adminNEW YORK. – It’s an old game, but even today it still gets a fair number of its victims.
Here are some of the worst Ponzi schemes:
- Charles Ponzi – US$15 million
Compared to today’s notorious cons, the loss associated with this scam in 1920 might seem a pittance. But in the tale of Charles Ponzi, it wasn’t just the size of the swindle but the speed with which it was done. According to Smithonian Magazine, Ponzi made an estimated US$15 million in eight months by convincing lenders he could make them rich with investments in international postal reply coupons. His story was so infamous that the basics of the pyramid scheme – take money from a new investor to pay back an old one – began to carry his name, despite the fact that he wasn’t the first to do it.
- Lou Pearlman – US$300 million
The man behind platinum-selling boy bands ‘NSYNC and the Backstreet Boys, Lou Pearlman’s legacy also includes a massive Ponzi scheme. Pearlman swindled investors and banks out of more than US$300 million on the basis of companies that only existed on paper. In 2008, he was convicted of conspiracy and money laundering charges and sentenced to 25 years in federal prison. He died at the age of 62 in 2016.
- Gerald Payne and Greater Ministries International – US$448 million
In the 1990s, Gerald Payne and leadership at his Greater Ministries International Church convinced nearly 20,000 investors to hand over millions in a programme that claimed it could “Double Your Blessings.” The IRS began to investigate based on suspicious bank activity, and by 2001 Payne was convicted and sentenced to 27 years in prison. At the time, the IRS called it one of the biggest Ponzi schemes it had ever investigated.
- Reed Slatkin – US$593 million
Known as a co-founder of EarthLink, the internet service provider that launched in the mid-90s, prosecutors say Reed Slatkin’s massive Ponzi scheme began long before the company existed. In 2003, the former Santa Barbara investment manager pleaded guilty to defrauding his investors of more than US$500 million across 15 years, starting in 1986.
- Scott Rothstein – US$1.2 billion
It isn’t always finance types who run the biggest scams: Scott Rothstein used his Fort Lauderdale law firm to run an eye-popping US$1.2 billion Ponzi scheme. According to the Miami Herald, Rothstein convinced his investors to buy into bogus legal settlements. He was sentenced to 50 years in prison in 2010 – a term that’s held despite his attempts at reduction.
- Tom Petters – US$3.7 billion
Businessman Tom Petters was accused of stealing money from hedge funds, missionaries and pastors alike, according to the New York Times.
Petters promised investors that by pouring money into his organisation, they’d fund the purchase of retail merchandise that would then be sold to discount retailers for a profit. But that’s not what happened, and in 2010 Petters was sentenced to 50 years in prison. The scam is reportedly the biggest in Minnesota history.
- R. Allen Stanford – US$7 billion
Texas tycoon R. Allen Stanford masterminded a 20-year scheme via his offshore bank in Antigua, cheating almost 30 000 investors from more than 100 countries out of billions. The scam involved fake certificates of deposit, and prosecutors accused Stanford of funnelling funds into his personal interests, including real estate and cricket tournaments. In 2012, Stanford was sentenced to 110 years in federal lockup.
- Bernie Madoff – US$20 billion
It’s unclear at what point Bernie Madoff began shaping the largest Ponzi scheme in history, some believe it may have extended all the way back to the 1960s.
Regardless of the time-frame, what is known is that he conned thousands of investors out of US$20 billion in principal funds.
After his arrest in 2008, he was sentenced to 150 years in prison, where he died on April 14, at the age of 82. – CNN.
Mathew Masinge
Online Reporter