Fraud is not easy. Famous fraudsters, like Bernie Madoff and Charles Ponzi, are often caught because they can’t keep up with the volume of their schemes. They have to hire more people or build more houses or invest in more stocks just to pay off old investors. And that’s what gets them caught. Fraud requires a lot of work; it’s exhausting and expensive and time-consuming, especially, when you’re trying to pull off a big con like these famous ones did.
Bernie Madoff was convicted for operating one of history’s largest financial frauds by running his own investment company as a Ponzi scheme where he used money from new clients to pay artificially high returns on investments for older clients until word got out that the returns were too good to be true and Madoff Securities was revealed to be a massive pyramid scheme.
Bernie Madoff pulled off one of history’s biggest financial frauds by running his own investment company as a Ponzi scheme where he used money from new clients to pay artificially high returns on investments for older clients until word got out that the returns were too good to be true and Madoff Securities was revealed to be a massive pyramid scheme. He is currently serving 150 years in prison for his crimes, but his damage has been estimated at $21 billion.
Charles Ponzi was an Italian swindler who became known as The King of Thieves after being convicted of using a scheme involving false promises of huge interest payments on investment returns to take at least $20 million from investors, thus earning his name as “The King of Schemes.” Famous for the Ponzi scheme, he defrauded many Bostonians with a postage stamp speculation racket that was born out of his previous bubble-blowing scheme in 1919 involving postal reply coupons. Now, he’s dead, but his legacy lives on with new investors about to get screwed over by a famous con man.
James E. Davis
James E. Davis milked $2 million from innocent people before being caught by the authorities and sentenced to two years in prison. He promised investors returns of 25% a year by buying real estate and selling it at a profit. The problem is he never bought any real estate, instead spending his investors’ money on family expenses–and, of course, himself. James E. Davis pleaded guilty to fraud and money laundering in October 2010 while on trial for running a $35 million Ponzi scheme, which he launched in 1988. He would convince investors into buying high-end real estate and luxury goods such as boats and airplanes with the promise of high returns that never came. Davis was sentenced to 22 years behind bars for his crimes and has to pay a $70 million judgment against him.
Kenneth Starr was convicted in 1989 for running what was then the largest bank fraud scheme in Texas history after being accused of misusing funds from the failed Madison Guaranty Savings and Loan Association, where he served as president. He was sentenced to 25 years but only spent six in prison before being released on parole. The case shone a light on several liberal figures in Washington during Clinton’s presidency, including Hillary Rodham Clinton, who was an attorney for the Rose Law Firm at the time. Kenneth Starr was convicted of bank fraud to the tune of $60 million and served three years behind bars before being released on parole. He now works as a lawyer at Baylor University. The case has been said to have helped shape the liberal political scene of Washington during President Bill Clinton’s presidency.
Alberto Vilar pled guilty to an investment adviser fraud charge in 2009 and was sentenced to nine years in federal prison for his crimes. He defrauded investors with a company called Amerindo Investment Advisors out of $470 million, some of which he had specifically targeted the elderly and retirement funds from Police and Fire departments. Alberto Vilar was sentenced to nine years in federal prison for his crimes before dying while incarcerated at Federal Correctional Institution, Butner Low in North Carolina. He now has a $50 million fraud judgment against him and his wife as more victims came forward after his arrest.
Tom Petters ran what was at the time the largest Ponzi scheme in U.S. history and was raking in $3.5 billion from investors for years by selling merchandise such as consumer electronics via his company Petters Group Worldwide, Inc., promising sky-high returns. The FBI caught up to Petters in September 2008 and arrested him for fraud. He was sentenced to 50 years behind bars, but died while serving his sentence in August 2018.
Joseph P. Nacchio
Joseph P. Nacchio, former CEO of Qwest Communications International, Inc., was convicted of 19 counts of insider trading and sentenced to six years in jail for his crimes in July 2007. He began serving his sentence in April 2009 at the Federal Correctional Institution, Schuylkill in Pennsylvania and was released in September 2013.
Scott W. Rothstein
Scott W. Rothstein is currently serving a 50-year sentence for running what has been said to have been the largest Ponzi scheme in U.S. history, raking in $1.2 billion before his arrest in October 2009. The disgraced Florida attorney abused his access to the legal system to help run his scheme.
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