<i></i> <i></i> <i></i> 0<p>In the world of rich stockbrokers and scamming financial houses, we must be aware of the past of these scams as movies like the Big Short, and Wolf of Wall Street show us exactly how the public gets played on a massive scale. So it never hurts to know how this has happened in the past, so you’re booted for knowledge in the financial world. Read on!</p> <h2>18. Madoff Scam</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1011.jpeg"/> economist <p>New York hedge fund manager and Wall Street legend Bemard Madoff has been charged with what people claim could potentially be the biggest Ponzi scheme in history. Madoff had apparently planned to carve up the last of his $300 million earnings between friends, family, and employees before making the shocking declaration that all of his immense investment prowess was actually the result of one of the world’s biggest ever scheme of fraud.</p> <h2>17. Enron</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1012.jpeg"/>ljaurbach <p>When it comes to financial fraud scams, Enron comes near the top of the list. As a result of such massive fraud at Enron, which was an energy company based in Huston, Texas, shareholders lost tens of billions of hard-earned dollars. Many Enron executives including the accounting firm and bank officials were charged with fraud. Andrew Fastow, Enron’s former finance chief, later testified in court that many of the bank’s transactions were actually contrived, fake deals done only to create the appearance of profits and cash flowing in to maintain the books. Kernneth Lay, the founder of Enron, was convicted of fraud for duping investors before declaring that the company had plummeted into bankruptcy. Prosecutors accused Kernneth Lay of concealing millions of the investor’s money, and he was consequently charged with 11 counts of securities fraud.</p> <h2>16. Charles Ponzi Scheme</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1013.jpeg"/>playingintheworldgame <p>The biggest scam by a mile in United States history, Ponzi schemes were the brainchild of one Charles Ponzi who constructed the build-up of legitimate businesses before having them unable to achieve their expected returns. The businesses thus ran as Ponzi schemes then, under fraudulent terms and the con artist Ponzi utilized this massively in the 20’s. Based on the arbitrage of postage stamps on international reply coupons, he channeled investor funds to make cyclical payments to earlier investors and to his own kitty. Some 40,000 people invested around $15 million and only a third of the money was ever returned. Indicted on 86 counts of mail fraud and with a sentence of 5 years, Ponzi was incarcerated in 1920.</p> <h2>15. Pharmalat Scam</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1014.jpeg"/>lerevenu <p>Infamously known as “Europe’s Enron,” the scam that drowned Italy’s famed milk packaging giant Pharmalat and its senior directors, Blue-chip European and American Banks, Accounting Firms, Politicians and 130,000 minor shareholders following the uncovering in 2003, of a $14 billion void in its finances. In 2008, Fausto Tonna was given a 2.5 years sentence in the case after implication. In December 2010, Calisto Tanzi was also given an 18-year sentence and launched a formal appeal. In April 2011 after a 3-year trial, a Milan court acquitted four Banks- Morgan Stanley, the bank of America, Deutsche Bank and Citigroup of Market exploitation and rigging. Prosecutors had demanded €120m of the bank’s profits to be impounded owing to fraud. It is currently estimated that a ballpark figure of at least $17bn of Pharmalat funds have simply vanished from the books and cannot be accounted for.</p> <h2>14. Barrings Collapse</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1015.jpeg"/>BT.com <p>Massive fraudulent financial scams and malfeasance by its single employee, Nick Leeson – a derivatives broker led to the downfall of Barrings PLC a 233-year-old bank in February 1995. After landing the bank with liabilities of $1.4bn, Leeson escaped to Malaysia. By that time of bankruptcy, the bank had collected total losses that amounted to almost $2.2bn. Leeson was sentenced to six-and-a-half years of institutionalization in Singapore for the twin charges of fraud and forgery.</p> <h2>13. Portuguese Bank Note Affair</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1016.jpeg"/>globalfinancialdata <p>Largely considered the biggest fraud in history to be perpetrated by a single person, named Al Alves dos Reis against Banco de Portugal. He is notoriously known as the “The Man Who Stole Portugal” on account of the gigantic repercussions his fraud had on Portugal’s economy. By the year 1925, Rois had somehow managed to introduce escudo banknotes worth an estimated £1,007,963 (at 1925 exchange rates) in the Portuguese economy which was equivalent to a staggering 0.88% of the Portugal’s nominal GDP at that time. This led to the Portuguese currency, escudo, being fiscally disturbed and losing much of its credibility. After the scheme was eventually found out, the Bank of Portugal ordered the withdrawal of all 500 escudo banknotes. When the man behind the fraud came into the public light in December 1925, it brought about a crisis. He was arrested a few days later after his appearance. He was 28 years old. He received a relatively meager 20 years sentence and was released in May 1945.</p> <h2>12. Amarnath Hedge Fund Scam</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1017.jpeg"/>economictimes <p>Known as the biggest hedge fund collapse in all of history, Amarnath lost a massive $6bn of investors money over the span of one week alone. Amarnath Advisors, the US-based hedge fund whose investments were hit by a massive loss of $6 bn on account of a misplaced bet on gas prices. The firm then proceeded to sell its portfolio of energy trades and off-loaded other assets in a bid to ward off the imminent collapse. Amarnath invested most of its funds on trades that bet the persistent trend in rising natural gas prices would continue to exist. However, natural gas price declined sharply. As the losses continued to pile up, the fund’s banker called in their loans, forcing the fund to sell more assets to avoid defaulting. The sudden decrease in the fund’s value raised major questions over both, the lack of adequate risk management controls at Amarnath, and the overly lax control of hedge fund managers.</p> <h2>11. Worldcom Scandal</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1018.jpeg"/>cbs news <p>Another huge financial scam in the world’s scams history is the Worldcom scandal. Worldcom inflated the value of its assets by underreporting line cost by capitalizing rather than reporting them correctly as expenses, and in turn inflating revenues with fake accounting entries of as much as $11bn, leading to 30,000 people losing their jobs and investors losing a massive $180bn. This elaborate scam finally caught up to its perpetrators when the internal auditing department uncovered a staggering $3.8bn in fraud. Ebbers, the mastermind behind this operation, was sentenced to 25 years for fraud, conspiracy and filing false documents. Following the scandal, Congress passed the Sarbanes-Oxley Act, introducing a sweeping set of new business regulations.</p> <h2>10. Lehman Brothers Scandal</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1019.jpeg"/>tomthomson <p>The only advantage of major financial breakdowns is the fact that they smoke out frauds. One of the biggest financial scandals in the list is the Lehman Brothers Scandal involving the massive amount of $50bn. Lehman executives hid over $50bn in loans which they attempted to disguise as sales. They were caught when they went bankrupt which led to the company coming under scrutiny. They weren’t prosecuted on accounts of lack of evidence,</p> <h2>9. Satyam Scandal</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1020.jpeg"/>lmt-lss.com <p>Another scandal which is worth mentioning in this list is the Satyam scandal. The perpetrator admitted fraud of $1.5bn to the company’s board of director. The group of perpetrators was released by the Central Bureau of Investigation failed to file charges on time.</p> <h2>8. The Mississippi Scheme (1719)</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1021.jpeg"/>wikimedia <p>When starting a company, Scottish financial genius John Law, had no trouble over hyping the abilities of his firm. He managed to convince investors, including the French government, to support his development scheme. The value of shares in his company skyrocketed, and French currency increased in greatly in value, since it was believed France would gain a mountain of gold and silver from what was then only a swampy backwater. When investors actually what Louisiana was like, shared plummeted. Law narrowly avoided being lynched, escaping only by disguising himself as a beggar. He died in poverty nine years later.</p> <h2>7. The Wright Panic (1900)</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1022.jpeg"/>wikimedia <p>Never underestimate the undeniable power of societal pressure. Financial figurehead, Whitaker Wright put prestigious names on the boards of directors of all his companies. Consequently, investing in his firms became quite the norm among the elite. Unfortunately, while all his companies looked amazing on paper, they were actually just lending money to one another in order to balance all their books. When the scheme became apparent to the public, shares collapsed, leaving most of his posh pals penniless.</p> <h2>6. The Eiffel Tower Sale (1925)</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1023.jpeg"/>mental floss <p>Why buy a house, when there’s something even better on the market? When Victor Lustig discovered that the world famous Eiffel Tower was in dire need of repairs, he forged some papers showing that he was allowed to sell the tower for scrap metal. He managed to not only get one, but two huge scrap metal dealers to come up with a massive total of over a staggering $200,000 in bribes to throw the multi-million dollar contract their way. Following this deal, he then proceeded to skip town and returned to his home in the United States, where he led an amazing life as America’s most successful swindler.</p> <h2>5. The Match King Hoax (1929)</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1024.jpeg"/>wikimedia <p>Few entrepreneurs in the roaring twenties were more prominent than Ivar Krueger, who owned a wide assortment of banks, film companies, newspapers, telecom companies, and railways. When he tried to form a monopoly to control manufacturing and distribution of all the world’s safety matches, few questioned the fact that he would succeed. International banks practically begged him to let them invest in his venture, unaware of the fact that his many companies existed only on paper and were this profitable only because they kept investing in each other. The scam began to fall apart in 1929 when investors began to want to cash out, but he managed to hold onto his control until 1932. After that point, he saw it was pointless to try to prolong this hoax and shot himself in the chest.</p> <h2>4. The Baker Estate Swindle (1936)</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1025.jpeg"/>bigstatehomebuyers <p>In 1839, a man named Colonel Jacob Baker passed away, leaving an estate that comprised most of the land where the city of Philadelphia is located, a tract worth up to $3 billion. With the strong guidance of William Cameron Morrow Smith, all of Baker’s heirs formed a legal firm, open for anybody sporting the last name “Baker,” to pool the majority of their resources to fund the legal battle to recover their share of what they deemed their rightful inheritance. However, there remained one problem; Colonel Baker was nothing but a mere fictional creation, and there was no massive inheritance to be had. Smith and his ingenious cronies collected a sum of around $25 million before the swindle was shut down in 1936.</p> <h2>3. The Great Insider Trading Scam (1986)</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1026.jpeg"/>ny times <p>Ivan Boesky amassed a massive fortune of more than $200 million all by betting on corporate takeovers. Surprisingly, many of these seemed to occur only a few days before the official announcement of the acquisition, making Boesky a very wealthy man indeed. When he was charged with the crime of insider trading, Boesky cooperated with the SEC and received a lessened sentence of a meager 3.5 years out of which he served only 2. He was also fined $100 million, which while seems a lot, was only a fraction of his ill-gotten gains.</p> <h2>2. The Savings & Loan Scandal (1989)</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1027.jpeg"/>youtube <p>Few people, let alone fraudsters have known to be as openly brazen as Charles Keating – the mastermind behind the most visible collection of corporate managers running a large number of Savings and Loan institutions. These firms operated like banks, but without all the rules and regulations, and therefore made a series of poor investments, the main purpose of which was to benefit the corporate officers. Keating and crew never let their investors find out that they were investing in worthless ventures. Keating was eventually arrested for fraud.</p> <h2>1. ZZZZ Best Cleaners (1986)</h2> <img src="https://cdnone.netlify.com/db/2017/10/word-image-1028.jpeg"/>investopedia <p>Barry Minkow was considered a Wall Street marvel when he brought his company to the public light. Shares in his company, ZZZZ Best, which claimed to be an industrial rug cleaning firm, increased exponentially in value, creating a company with a stock valuation of a staggering $200 million. Unfortunately for many, ZZZZ Best didn’t actually exist and had originally been funded through what seemed to be a series of credit-card thefts. Finally exposed for what it really was in 1987, the stock for this fraudulent company dropped to zero, and Minkow landed for 25 years in prison.</p> <i></i>