Unfortunately, fraud has been a part of human life since the very beginning and countless individuals have lined their pockets by swindling others. The following four cases are exceptional, due to the combination of the vast sums of money involved and the blatant nerve of the perpetrators.
Charles Ponzi
Let’s begin by meeting Charles Ponzi who left Parma in 1903 and landed in Boston with just a couple of dollars to his name. Fast forward a couple of decades and Ponzi, now in his late 30s, has set up a company, the Securities Exchange Co. and with it, the world’s first Ponzi scheme was created.
Ponzi attracted investors to his company by promising a 50% return on their investment in a relatively short period. He would pocket the investment and use the next generation of investors to pay the former investors’ return. The former investors would validate an excellent, profitable investment and inspire another generation of investors to sign up, and the cycle continues.
The scheme collapsed when there were no more new investors to pay older investors, and after making millions, Ponzi died broke in a Brazilian charity hospital aged 66.
This hasn’t prevented others from trying to emulate his scheme. In 2019, US state and federal authorities uncovered 60 alleged Ponzi schemes with a total of $3.25 billion in investor funds.
These are the four most lucrative Ponzi schemes in US history.
Scott W. Rothstein (2010)
Scott Rothstein, a former lawyer, had a Ponzi scheme that was a little different from the others featured here, but the principle was the same. Rothstein allegedly sold shares in (fake) lawsuit settlements, promising investors huge returns once the cases were settled. Before he was sentenced to 50 years in prison, Rothstein operated a Ponzi scheme worth $1.2 billion.
Tom Petters (2010)
The Ponzi scheme dreamt up by CEO Tom Petters of Petters Company Inc. was a little more sophisticated, but the principle was the same. In this version, it was alleged that PCI supplied fictitious documents to dupe current and potential investors showing huge returns on bargain goods (that didn’t exist) being re-sold to retailers for a higher price. The scheme ran for 13 years before Petters was caught and sentenced to 50 years in jail, after scamming $3.7 billion from his investors.
R. Allen Stanford (2012)
R. Allen Stanford’s $7 billion, 20-year fraud scammed as many as 30,000 people worldwide. Stanford allegedly issued fake certificates to investors as proof of their deposits residing in high-interest accounts when the money was really going into his back pocket. He was eventually caught in 2009 and sentenced to a whopping 110 years in prison.
Bernie Madoff (2008)
Even now it’s hard to work out why Bernie Madoff turned to crime. He was a successful and highly respected businessman on Wall Street worth billions and even served as chairman of the NASDAQ exchange in 1990. Meanwhile, he was running a hugely lucrative Ponzi scheme on the side. If several investors hadn't chosen to cash out in 2008, it might even still be in operation.
But Madoff was unable to raise the necessary $7 billion, the Securities and Exchange Commission closed in and the game was up. He was sent to prison in 2008 for 150 years where he died in 2021, having scammed about $64.8 billion from his investors, making it the largest Ponzi scheme in US history.
