The TOP-10 biggest investment frauds in modern history

The investment world is full of temptations in terms of easy and dirty money. From time to time world’s newspapers blast with another loud story of billion dollar scam investigation. The scenario is always almost the same: a promising looking Corporation, fooled investors, fake accounting reports, and a financial disaster as a result. Needless to say but all “key heroes” of these frauds are now in jail.

Let’s take a look at the most notorious investment scams in a modern history, which were committed with the purpose to earn billions, but ended up with the jail sentence.

1. The case of Bernard Madoff

This case has shaken the investment world in the 2008 year, when the criminal scheme exploited by a billionaire Bernard Madoff was revealed.
Madoff used a well-known Ponzi scheme to collect money from investors and pay dividends from incoming funds of newly entered investors. The “bubble” exploded in one day when the thousands of fooled investors have lost their money, by bringing Benard Madoff staggering 65 billion dollars.

Bernard Madoff

The court gave to Bernard Madoff 150 years in prison and his case was officially announced the biggest investment fraud in history, committed by an individual. Also, this case has triggered some changes in financial laws and rules.

2. Kazutsugi Nami and L&G Company

This Japanese founder of the “Ladies &Gentlemen” (L&G) food company, has managed to involve into fraud thousands of individual investors who trusted him with their money. He was arrested in 2009 due to a massive fraud with invented by him virtual currency called “Enten”. The total amount of investor’s money involved into Nami’s fraudulent scheme is above 1 billion dollars.

Kazutsugi Nami

Tokyo-based chairman of L$G Company (that went bankrupt shortly after Nami’s arrest) has managed to use the well-known “Ponzi scheme” with an unbelievable success. He attracted money by promising people 36% of yield, so before the arrest, he owned a financial pyramid of the 128 billion yen net worth! 

3. The “Enron” case in 2001

Enron Corporation

Enron Corporation case is officially called the largest investment scam as the total amount of money involved in the fraud was about $65 billion. The energy company was accused of a large-scale accounting fraud that eventually took out about 80 billion dollars from the stock market and undermined the whole financial market of the country. Being, probably, the most discussed investment scandal, Enron Corporation shares collapsed from 90 dollars to unbelievable 1 dollar and even below that. The story has ended for the founder of Enron with 24 years of sentence in jail.

4. Joseph Nacchio and Qwest Communications International fraud

The former Chief Executive Officer of the Quest Communications International was arrested in 2007 for committing one of the biggest investment scams through inside trading and false data that made investors buy the worthless shares of his company.

Joseph Nacchio

The key of his scam was the misinformation about the performance of his company. Nacchio convinced investors they are about to get a huge profit as shares will soon rise to an all-time high, who in facts, his company was heading to the financial catastrophe. The total amount of Nacchio’s scam is about $3 billion.

5. Bernard Ebbers and WorldCom scam

Before the famous case of Bernard Madoff, this financial scandal with the WorldCom company was the largest scam in the U.S. history. The founder, Bernard Ebbers, has managed to mastermind the $100 billion investment scam by giving a false hope and misleading information to investors who were buying shares of the WorldCom at $64 per one share (which was an unimaginable price these times).

Bernard Ebbers

Bernard Ebbers was the one aggressive investor who was constantly acquiring smaller companies in hopes to enlarge the market share for WorldCom. It’s hard to believe, but more than million private investors bought shares and bonds of the WorldCom and have lost their money eventually.

6. Sam Israel and the case of Bayou Hedge Fund Group

This case of investment fraud is not that significant as previous ones, but it devastated financial status of thousands of people who trusted the Bayou Hedge Fund with their money (about half a billion dollar).

Sam Israel

He had promised to his gullible investors that in ten years his Company will raise from $300 million to mind-blowing $10 billion. Furthermore, when in the 1998 year the Fund showed dramatically poor performance, Sam Israel faked accounting reports and sent it to his all investors. Based on these fake reports investors kept bringing money having no idea what’s really going on.

When the fraud became revealed, Sam Israel was sentenced to 22 years in prison.

7. HealthSouth case in 2003

The company was the leading Corporation, providing health care services in the U.S. HealthSouth showed a massive growth that allowed it to buy several small companies to increase the market influence. The beginning of the end has shown up when the CEO Richard Scrushy has commanded his accountants to falsify accounting reports the purpose to show the higher net profit numbers to investors.

health care services

Another “nail in the coffin of HealthSouth was placed by the founder when he sold company’s shares massively on the eve of Company’s loss report release.

8. Dennis Kozlowski and Tyco International

Dennis Kozlowski

As a former CEO of Tyco International, Kozlowski confessed to the court his shocking spending was out of “pure greed”. He stole more than 150 million dollars during his 27 years “career” in Tyco International by paying for his lavish lifestyle (luxury items, crazy parties, etc), and granting himself unauthorized bonuses from the Company’s budget.

Dennis Kozlowski has got a maximum jail sentence of 25 years and became one of the most discussed people who committed such a notorious fraud.

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