Here are some of the most cunning schemes taken place, around the world-
1.PRINCE OF POYAIS (1821)
In 1821, a Scotsman, Gregor MacGregor, pulled off, what could only be reasoned as desperation for money, one of the biggest frauds of the early 19th century, gaining over £200,000 in the process. He invented an entirely fictional country and named it “Poyais” and claimed it was located near the Black River, what is now present-day Honduras. McGregor claimed that Poyais covered eight million acres, and he was the prince of this land. He convinced hundreds of people in his home country of Scotland to invest in the non existent country, and even oversaw the deployment of a ship of 250 people hoping to start a new life in Poyais. When their ship arrived, they found nothing but undeveloped and inhospitable jungle. The emigrants then realized they have been duped. Few travellers were able to return but most of them died due to diseases like yellow fever and malaria.
2.CHARLES PONZI’S ROUNDABOUT SCHEME (1920)
In the early 1990s, the infamous Italian criminal Charles Ponzi scammed investors out of about $7 million by passing on new investors’ money to existing investors and presenting it as a sustainable investment. Initially, to raise the money, he went to his friends and promised them double returns in 90 days. In January 1920, Ponzi opened his own company to promote this scheme. As word spread about this unbelievable scheme, investments started pouring in. By June 1920, the net total investment in Ponzi’s scheme rose to $2.5 million. People began mortgaging their homes and even invested their life savings in the scheme without realizing Ponzi’s tactics. Ponzi’s rapid rise drew suspicions, and his publicity agent found incriminating documents related to the scam. The agent revealed his truth to the public and in November, Charles Ponzi was sentenced to five years in prison. Unfortunately, his investors ended up losing about $20 million.
3.ZZZZ BEST (1986)
In 1986, Barry Minkow, the owner of the carpet cleaning company ‘Zzz Best’ appeared to be building a multi-million dollar corporation, but he did so through forgery and theft. He created more than 20,000 phony documents and sales receipts without anybody suspecting anything. Minkow deceived auditors and investors and through their hard worked money, Minkow shelled out more than $4 million to lease and renovated an office building in San Diego. ZZZZ Best went public in December of 1986, eventually reaching a market capitalization of more than $200 million. Barry Minkow was only a teenager at the time when he committed this fraud. He was sentenced to 25 years in prison.
4.WEDDING GOLD SCAM (1986)
In 1996, on the word of geologist John Felderhof, David Walsh, the founder of Bre-X Minerals Ltd bought a property near the Busang River in Indonesia. He was told that it would produce gold after mining. Filipino geologist Michael deGuzman, project manager, tested the initial samples and when he didn’t find any trace of gold, he shaved off some gold from his wedding band, added it to the samples, and declared the first estimate of the total find to be about 62 metric tons. Bre-X then announced a huge discovery of gold, and in the process went from a penny stock to $280 per share, with a total value of $4 billion. DeGuzman kept on salting the samples until the Indonesian government got involved. In March 1997, he committed suicide by jumping from a helicopter. As a result, the Indonesian government, suspicious, postponed signing the mining deal with Bre-X. Eventually, stock prices began to fall, and thousands of investors lost billions. TSE and NASDAQ suspended trading of Bre-X stock, and it went bankrupt on November 5, 1997.
5.KREUGER CRASH (1925)
A Swedish civil engineer Ivar Kreuger opened a company in Sweden in 1908. Then, Krueger took over his father’s match business. In 1917, he founded the Swedish Match Company. From 1925, Kruger began offering loans to insolvent countries at a bargain that was hard to refuse. He would also provide loans to countries that offered him a national monopoly on match production. Using his skills, he increased the sales in the country. Since the governments taxed matches, the increase in sales would increase tax revenues used to repay the loans. By 1931, the Swedish Match Company controlled 250 factories in 43 countries. But his empire collapsed during the Great Depression. On 12 March 1932, Kreuger committed suicide by shooting himself. The death of Krueger led to the “Kreuger crash.” It hit investors and companies all over the world, especially in America and Sweden. After his death, Kreuger’s forgery of Italian bonds amounting to $142 million was found out. In Sweden, Kreuger owed more than the country’s national debt. As a result, the suicide rate increased in Sweden and the prime minister fell. In America, his shares collapsed taking with it the life savings of thousands of people.
6.PORTUGAL BANK NOTE AFFAIR (1924)
In 1924, Alves dos Reis was in jail for 54 days for embezzling money from a company. After being released from jail, Reis forged a contract in the name of the Central Bank of Portugal, Banco de Portugal. Then he posed as a representative from the bank and convinced a London-based company that the bank had authorized him to print his own bank notes. Reis further claimed that the money they were going to print was a part of a secret project, and it would be used to financially aid a struggling Portuguese colony, Angola. According to Reis’s instructions, the London-based company printed an equivalent of £1,007,963 of bank notes. The notes were then circulated into the Portuguese economy. In June 1925, he created the Bank of Angola & Metropole to help Angola. But the low-interest rates of the Bank piqued the interest of journalists, and they raised questions. Finally, the Bank of Portugal noticed the bank notes with duplicate serial numbers, and Reis’s scam was exposed. Five years later, he was sentenced to 20 years in jail.