Busted! The 5 Biggest Financial Frauds To Ever Walk The Earth

With the popularity of financial documentaries like inside job, it’s clear that people love hearing the shocking tales of financial fraud. Throughout history, there have been some jaw-dropping financial schemes perpetrated by the shadiest of con artists. Fortunately for the rest of us, these scammers were all eventually caught, but not before they did a lot of damage along the way.

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Here are the 5 biggest financial frauds to ever walk the face of the earth.

  • Frank Abagnale

Remember the movie Catch Me If You Can? Yeah, that wasn’t a Hollywood fiction. It was based off a true story. Frank Abagnale is one of the most famous frauds of all time. He created multiple fake identities and made his own nearly-flawless copies of checks, depositing them, and raking in tons of money. Another one of his admitted cons was to don a security guard disguise, stand near a deposit box with a phony sign saying “Out of service, place deposits with security guard on duty” and collect the deposits companies like Hertz and United Airlines would drop off each day. Another con of his was to pose as a Pan Am pilot and get free courtesy flights from other pilots. He used this to travel around the world for free.

Abagnale survived almost entirely on his scams, and over the course of 5 years in the 1960s, he deposited more than $2.5 million in fake checks in 26 countries across the world. He was finally caught in France, where he spent 6 months in prison before being sent to Sweden where he was imprisoned for an additional 6 months. Eventually, he made his way back to the United States, where he was given a 12-year prison sentence. He escaped by pretending to be an undercover prison officer. He was eventually caught again, but the US Federal Government decided to hire him as a consultant to help fight fraud.

  • Bernard Madoff

In 2008, it was revealed that Bernard Madoff pulled the largest Ponzi scheme in history. As the financial crisis was hitting, investors were requesting to withdrawal their money from Madoff’s investment firm, Bernard L. Madoff Investment Securities. Come to find out, there was “absolutely nothing left” and the business he had run for decades was really nothing more than a “giant Ponzi scheme.”

Madoff took tens of billions of dollars from thousands of victims. He pled guilty in court and was given a 150-year prison sentence.

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  • Charles Ponzi

Of course, if you’re going to mention Bernie Madoff’s Ponzi scheme, you have to mention the man for whom the Ponzi scheme was named. Charles Ponzi’s financial scam is one of the most famous of all time. In 1919, he told investors that they could enjoy significant profits by purchasing international reply coupons from other countries and then redeeming them in the United States for postage stamps. The idea was that the exchange rate would create a margin of profit for investors.

As it turns out, Ponzi was using the money from new investors to pay off old investors, all the while, peeling off some of that cash for himself. In total, he raked in $20 million for himself. In today’s economy, that’d be about $200 million. He was eventually found out, and spent 14 years in prison charged with 86 counts of mail fraud. 

  • Marc Dreier

Right around the same time Madoff’s huge scam was coming to light, Marc Dreier’s own financial schemes were also taking center stage. A once prominent attorney, Dreier decided to expand his law firm, paying his partners huge salaries without requiring them to be equity partners. With complete control over the firm’s finances, he issued a fake IOU for $20 million that was supposed to be from a major client. He then sold that IOU to a hedge fund, promising to pay it back plus interest within a year. He continued doing this scam for two years, issuing hundreds of millions in fake IOUs. As his plan began to unravel, he resorted to such desperate measures as impersonating executives from other companies who claimed to be issuing the notes.

Like the other scammers on this list, Dreier was eventually caught. He was sentenced to 20 years in prison in July 2009. 

  • Victor Lustig

He’s known as the man who sold the Eiffel Tower…literally. In his most famous con of all, Lustig posed as the Deputy Director General of the Ministère de Postes et Télégraphes. He reached out to the most wealthiest scrap iron dealers in Paris, telling them he had an urgent matter to meet with them about. After wining and dining them, Lustig told these businessmen that the governmen

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t had decided to tear down the Eiffel Tower and sell the 7,000 tons of metal to the highest bidder. Lustig targeted one of the men, Andre P

oisson, and told him he had the winning bid. However, Lustig swindled a bribe out of Poisson under the pretense that it would help secure the deal with the government. Lustig fled to Austria with the money where he lived the high life thanks to his scam. Six months later, he returned and pulled the same scam again. This time, though, his target alerted the authorities, and Lustig fled to the United States. He spent years pulling one con after another, but he was eventually caught on a counterfeiting charge and died behind bars after serving 11 years in prison.

Mikhail Budhu is the owner of the Finance Documentaries Blog – the number one source for finance, banking, investing and trading documentaries. Add Mikhail on Google+ to learn more.

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