7 Biggest scams in history

The world has faced a series of scams that have threatened the manner humans work, function and do business generally. Notable among the frauds taking place across the globe is that of Ponzi schemes, which often see fraudsters take the opportunity of investors’ funds to enrich themselves at the investors’ detriment.

The biggest scams are not only about the money involved but also the impact and shock it had on the world, the level of corniness and more.

This article offers the top seven fraud scams in history.

Biggest scams ever in history

1. Charles Ponzi

The original pyramid scheme’s inventor, Charles Ponzi, was born in Italy and moved to Boston in 1903 with less than $3 to his name. His early scams were limited to forging cheques and aiding illegal immigrants, for which he received a five-year sentence in a U.S. Federal prison.

Ponzi discovered arbitrage in 1920 using five-cent international postal reply coupons. With the peso depreciating, there was a chance to gain money by redeeming coupons bought in Spain at a predetermined exchange rate for a nickel in the United States.

To do so, he solicited individuals from Europe’s less developed nations to send him postal coupons, which he later sold in the United States for a profit.

Ponzi, however, wasn’t content with only robbing the government. He began recruiting common folks by making them promises of returns on their investments ranging from 50% to 100% since he had bigger aspirations. Ponzi’s boasts drew in thousands of individuals, who trusted him with their money. Ponzi repaid previous investors with incoming funds from new ones, and many of them just reinvested their profits with him in the first place.

These types of disproportionate returns began to draw attention, and a probe by The Boston Post discovered that the operation was a fraud. When it was discovered that Ponzi had stolen up to $20 million from investors, he was given a new prison term.

Later, he was returned to Italy through deportation.

2. Robert Allen Stanford

Robert Allen Stanford was prosecuted by the SEC in 2009 for a scam involving a multibillion-dollar certificate of deposit program. Stanford is accused of using his Antigua-based business, Stanford International Bank (SIB), to entice investors with the customary promise of large but implausible profits by selling them Certificate Deposit (CDs) worth almost $8 billion. 

The SEC asserted in a statement from 2009 that SIB misrepresented its CD program and deceived investors. For conducting this 20-year fraud conspiracy, Stanford was given an astounding sentence of 110 years in jail in 2012. To fund his ventures and way of life, Stanford “misappropriated $7 billion from SIB,” the DOJ claims. Stanford’s attempts to have his conviction and jail sentence overturned were rejected by a U.S. appeals court in late 2015.

3. David J. Dominelli

It’s common to think of the 1980s as a highly corrupt era and the J. David Dominelli’s Ponzi scheme launched is a great illustration of the mindset of the time. According to the Times, Dominolli enticed investors with claims of large profits by utilizing the foreign exchange market. Despite the high volatility of these markets, Dominelli was able to generate profits of at least 3% each month. But as soon as cheques started to bounce in the 4th quarter of 1983, the Dominoes started to fall. David J. & Company also declared bankruptcy in 1984.

The authorities believed Dominelli may have lost over $100 million of investors’ money in his Ponzi scheme when he entered a guilty plea to bankruptcy, mail fraud and tax evasion from 1980 to 1985. 

4. Tom Petters

Tom Petters orchestrated a $3.65 billion Ponzi scheme that resulted in a 50-year prison term. Petters was accused of using his business, Petters Company Inc., to entice investors with the promise of buying goods and reselling them to merchants for a profit. 

Instead of the above promise, Petters used the money from investors to pay other investors, individuals who assisted his money frauds, and businesses he owned, and to support his opulent lifestyle. Co-conspirator Deanna Coleman, an informant, revealed the multibillion-dollar Ponzi scam to the authorities in 2008, as at the period of the report, the Ponzi scheme had been operating for at least ten years.

5. Emmanuel Nwude

Nwude’s scam is today known as one of the biggest scams to come out from Africa and one of the biggest in the globe, raking over $200 million in fraudulent sums. 

Nwude was a Lagos-based banker who approached a Brazilian firm to invest in the construction of the yet-to-be-built Abuja airport. Emmanuel fronted as the governor of the Central Bank of Nigeria, where he claimed the authority by law to seek the proposed funding. 

The $200 million was made in tranches to Nwude, but no airport was ever constructed. The high of the story was that Nwude was never found guilty of the fraud following little evidence that traced to the offence.

6. Bernard L. Madoff

In 2008, the SEC filed a complaint against Madoff and the popular financial firm, Bernard L. Madoff Investment Securities LLC, alleging fraud, breach of securities rules and requesting immediate assistance for investors. 

According to a press release, Madoff bragged to two of his employees about the authenticity of the Ponzi scheme, revealing the scheme as a hoax and that the projected losses came to at least over $30 billion. 

Since the hoax was exposed, investors have grappled to acquire some of their investments. By the end of 2020, almost $3.2 billion in losses had been collected and disbursed by The Bernard L. Madoff Victim Fund.

7. Paul Lewis Jr

Money scams sometimes include falsifying the truth, but James Paul Lewis Jr. went above and beyond. According to a 2005 press statement with the U.S. Department of Justice, Lewis led the Orange County-based Financial Advisory Consultants and assured investors of yearly returns ranging from 18 to 40%. 

Lewis had other ideas for the money, despite telling investors he would use it to buy and sell struggling firms, make business loans, lease medical equipment, and pay insurance premiums; rather, Lewis utilized the $300 million to enrich himself and others. He reportedly spent investor money on properties and high-end vehicles, made investments in other businesses, and traded currency futures using FAC funds. The investment fraud went on for seven years unidentified by the authorities.

Conclusion

Scams have been present among humans since the dawn of time. Nonetheless, there exist some scams that have affected the way we have done business in the past. This article offered seven scam stories that affected human civilization.

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Richard Okoroafor

Richard Okoroafor

Richard is a brilliant legal content writer who doubles as a finance lawyer. He brings his wealth of legal knowledge in corporate commercial transactions to bear, offering the best value that exceeds expectations.

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