Become aware of financial scams and learn from these 11 biggest financial scandals in history. There are many ways to trick people into losing their money. There are some people in the world who take advantage of good people wanting to make the most out of their money. The people listed here represent the biggest scams and have gotten millions and even billions of dollars through their tricks. It’s sometimes easy to be allured by a prospect of fast and big money. When it comes to finances, often times, when it feels too good to be true, it is.
There are many ways and many scams that have been used over time. It’s amazing how creative minds can always think of ways others have not yet thought of before. There were even some people listed here that mainly targeted corporations and tried to exploit legal and financial loops. This list involved all aspects of financial scandals, whether it is corruption, corporate, or even individual scams. For a more specific list of corporate scandals you can check out The 10 Biggest Corporate Scandals in Modern History. Of course, these scandals are known to us today because the perpetrators were eventually caught and their schemes revealed.
The scandals found here are ranked based on how much money these people have gotten over before they were caught. You’ll find that some of these are already familiar. You may have even encountered some of them. Let’s explore more as we go through these 11 biggest financial scandals in history:
11. The Ponzi Scheme
Charles Ponzi has an entire scheme based on his name. He fooled lots of investors by getting money that, according to him, would have high returns when converted to another country’s currency. He claimed that the international differences would yield a higher return on investment. In truth, he was actually paying older investors with newer investors’ money. He was eventually caught and the scheme led to the closure of 6 banks.
volartman/Shutterstock.com
10. Edward Strafaci
Strafaci, who was working as executive vice president of Lipper Holdings, informed investors that he had their money in two hedge funds that were growing annually. In reality, both were actually losing money. When he was discovered he faced charges and was sentenced to 6 years in prison.
PathDoc/Shutterstock.com
9. Manhattan Capital Management
Manhattan Capital Management was founded in 1996 by Michael Berger. It eventually lost hundreds of millions of dollars, but Michael declined to report any of these losses. Instead, he forged fake data and faked documents to fool his investors into pouring more money. Losses amounted to almost $400 million. Michael was caught in 2007 after fleeing from his sentence for 5 years.
8. WG Trading Investors
A stock or commodities trading company from New York, Paul Greenwood and Stephen Walsh convinced many to invest into their fraudulent business. Investors did not know that the two were actually using the money for themselves. Their scam was eventually discovered but losses already reached $560 million.
7. Tom Petters
Petters ran Petters Group Worldwide and he was a money manager. He convinced a lot of investors for 13 years that he was using their money to buy and sell consumer wholesale goods for a profit. He provided false reports but was eventually caught. He now awaits trial for money laundering, wire fraud and a lot of other charges.
6. Nick Leeson
Nick Leeson was a former employee of the British investment bank Barings. This man was responsible for the bank’s downfall. He made a lot of bad and risky moves in trading with the Singapore International Money Exchange and hid his losses. When he was caught Barings was already $1.4 billion in debt. He served in prison for six years and released 2 books about the experience.
5. Divine Yen
Kazutsugi Nami, who was then a chairman of a bed linen company promised investors at least 36% return on investment using what he would call Enten or “Divine Yen”. The fictional virtual currency was what he declared the only money that would matter after economies would fall. He got $1.4 billion of investors’ money. They were caught and he was arrested with other members of his company.
The biggest scams and scandals are found as we continue this list of 11 biggest financial scandals in history.
4. Ralph Cioffi and Matthew Tannin
Both Cioffi and Tannin were hedge fund managers and like a few of those listed here, lied to their investors that the money was growing. This led to more investment. Everything fell in 2008 as they had already lost $1.6 billion of investors’ money.
3. Jerome Kerviel
Jerome Kerviel worked for French bank Societe Generale. He made a lot of trading without consent and knowledge of his superiors. When he was discovered he had already lost $8 billion of the banks money. Kerviel is now facing a sentence of 3 years in prison.
2. Stanford Financial Group
Allen Stanford who owned the financial group and a bank based in Antigua promised high return for investors’ money. He was then noticed by SEC, IRS and the FBI but he kept evading and falsifying information. He and two associates were eventually charged as he had already gotten away with $8 billion.
1. Bernard Madoff
The biggest financial scandal goes to Madoff who stole $65 billion and is now facing a sentence of 150 years in prison. He convinced high-profile investors towards his investment plan that was actually a Ponzi scheme. When investors wanted to get their money he couldn’t provide any and was put in prison.
This has been the 11 biggest financial scandals in history. Always be aware when you are investing and never put all your eggs in one basket.
