Throughout history, humanity has witnessed an array of cunning schemes that have captured the imagination and bewilderment of people worldwide. From audacious Ponzi schemes to corporate fraud, these deceptions have left a trail of victims and often sent shockwaves through societies.
In this captivating exposé, we delve into the 12 greatest scams of all time, unveiling the masterminds behind these nefarious plots and the far-reaching consequences they left in their wake.
12 Greatest Scams Around The World
1. Bernie Madoff Ponzi Scheme
Bernie Madoff's Ponzi scheme was the largest financial fraud in history, defrauding thousands of investors out of tens of billions of dollars. The scheme worked by paying investors with money from new investors, rather than from actual investment returns. This allowed Madoff to keep his scheme going for decades, even as the underlying investments lost money.
The scheme began to unravel in the fall of 2008 when the general market downturn accelerated. Madoff had previously come close to collapse in the second half of 2005 after Bayou Group, a group of hedge funds, was exposed as a Ponzi scheme that used a bogus accounting firm to misrepresent its performance.
By November, investors had requested $105 million in redemptions, though Madoff's Chase account had only $13 million. Madoff survived by moving money from his broker-dealer's account into his Ponzi scheme account.
Alerted by his sons, federal authorities arrested Madoff on December 11, 2008. On March 12, 2009, Madoff pleaded guilty to 11 federal crimes and admitted to operating the largest private Ponzi scheme in history. On June 29, 2009, he was sentenced to 150 years in prison with restitution of $170 billion. He died in prison in 2021.
2. Enron Scandal
The Enron scandal was an accounting scandal that involved Enron Corporation, an American energy company based in Houston, Texas. The scandal led to the bankruptcy of Enron in December 2001, which was at the time the largest corporate bankruptcy in U.S. history.
The Enron Scandal was caused by a number of factors, including:
- The use of mark-to-market accounting, which allowed Enron to inflate its profits by booking future profits as current profits.
- The use of special purpose entities (SPEs) to hide debt and losses.
- The failure of Enron's board of directors to properly oversee the company's financial reporting.
The scandal had a devastating impact on Enron's employees, investors, and retirees. Many employees lost their jobs, investors lost billions of dollars, and retirees lost their pensions. The scandal also led to the dissolution of Arthur Andersen, Enron's accounting firm.
The Enron scandal led to a number of reforms in the financial industry, including the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act was designed to improve corporate governance and prevent future accounting scandals.
3. Volkswagen Emissions Scandal
The Volkswagen emissions scandal, also known as Dieselgate, was a major scandal that involved Volkswagen Group, a German automotive manufacturing company. The scandal began in September 2015, when the United States Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to Volkswagen Group. The EPA alleged that Volkswagen had installed software in its diesel vehicles that allowed the vehicles to cheat on emissions tests.
The software, known as a "defeat device," would detect when the vehicle was being tested and would reduce emissions accordingly. This allowed Volkswagen vehicles to pass emissions tests while emitting up to 40 times more pollutants in real-world driving conditions.
The scandal affected approximately 11 million vehicles worldwide, including 500,000 vehicles in the United States. Volkswagen was fined billions of dollars by the EPA and other regulatory agencies. The company also recalled millions of vehicles and offered to buy back some of the affected vehicles from customers.
Volkswagen's reputation was damaged, and the company lost billions of dollars in sales. The scandal also led to the resignation of Volkswagen's CEO, Martin Winterkorn.
4. Charles Ponzi's Scheme
Charles Ponzi was an Italian-American swindler who became infamous for his 1920 Ponzi scheme, in which he promised investors that he could double their money in 90 days by using arbitrage opportunities in international reply coupons. Ponzi's scheme was based on the false premise that he could buy international reply coupons in countries with weak currencies for less than their face value and then redeem them in countries with strong currencies for more than their face value.
In reality, Ponzi was not actually buying international reply coupons. Instead, he was using the money from new investors to pay off old investors. This allowed Ponzi to keep his scheme going for a while, but it eventually collapsed when he could not attract enough new investors to keep up with the payments to old investors.
Ponzi's scheme defrauded an estimated $20 million from investors, which is equivalent to over $220 million in today's dollars. He was arrested and convicted of fraud, and he served five years in prison.
5. Theranos Fraud
Theranos was a healthcare startup that was founded in 2003 by Elizabeth Holmes. The company claimed to have developed a revolutionary blood-testing technology that could perform hundreds of tests with just a single drop of blood. Theranos's technology was based on a device called the Edison, which was designed to be used in doctor's offices and retail settings.
Theranos raised billions of dollars from investors, including Rupert Murdoch, Henry Kissinger, and Betsy DeVos. The company was also valued at over $9 billion at its peak.
However, in 2015, it was revealed that Theranos's technology was not as accurate as the company had claimed. In fact, the Edison device was only able to perform a small number of tests accurately. Theranos was also accused of misleading investors and patients about the capabilities of its technology.
As a result of these revelations, Theranos's business collapsed. The company was forced to shut down its blood-testing labs, and Holmes was charged with fraud. In 2022, Holmes was convicted of four counts of fraud and sentenced to 11 years in prison.
6. Fyre Festival
Fyre Festival was a fraudulent luxury music festival that was founded by Billy McFarland and Ja Rule. The festival was scheduled to take place on April 28–30 and May 5–7, 2017, on the Bahamian island of Great Exuma.
Fyre Festival was promoted as a "luxury" music festival with amenities such as gourmet meals, luxury accommodations, and private jets. However, when attendees arrived at the festival, they found that the promised amenities were not there. Instead, they were met with chaos, confusion, and disorganization.
The festival was canceled after just one day, and attendees were left stranded on the island. Many attendees had to pay for their own flights home, and some even had to sleep on the beach.
The Fyre Festival scandal was a major embarrassment for McFarland and Ja Rule. They were both sued by investors and attendees, and they were eventually convicted of fraud.
7. Bre-X Minerals Scandal
Bre-X Minerals was a Canadian mining company that was involved in a major gold mining scandal in the 1990s. The company claimed to have discovered a massive gold deposit at Busang, Indonesia, but it was later revealed that the samples had been falsified.
The scandal began in 1993 when Bre-X acquired the Busang concession. The company quickly began to promote the deposit, and its stock price soared. By 1996, Bre-X was valued at over $6 billion.
However, in 1997, it was revealed that the gold samples had been falsified. The company's CEO, David Walsh, was found dead of an aneurysm in 1998 in Indonesia, and its chief geologist, John Felderhof, was arrested on fraud charges in 2007.
The Bre-X scandal was a major blow to the mining industry, and it led to a number of reforms.
8. Lehman Brothers Collapse
Lehman Brothers was an investment bank that was founded in 1850. The company was one of the largest investment banks in the world, and it was a major player in the subprime mortgage market.
In 2008, the subprime mortgage market collapsed, and Lehman Brothers was heavily exposed to the losses. The company was forced to file for bankruptcy on September 15, 2008.
The collapse of Lehman Brothers was a major event in the financial crisis of 2008. The bankruptcy filing triggered a wave of selling in financial markets, and it led to a sharp decline in the stock market.
The collapse of Lehman Brothers also had a significant impact on the global economy. The bankruptcy filing led to a credit crunch, which made it difficult for businesses to get loans. This, in turn, led to a slowdown in economic growth.
9. The Nigerian Prince Scam
The Nigerian Prince scam is a type of advance-fee fraud that is typically carried out through email. The scammer will send an email claiming to be a Nigerian prince or other wealthy individual who needs your help to transfer a large sum of money out of the country. In exchange for your help, they will offer you a share of the money.
The Nigerian Prince scam is one of the most common scams in the world, and it has been around for many years. The scam is so common that it has become a cultural meme.
Here are some of the key features of the Nigerian Prince scam:
- The scammer will claim to be a wealthy individual who needs your help to transfer a large sum of money out of the country.
- The scammer will offer you a share of the money in exchange for your help.
- The scammer will often use poor grammar and spelling in their emails.
- The scammer will often ask you to send them money in order to help them with the transfer.
If you receive an email from someone claiming to be a Nigerian prince, it is important to be very careful. The email is likely a scam, and you should not send any money to the scammer.
10. The Great Diamond Hoax
The Great Diamond Hoax was a swindle in which a pair of prospectors sold a false American diamond deposit to prominent businessmen in San Francisco and New York City. It also triggered a brief diamond prospecting craze in the western United States, in Arizona, New Mexico, Utah, Wyoming, and Colorado.
The hoax was perpetrated by John Slack and George Rubery, two Kentucky cousins who claimed to have discovered a diamond mine in the Rocky Mountains. They brought samples of the diamonds to San Francisco and New York City, where they showed them to prominent businessmen, including William Chapman Ralston, the president of the Bank of California.
The businessmen were impressed by the diamonds, and they invested heavily in the mine. Slack and Rubery used the money to hire a team of miners and to build a processing plant. They also hired a geologist to authenticate the diamonds.
The geologist, however, was not fooled. He determined that the diamonds were actually glass, and he exposed the hoax. Slack and Rubery were arrested, but they were never convicted.
The Great Diamond Hoax was a major scandal in the 1870s. It led to the loss of millions of dollars for investors, and it damaged the reputation of the diamond industry.
11. The Great Salad Oil Swindle
The Great Salad Oil Swindle was a financial fraud that occurred in the United States in 1963. The scandal involved Allied Crude Vegetable Oil Company, a major salad oil supplier.
Allied Crude was owned by Tino De Angelis, a charismatic businessman who had a reputation for being a risk-taker. De Angelis used a variety of fraudulent schemes to inflate the company's assets and profits.
One of the most common fraudulent schemes that De Angelis used was to "wash" salad oil. This involved transferring salad oil from one tank to another, without actually increasing the amount of oil. This allowed De Angelis to create the illusion that the company had more oil than it actually did.
De Angelis also used a variety of other fraudulent schemes, including:
- Falsifying financial records
- Overstating the company's inventory
- Selling nonexistent salad oil
The Great Salad Oil Swindle was exposed in November 1963, when inspectors from the New York State Department of Agriculture discovered that Allied Crude did not have enough salad oil to cover its outstanding contracts. The scandal led to the collapse of Allied Crude and the loss of millions of dollars for investors.
De Angelis was eventually convicted of fraud and sentenced to prison.
12. The Charles Ingram Who Wants to Be a Millionaire? Scandal
Charles Ingram, a British Army Major, appeared on the UK version of the game show Who Wants to Be a Millionaire? in September 2001. Ingram won the top prize of £1 million, but he was later accused of cheating.
Ingram's wife, Diana, and Tecwen Whittock, a university lecturer who was sitting in the audience, were also accused of cheating. The prosecution alleged that Diana Ingram coughed when Ingram was about to give a wrong answer and that Whittock used a special device to transmit the coughs to Ingram's earpiece.
Ingram, Diana Ingram, and Whittock were all found guilty of conspiracy to cheat and sentenced to suspended prison sentences. The scandal was known as the "coughing major" scandal.
The Coughing Major scandal was a major event in British television history. The scandal led to a number of changes to the game show format, including the introduction of a new security system that prevents contestants from cheating.