Named after the legendary conman, Charles Ponzi, the Ponzi scheme is a staple in financial scams. The scammer promises high return rates to investors and uses other investors to return that money. People nowadays know it as the “pyramid scheme,” with older investors getting paid by newer ones.
Believe it or not, this scam is still alive and well. Shrewd bankers and malicious minds have continued pulling the Ponzi scheme even after the year 2000. In this article, we’ve decided to present the 10 largest and most outrageous Ponzi schemes. You’ll be surprised at the gullibility of some of the victims.
Peter Lombardi - $1 billion
With Lombardi, we are officially entering the 1 billion-club on this Ponzi scheme list. His scam is perhaps the most malicious because the victims were HIV patients. Lombardi founded the Mutual Benefits Company and asked people to invest.
Apparently, the idea was to fund the lawsuits of HIV patients against pharmaceutical companies. A 2003 SEC raid discovered his real goals, and he was sentenced to 20 years in prison. He was so skilled that people didn’t find even 50% of the money he stole.
Scott Rothstein - $1.2 billion
This particular Ponzi scheme is most famous because it’s the largest lawyer-orchestrated scam ever. Once a respected lawyer from Florida, Rothstein developed an elaborate Ponzi scheme, spanning many years.
By attracting several thousands of investors, he funded his lavish lifestyle, which ended up blowing his cover. For his shameful activities, Scott is currently serving a 50-year prison sentence. The government estimates that he stole much more than $1.2, but nothing has been confirmed yet.
Tom Petters - $3.65 billion
Tom was a dangerous scammer because he was so immensely connected in multiple industries. He owned several wholesale companies, as well as being the CEO of his Petters Group Worldwide. Everyone that knew him thought of him as a good and kind man, but his green ended up being his demise.
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The SEC and FBI got suspicious when his lucrative purchases didn’t stop. If it weren’t for his VP, Deanna Coleman, nobody would have found a thing. For his malicious acts, Petters is looking to spend the rest of his life in prison.
Allen Stanford - $7 billion
This one sounds like a story from a cartoon, but it actually isn’t. Allen had the brilliant idea of introducing himself as the heir of Leland Stanford, the founder of Stanford University in California. By doing so, he charmed and impressed people.
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Shortly after, he would funnel their money to his own banks in Antigua and other exotic locations. He even paid off numerous politicians to cover up his deeds. The feds showed no mercy for his $7 billion-theft and handed him a 110-year sentence.
Bernard Madoff - $65 billion
Proclaimed as the worst thief in human history, Madoff leads our list of Ponzi conmen. Starting off as a humble salesman, he slowly worked his way to Wall Street. After developing the NASDAQ system, people started viewing him as a prodigy and financial genius.
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A reason for this is because he never reported any losses. This seemed suspicious to the FBI. It turns out that he was running the most complex Ponzi scheme ever, netting $65 billion in the process. After a short trial, he was sentenced to 150 years in prison.
Jeff Skilling had the lucrative position of CEO of Enron Corp., giving him access to a wide network of people and operations in natural gas markets. In 2001, it came to light that the company, long considered a poster boy for running a profitable business had been committing fraud the whole time.
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They used a series of accounting loopholes and corruption to hide billions in revenue and even more in debt. The scheme was so complex that it needs a whole novel to detail down in full. Skrilling has been in prison since 2006, slated for release in 2019.
The Bitconnect Cryptocurrency Scheme - 2$ billion
At its height, Bitcoin was one of the most popular places for amateur investors to place their money in hopes of profiting extravagantly. Some were definitely able to, but those that had their money in Bitconnect ended up losing over $2 billion collectively within just a few hours.
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The cryptocurrency collapsed from a high of $331 to just $21 within six hours as major investors pulled out and the SEC tightened the noose on the scheme. Ultimately, the lack of new users meant they were burning through more money than they were making and had to bail.