Introduction
Ponzi schemes are a type of fraud that involves promising investors high returns on investment, using money from new investors to pay the original ones. In this article, we explore some famous Ponzi schemes in history and how they came about.
Charles Ponzi
Charles Ponzi was a criminal who earned money by running a fraudulent scheme called a Ponzi scheme. In 1920, he was convicted of mail fraud and served five years in prison.
He was born in Italy around 1882 and moved to America in 1903. He lived in Boston for several years before moving to New York City and later Montreal, Canada, where he worked as an accountant for the Canadian Pacific Railway (CPR). In 1919, he started selling international reply coupons (IRC), which were prepaid postage stamps that allowed people living outside North America to send letters back home at discounted rates; this allowed him access to large amounts of capital from investors who wanted their money returned plus interest payments based on how long it took them to receive their investment back plus interest payments based on how long it took them to receive their investment back–what we now know today as “Ponzi schemes.”
Bernie Madoff
Bernie Madoff was a Wall Street financier who was convicted of fraud and sentenced to 150 years in prison. He was the mastermind of a $65 billion Ponzi scheme that had been running for decades before it was discovered by investigators.
A Ponzi scheme is an investment scam where people are promised high returns on their investments but their money is actually used to pay back earlier investors instead of being invested as promised. The early investors get paid off with money from later ones until there aren’t enough new investors coming into the scheme anymore, and it collapses when no one has any more money left to pay off old investors who want their profits back–but there’s no profit because all those earlier investments were already paid out!
Great Diamond Hoax
The Great Diamond Hoax was an elaborate confidence trick played by Englishman Frederic Adams in 1872. Adams claimed to have found a large diamond field in South Africa and used the newspapers to advertise his find. He sold shares in the mine to investors, who were promised a share of the profits from selling diamonds from this new field.
The scheme collapsed when it emerged that there was no such diamond field nor any legitimate prospectors working there; instead, Adams had been buying up loose gems at low prices to sell back at inflated prices through his advertising campaign.
Bayou Hedge Fund Group
The Bayou Hedge Fund was a hedge fund that was based in Louisiana. It was founded by Samuel Israel III, who had previously been involved in other financial scams and Ponzi schemes. The Bayou Fund collapsed in 2009 after it became clear that the company did not have enough assets to cover its liabilities, leaving investors with losses of around $400 million dollars. At its height, Bayou Hedge Fund Group was worth $550 million dollars; however, at the time of its collapse, it only had $100 million in assets under management (AUM).
Albanian Ponzi Scheme
The Albanian Ponzi Scheme was a fraudulent investment scheme that went on for over 20 years. It started in the 1980s and ended with the collapse of Albania’s economy in 1997. It caused great damage to investors, who lost $1 billion dollars when it all came down.
The Société Générale de Surveillance (SGS) was an international security company based in Switzerland that specialized in fraud prevention and detection services. In 1992 they discovered this massive scheme while working with the Albanian government, but were unable to stop it until 1997 when they finally got their hands on evidence against them so they could take legal action against those responsible for perpetrating this fraud against innocent people all over Europe who had invested their life savings into what turned out to be nothing more than an elaborate Ponzi scheme run by corrupt politicians who used their power as heads of state for personal gain rather than serving their constituents’ needs as leaders should do
TelexFree Scandal
TelexFree was a multi-level marketing company that used the internet to sell voice-over internet protocol (VOIP) services. The company was founded by Carlos Wanzeler and James Merrill in 2012.
TelexFree’s revenue model involved recruiting money from new investors to pay existing ones, who were promised returns of up to 500%. In 2014, the U.S Securities and Exchange Commission (SEC) charged Wanzeler with fraud for raising $3 billion from millions of people through this scheme without disclosing that he had no intention of ever paying them back. As part of its settlement with the SEC, TelexFree filed for bankruptcy protection in 2015 and agreed not to do business again until 2019–but many former customers are still waiting for their payments today!
MMM Ponzi Scheme
MMM is a Russian-based Ponzi scheme that was launched in 2005 by Sergei Mavrodi. The company promised investors returns of up to 100% per month, but when it failed to pay out on its promises, an estimated 1 million people lost their money. In 2018, MMM was shut down by Russian authorities, who said that its business model was illegal and that it was operating an “unregistered enterprise.”
In addition to being one of the largest Ponzi schemes ever created, MMM also holds another distinction: it’s the first time someone has been arrested for running such an operation (Mavrodi himself).
Woodbridge Group Ponzi Scheme (2016-2017)
The Woodbridge Group Ponzi Scheme was a fraudulent investment scheme that ran from 2016 to 2017. It was run by a man named Nicholas Cosmo, who was based in San Diego, California. The company sold fraudulent investments that promised high returns on investments but did not actually invest any money as promised. Instead, investors’ funds were used to pay off earlier investors and cover Cosmo’s personal expenses (including his mortgage payments). When the scheme collapsed in 2017 after running out of new investors who could be conned into buying into it, it had taken in over $1 billion from investors–one of the largest Ponzi schemes ever recorded.[1]
The best thing you can do is to stay away from unsavory investment opportunities.
The best thing you can do is to stay away from unsavory investment opportunities. The temptation can be overwhelming, especially if you’re looking for a way to make money quickly or are desperate for a job. But it’s important to remember that there are no shortcuts in life–and if something sounds too good to be true, then it probably is!
One way of making sure that your money stays safe is by investing in yourself rather than trusting someone else’s business plan or idea. If someone offers you an opportunity like this and says that all you need do is give them some capital upfront and then wait for them to return with profits later on down the line…well…that should set off alarm bells immediately!
Conclusion
The best thing you can do is to stay away from unsavory investment opportunities. Don’t let the lure of easy money or high returns cloud your judgment. Always do your due diligence before investing any money in an opportunity and make sure that it’s legitimate by checking with the SEC or FBI if necessary.
