People are always looking to make a quick buck, but some greed knows no bounds. Or morals. Or laws. These enterprising folks swindled their clients and companies out of billions of dollars through crafty record keeping, shady investments, and making risky bets that usually surpassed the funds they had available. They say the only thing worse than being poor is being rich and then poor, so we can only hope that these guys feel the sting for years to come.
Charles Ponzi
Charles Ponzi was the namesake for all future thieves with his “patented” Ponzi scheme. His idea was simple: he bought discounted postal reply coupons (these are largely outdated but at the time could be redeemed for postage stamps) in other countries and redeemed them at face value in the U.S. He told unwitting investors they would receive a 50 percent profit within the first 45 days, or 100 percent profit within 90 days, but he really just used the newer investors to pay off the earlier ones. By robbing Peter to pay Paul, he ended up costing investors more than $20 million (equivalent to more than $225 million today.) When the dust settled, investors each recouped approximately 30 cents on the dollar.
Marc Dreier
New York City lawyer Marc Dreier went after hedge funds and other investors by selling them fake promissory notes, earning upwards of $700 million during his scheme. A classic Ponzi schemer, Dreier made fake accounting and financial statements, and even went as far to pay people to impersonate others, tricking investors into believing the documents were genuine. He was eventually arrested in late 2008 when he was caught trying to impersonate an employee of the Ontario Teachers’ Pension Plan. He had been living for years in the lap of luxury and had an $18-million yacht.
Raffaello Follieri
Raffaello is known for being Actress Anne Hathaway’s ex, but he was also embroiled in the Vati-Con scandal, in which he misappropriated $50 million that was meant to buy Roman Catholic churches in the U.S. A real estate developer, Follieri was supposed to be helping Bishop Joseph Galante’s Diocese of Camden, New Jersey, to sell half of the church’s properties to help cover deficits. Galante was implicated in the scandal and Follieri served four years in federal prison for his trouble.
Bernie Ebbers
As CEO of Worldcom, Bernie Ebbers built his company swiftly and successfully, mainly by creating falsified accounting documents and inflating the company’s assets in order to trick investors into handing over their money. It was working wonderfully until Worldcom’s stock began to decline in 2002 and Ebbers came under pressure to cover the margins on the stock he used to finanace other ventures. Twenty thousand people were laid off when Worldcom went under, and Bernie got 25 years of jail time.
Samuel Israel
Sam and a partner named Daniel Marino set up the Bayou Group hedge fund with $300 million in investments, promising those who contributed a total return of more than $7 billion. After misappropriating the money for personal use, they had to lie about the fund’s profits and even created a fake accounting firm to draw up the falsified audit documentation. Israel was found out when Marino wrote a suicide note detailing the scheme. Marino panicked after being asked for a large withdrawal by a company for funds they couldn’t produce. He didn’t go through with the suicide. Israel tried to fake his own suicide but failed, and received 22 years in federal prison for his crimes – 20 years for robbing people, and two for trying to fake his death.
Kenneth Lay
Enron. The name alone conjures images of scandal, bankruptcy, and the loss of millions and millions of dollars for shareholders. A lot of that can be traced back to then-CEO Kenneth Lay; using the company’s accounting firm, Lay helped hide the decline of the company but eventually was forced in 2001 to file for the largest corporate bankruptcy in history when his scheme was uncovered to the general public. Even more than that, however, Lay was found guilty of bribing foreign governments to win international contracts, manipulating domestic markets, and trading at 55 times the company’s earnings. Although he was found guilty, Lay died of a heart attack while awaiting sentencing.
James Fisk and Jay Gould
Fisk and Gould are responsible for the infamous Black Friday, taking place on Sept. 24, 1869. As speculators, they began buying millions of dollars of gold in an attempt to corner the market, and hoarding it rather than selling it back. Prices rose, stocks plummeted, and the U.S. government was forced to start selling some of its gold to try and right the market. However, with the immense hoarding, the government’s gold hit the market ($4 million worth) and caused the premium to crash in minutes. The pair escaped legal punishment, despite their actions causing agricultural exports to plummet, brokerage firms to declare bankruptcy, and an overall decline in the national economy for months.
Richard Scrushy
HealthSouth Corp. founder Richard Scrushy tried to escape his past by finding Jesus and becoming a televangelist, but was indicted in 2005 for money laundering, extortion, obstruction of justice, racketeering and bribery, among others. He was sentenced to six years and 10 months for his crimes, but the pain wouldn’t stop there for Scrushy. In 2009, HealthSouth shareholders brought a case against him, sueing for damages related to his scheming. The judge ruled that Scrushy was responsible to pay out $2.87 billion. The poor guy is having to sell off his mansions, luxury cars and yachts to pay the fine.
Jérôme Kerviel
Rogue trader Jérôme Kerviel was a junior futures trader at French bank Société Générale when he began making unauthorized trades in European Stock Index futures. He anticipated market prices would begin falling, but in fact was exceeding the bank’s total market capitalization. He bet $73 billion on the risky futures markets, far beyond the market value of Société Générale. To try hide his crime, he began intentionally losing money in bad trades, while earning over $1 billion in hidden profits. The bank lost more than $7 billion due to Kerviel’s actions and he was sentenced to five years in prison.
Bernie Madoff
Perhaps the most infamous name in financial crime, Bernie Madoff is responsible for the biggest Ponzi scheme in history, swindling more than $65 billion over two decades. Using his own investment firm, Madoff had a stellar reputation causing investors to flock to him and plead with him to get a piece of the pie. When it came to light that he was just using new investors to pay off old ones, many were wiped out. Two investors reportedly committed suicide, including his son two years after the scandal broke. Madoff had taken money from investors all over the world, but disproportionately from the Jewish community, pulling heavily from the “Jewish circuit” of rich New York business people. He was sentenced to 150 years in prison, and is considered one of the most hated men in the U.S.
