his development scheme.  Shares in his company skyrocketed and French currency increased in value, since it was widely believed France would gain a mountain of gold and silver from what was then only a swampy backwater.  When investors actually received what Louisiana was like, shared plummeted.  Law narrowly avoided being lynched, escaping only by disguising himself as a beggar.  He died in poverty nine years later.

Fun fact: With the exception of New Orleans, Louisiana is still a swampy backwater.

The Diamond Necklace Hoax (1785)

The Diamond Necklace Hoax (1785)

It’s been said that few creatures on this earth are more gullible than a horny priest.  That was certainly the case with Cardinal Prince de Rohan, who was so convinced that he was having an affair with Queen Marie Antoinette (pictured), that he arranged for her to purchase, on her line of credit, a diamond necklace worth six million livres.  Unfortunately, Rohan was, unbeknownst to him, actually having an affair with a prostitute dressed up as the Queen, a ruse conducted by his (former) mistress, courtesan/countess Jeanne de la Motte, who hoped to make away with the necklace herself.   When caught, de la Motte was sentenced to be stripped naked in public and branded with a hot iron.

Fun fact: The resulting scandal triggered the French Revolution.

The Wright Panic (1900)

The Wright Panic (1900)

Never underestimate the power of social pressure.  Financier Whitaker Wright put pretigious figurehead names — lords and ladies, mostly — on the boards of directors of his companies.  As a result, investing his firms became quite the social norm among the well-heeled.  Unfortunately, while his companies looked solvent on paper, they were really only lending money to one another in order to balance the books.  When the scheme became public, shares collapsed, leaving many of his posh pals penniless. 

Fun fact: When Whitaker heard he’d been convited of fraud, he took cyanide pills and died within minutes.

The Original Ponzi Scheme (1920)

The Original Ponzi Scheme (1920)

Charles Ponzi discovered that he could purchase postal coupons at a discount, ship them abroad ,and sell them for full price.  His only lie was exaggerating the financial benefits.  Rather than a modest 5% profit, he claimed the coupons would produce a 50% profit in only 45 days.  Thousands of people practically threw their money at him, as he paid early investors from the proceeds of subsequent ones.  When the epynomous scheme finally blew up, investors lost nearly $10 million.  Ponzi fled the country and eventually died in abject poverty.

Fun fact: After fleeing the U.S., Ponzi became financial advisor to Benito Mussiolini, where his bungling hastened Il Duce’s decline.

The Eiffel Tower Sale (1925)

The Eiffel Tower Sale (1925)

Why buy the Brooklyn Bridge, when there’s something even cooler on the market? When “Count” Victor Lustig discovered that the famous Eiffel Tower was in need of repairs, he faked some government papers showing that he was authorized to sell the tower for scrap metal.  He managed to get not one, but two scrap metal dealers to come up with a total of over $200,000 in bribes to throw the multi-million dollar contract their way.  Then, he skipped town and returned to the United States, where he continued a lustrous career as America’s most successful swindler.

Fun fact: VIctor Lustig is the also author of “The 10 Commandments of Con Men.”

The Match King Hoax (1929)

The Match King Hoax (1929)

Few moguls of the roaring twenties roared louder than Ivar Krueger, who owned banks, film companies, newspapers, mines, telephone companies and railways.  When he tried to form a monopoly to control manufacturing and distribution of all the world’s safety matches, few questioned he’d succeed.  International banks begged him to let them invest, not knowing that his many companies existed only on paper, profitable only because they were invested in each other.  The scam began to fall apart in the great crash of 1929 when investors wanted to cash out, but he managed to hold on until 1932.  At that point, he saw it was pointless to continue and shot himself in the chest. The financial world mourned, until it became publicly known that Kreuger spent all his investor’s money — half a billion dollars — on his luxurious lifestyle.

Fun fact: Krueger was reputed to have faked his death and lived the high life for years in the distant island of Sumatra.

The Baker Estate Swindle (1936)

The Baker Estate Swindle (1936)

In 1839, one Colonel Jacob Baker died, leaving an estate that comprised most of the land where the city of Philadelpia is located, a tract worth up to $3 billion.  Under the leadership of William Cameron Morrow Smith (pictured?), Baker’s heirs formed a legal association, open for a small fee to anybody with the last name “Baker”, to pool their resources for the legal battle to recover their share of their rightful inheritance.  There was only one problem; Colonel Baker was a fictional creation and there was no inheritance.  Smith and his cronies collected nearly $25 million before the swindle was shut down in 1936. 

Fun fact: A similar scam is pulled on folk with the last name Drake, inheritors of the Elizabethan explorer who discovered San Fransiciso bay.

ZZZZ Best Cleaners (1986)

ZZZZ Best Cleaners (1986)

Barry Minkow was the wunderkind of Wall Street when he brought his company public.  Shares in ZZZZ Best, an industrial rug cleaning firm, exploded in value, creating a company with a stock valuation of $200 million.   Unfortunately, ZZZZ Best didn’t really exist, didn’t have any contracts, and had originally been funded through a series of credit-card thefts. Finally exposed in 1987, the stock dropped to zero, and Minkow landed 25 years in prison.  The actual assets of the erstwhile $200 million firm — a few trucks and some cleaning equipment — were sold for $64,000.

Fun fact: In his heyday, Barry Minkow was a featured guest on Oprah Winfrey’s TV show!

The Great Insider Trading Scam (1986)

The Great Insider Trading Scam (1986)

Ivan Boesky amassed a fortune of more than $200 million by betting on corporate takeovers, many of which occurred only a few days before the announcement of the acquisition. When charged with insider trading, Boesky cooperated with the SEC, and recieved a negotiated sentence of only 3.5 years (and only 2 of which were served.)  He was also  fined $100 million, a fraction of his ill-gotten gains and was permanently barred from working in the securities industry.  Ironically, fellow-fraudster Michael Milken, who was also convicted, managed to retrieve his reputation after a sort, and is now a philanthropist, respected by those who have short memories.

Fun fact: Boesky is the prototype of Gordon Gecko from the movie Wall Street.

The Savings & Loan Scandal (1989)

The Savings & Loan Scandal (1989)

Few fraudsters have been as brazen as Charles Keating, the most visible of a cadre of corporate officers running a number of huge Savings and Loan institutions. These companies operated like banks, but without the regulations, and therefore made a series of bad investments, the main purpose of which was to enrich the corporate officers. Keating and crew never told their investors that they were investing in worthless junk, and Keating was eventually arrested and convicted of securities fraud.  As a result, government regulation was promptly tightened, and then promptly untightened, since the financial industry essentially owns the U.S. government.

Fun fact: Five senators were implicated for providing political cover to Keating and his cronies. One of them was John McCain.

The Enron Bankruptcy (2001)

The Enron Bankruptcy (2001)

Ken Lay was the hapless CEO of Enron, a company that employed approximately 22,000 people and claimed revenues of nearly $101 billion in the year 2000. In 2001, however, it came out that Enron’s finances were a cooked up fiction, involving all sorts of “creative” accounting.  The scandal brought down Enron and it’s laughably incompetent “auditors” the Arthur Andersen accounting firm, and resulted in the Sarbanes-Oxley act, whose main purpose is to make it financially difficult for small companies to issue stock. (Score one for big business!)

Fun fact: Fortune magazine named Enron “America’s Most Innovative Company” for six consecutive years, thereby proving that Fortune magazine is written by idiots.

The Madoff Pyramid (2008)

The Madoff Pyramid (2008)

The only advantage of financial meltdowns is that they smoke out fraud. Compared to the havoc wreaked by Greenspan’s course of deregulation, Madoff’s ponzi scheme was chickenfeed, involving a measly $18 billion.  However, the fact that Madoff was able to keep the scheme going for so long is ample testament to the fact that the U.S. government — despite repeated scandals, frauds, ripoff, hoaxes, and general fancy mischief — isn’t really serious about regulating the financial sector.  The SEC even investigated his operations and failed to find anything wrong, even though the impossibility of his business model was staring them in the face.

Fun fact: Madoff claims that most of the bankers through which he worked knew that he was pulling a scam, but said nothing.

The Great Wall Street Rip-Off (Ongoing)

The Great Wall Street Rip-Off (Ongoing)

By far the biggest fraud of all time, the great Wall Street ripoff involved more far money (in real dollars) than all the financial frauds of the past put together. The fraud, perpetrated by several large financial firms, consisted of selling fraudulent mortgage-backed securities, thereby creating a financial bubble. When the bubble burst, the resulting crash destroyed trillions of dollars of real investment, threw most of the world into a crippling recession, and created massive unemployment. The fraud — and all the disasters that followed — stemmed from the almost complete deregulation of the financial industry, spearheaded by Alan Greenspan (pictured), and abetted by both political parties.

Fun fact: Unlike ALL the other previous frauds in this post, The Great Wall Street Ripoff is going entirely unpunished. Despite the fact that the CEOs of the financial institutions repeatedly lied to investors and profitted mightily from the fraud, it appears as if nobody will serve a single day in jail. This is apparently because the ill-gotten gain is so spectacularly enormous that it has not only allowed the perpetrators to buy control of the government, but also to run a well-orchestrated and highly effective campaign to direct the anger of the public upon other victims of the fraud, rather than upon the perpetrators themselves. As such, the Great Wall Street Ripoff represents the final and complete victory of the fraudsters over attempts to restrain them by law. What’s fun about that fact? Nothing, unless you’re one of the criminals who pulled it off. In which case, it’s freakin’ hil-ar-i-ous!!!

Post culled from CBSNews

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APC considering Jonathan as Buhari’s predecessor

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A report claims legislators in the APC are now attempting to find an appropriate official competitor for the 2023 political race.

It was announced that an ongoing visit by APC to ex-president, Goodluck Jonathan was partially political.

The visit by the APC lead representatives has again started with rumors about a Jonathan administration in 2023.

An arising report has asserted that the All Progressives Congress (APC) is attempting to persuade a previous president, Goodluck Jonathan, to run for president on its foundation in 2023.

The report which was conveyed by This Day asserted that a few heads of the gathering have been constraining the previous president to think about the offer.

The paper expressed that a source who talked secretly said lead representatives on the foundation of the APC who visited Jonathan to congratulate with him on his 63 birthday commemoration, utilized the event to inconspicuously speak to their official proposition to him.

As indicated by the cases, Buhari’s partners accept that Jonathan would be innocuous to their gathering interest and as such the perfect individual to dominate if control somehow happened to move toward the South.

A source in Buhari’s camp who would not like to be recognized was cited to have stated:

“He handed over power peacefully and nursed no bitterness against anyone and therefore will not be a threat to the interest of the north. In any case, Jonathan has in the past denied any interest in challenging for the administration.

The previous president clarified that he was centered around his foundation.

Then, following the tumults by some geo-political zones to create the following leader of Nigeria, the legislative head of Kogi state, Yahaya Bello, has uncovered the characteristics of who might become President Buhari’s replacement.

Bello when speaking Channels TV on Thursday, November 20, said the PDP’s ambition to take back power is a “lofty dream” and ”castles in the air.”

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Obasanjo congratulates Biden on winning the election

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Olusegun Obasanjo congratulated the president elect Joe Biden on his election win .

The previous president said Biden’s triumph additionally had a great impact globally . Obasanjo asked Biden to reestablish the qualities America is known for all around the world Obasanjo in an assertion acquired by Legit.ng on Saturday, November 7 portrayed Biden’s success as a triumph of good over evil.

He said the triumph of the Democratic up-and-comer isn’t only a success for the individuals of America alone, yet in addition a triumph for the vast majority of the world.

Credit: africanarguments.org

The previous president encouraged the duly elected president to reestablish trust in the part of America as an advertiser of world harmony, security, dependability, and progress.

He said:

I felicitate with Vice President-Elect Kamala Harris as the first female Vice-President of the U.S. We in Africa are proud of her success. The first African-American President of the U.S., Barrack Obama, has Kenyan DNA in him and I am reasonably sure that the first African-American female Vice President-Elect of the U.S. will have some Nigerian DNA in her as most of those taken to the Caribbean from Africa went from Nigeria of today.”

Then, the US president-elect, Joe Biden has vowed to be the president for all Americans if they decided in favor of him.

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International Criminal Court (ICC) to Probe into #EndSARS Extra-judicial killings

The ICC set to conduct preliminary examination with regards to the ongoing #EndSARS protests in the country.

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The ICC set to conduct preliminary examination with regards to the ongoing #EndSARS protests in the country.

According to BBC, ICC confirmed that the office of prosecutor has received information on alleged crime. In a statement they made it known that the focus of the preliminary examination is to “assess whether the legal criteria for opening an investigation under the Rome Statute are met”, and the findings of their will be made public.

The #EndSARS protests have seen no less than 50 deaths of the country’s citizens; at least 5 soldiers and 10 policemen have also been reported dead during massive 2-week protests which sadly came to a grand ending on the night of November 20th where peaceful #EndSARS protesters where gunned to death at the Lekki tollgate.

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