The case of Bernard Madoff was a real bombshell for the media. The biggest financial scandal in recent years. Person, who was fully trusted, in fact, turned out to be an ordinary fraudster. Truth, the word "ordinary" is not quite right here. Though, Madoff's scams amount to about 65 billion dollars.
However, Madoff is not alone. There are many examples of financial fraud in history. How large, talked about all over the world, and very small, which have not even outgrown the local level. Today we will talk about the largest financial fraud in history..
Charles Ponzi
Year, when it became known to the public: about 1920
Approximate losses: 20 million dollars (adjust for time, then it was a lot)
Charles Ponzi is the author of the famous "Ponzi scheme" and, one might say, the founder of pyramid schemes. He was a financial fraud all his life.. And after his death, his capital amounted to only 45 Dollars, which was only enough for the funeral. For his scam, Ponzi established the Securities and Exchange Company. The essence of the fraud was simple enough. Ponzi took advantage of society's lack of awareness. As a matter of fact, all information about, how was he going to earn, was in the public domain, and if at least someone wanted to check it, then Charles would not be good. But people are gullible - and no one checked this information from the very beginning. (all came to their senses later).
It all started with that, that Ponzi noticed the difference between the ratio of post-war exchange rates in different European countries. He understood, that most of the international response coupons, bought in Europe can be sold in the USA. Charles's company was founded with the aim of obtaining investment from ordinary people, who received a bill for this, promising to bring them 50% profit for 45 days. Truth, the public did not know the fact, that international coupons can only be exchanged for postage stamps, not real cash. And Ponzi knew, and was not going to invest the money received anywhere.
The pyramid brought very good money at first. Ponzi bought several paid articles from popular publications, who only fueled interest in his event. And then there was an unexpected publication in Post Magazine, which explained, that it is simply impossible to cover the invested money physically. Ponzi was arrested for fraud. This is a short and not very successful retelling of the whole scam.. In the near future we will present a separate detailed article on this topic.. In the meantime, it's just worth knowing, that Ponzi is the biggest swindler in history (of those, what are known).
Bernard Madoff
Year, when it became known to the public: 2008
Approximate losses: 65 billion dollars
Madoff, who has already pleaded guilty, lured a huge number of investors into his networks and has been engaged in fraud for more than a dozen years. And nobody suspected, that this person may not be clean on hand. Bernard Madoff promised to outperform the market through steady and slow growth. But with the onset of the financial crisis, many investors wanted to withdraw their funds. And then it turned out, that the Madoff institution is an ordinary pyramid scheme.
Allen Stanford
Year, when it became known to the public: 2009
Approximate losses: 8 billion dollars
Stanford is the founder of Stanford Financial Group and Antigua-based Stanford International Bank. Investors trusted both institutions with almost unlimited trust.. But for many years this company has become seriously interested in the SEC., FBI and IRS. In particular, was interesting, why Stanford promises investors such a high return on investment. Recently, there have been messages, that the US Securities and Exchange Commission accuses the founder of the company and several other members of fraudulent transactions. The case is now being handled by the FBI. Who else will emerge during the current crisis?
Jerome Kerviel
Year: 2008
Approximate losses: 8 billion dollars
Trader Société Générale has been trading without the supervision of its superiors since 2005 of the year. During this time, according to the bank, he caused him damage in the amount of approximately 8 billion dollars. Kerviel himself claimed, that he started illegal trade with that, to achieve good results, present them to the bosses and get bonuses. According to the bank, this citizen just wanted to appropriate the money for himself.. In total, the trader was charged under four articles, which included breach of trust and fraud. Gerard Kerviel managed the amount of 50 billion euros. Naturally, it was all illegal.
Ralph Tsioffe and Matthew Tannin
Year: 2008
Approximate losses: 1,6 billion dollars
Bear Stearns hedge fund managers Tsioffi and Tannin lied to investors about the fund's current health, which was heavily focused on mortgage-backed securities (to put it mildly, not the most reliable at that time). At the same time, people continued to invest in the fund., trusting information, conveyed to the audience by the managers of Bear Stearns. At the moment, both managers are accused of conspiracy and fraud.. The damage from their actions is estimated at 1,6 billion dollars. Again, this fraud took place to be exposed during the current crisis..
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