Ponzi scammers are business men who effectuate illegal operations in which they use the funds invested by their victims to pay returns instead of offering them money obtained from further investments and thus, real profit. Sometimes, the so called benefits are paid from the money of later investors to the early ones. The first Ponzi scheme recognized as such was created by Charles Ponzi, in the 1920s, but his legacy lasted to these days when pozi scammers continue to be arrested every so often. Some of their frauds are much bigger than the one of Pozi itself.
1. Charles Ponzi
Charles Ponzi was the greatest ponzi scammer ever. As it is obvious he was inspired the coined term ‘ponzi scheme’. He became a millionaire after he had arrived in America after the first world war with 2, 50 $ in his pocket. At first, he was not lucky at all and entered prison 2 or 3 times for theft and small scams. After having the idea of making profit from the international post coupon, he asked some friends to invest in his scheme, promising to double their profit in 90 days. He soon won as much as 15 million dollars, but at that time suspicion of the legality of his business started to rise. After being caught, his investors only got 1/3 of their money back.
2. Bernard Madoff
Berni Madoff closely followed the example of Ponzi and became one of the greatest ponzi scammers in the world, surpassing his ‘menthor’. The 73 years old stock broker spent almost his entire adult life building a ponzi scheme that brought him almost 65 million $. Apparently, he caused to his investors losses of an estimated 18 billion dollars. For this crime, he was arrested in 2008 and he is to be released, for good behavior, in the year 2139…
3. Allen Stanford
The chairman of ‘Stanford Financial Groups and companies’. In 2009 he was charged for a fraud described as a ‘massive ponzi scheme’ He made fortune in the 1980 by buying cheap, neglected properties during a real estate crisis. Then, he would sell them when prices went up again. It was only afterwards that he started his ponzi scheme, when he opened a bank in Mont Serrat. The massive ‘ongoing’ fraud was estimated at 8 billion dollars, over a period of 25 years. In 2009, after being subject to investigations, Stanford surrendered and he is now waiting to be judged.
4. Michael Eugene Kelly
This is the owner of Yucatan resorts, as the owner of several other companies, and he is one of the most immoral ponzi schemers in history, as he stole 428 million $ from senior citizens and retirees by promising them timeshare investments in Cancun hotels. Most of his investors used their own retirement savings in order to obtain what they thought to be low-risk returns. He was arrested in 2006.
5. Tom Petters
Tom Petters was the owner of Petters Group Worldwide and he was charged for turning this business into a Ponzi scheme. He purchased Polaroid in 2005 and Sun Country Airlines, in 2006. Two years later, he was arrested for fraud and he was sentenced to 50 years in prison, in 2010. An estimated 23, 65 billion dollars were illegally obtained from this scheme.
6. Lou Pearlman
Former manager of Backstreet boys and O-Town, Lou Pearlman was one of the most unusual ponzi scammers and this is because he was already very rich when starting the unlawful scheme. He encouraged both individuals and corporations to invest into Trans Continental Airlines Travel Services Inc. and Trans Continental Airlines Inc., two companies which was actually fictive. He earned 500million $ this way, in a period of 20 years. His crime was discovered in 2007 by Florida regulators.
7. Scott Rothstein
Scott Rothstain joined the list of known ponzi scammers when his illegal scheme was discovered in 2009. A distinguished lawyer, he used his law firm to create an scheme involved purchasing fabricated “structured settlements,” in which people sell large settlements in legal cases for high sums of money. Initially, he run to Morocco, leaving behind a suicidal note but he changed his mind soon and got back to USA, were e got arresting and he is now serving a 50 year prison term. He stole a total of 1 billion dollars.
8. The Villalobos brothers
Enrique, Osvaldo and Freddy Villalobos started their loan scheme in 1980s. They cheated their clients, most of them American and Canadian retirees, with 400million $, by promising interest rates of 3%per month on an investment of 10.000 $. They would afterwards move money through shell companies before paying investors. Unlike the other ponzi scammers on this list, Villalobos brothers had real resources to back up them up and they were not greedy, their illegalities hardly being noticed.
This was a Romanian scheme which started in 1992, right after the collapse of the communism. It was a limited liability company with just 783 $. However, it attracted millions of depositors from all over the country. The victims invested more than a billion $ in this pyramidal scheme, while their total loses raised up to 667million $ two years later when it went bankrupt. The creator of Caritas, Ioan Soica, only received 1 year and half of prison.
10. Reed Slatkin
He was the cofounder of Earthlink, as well as a scientology minister, Reed Slatkin was one of the most successful pozi scammers in history. He used fake statements to convince his victims that he was a serious business man and to steal from Hollywood celebrities. What he did was to use funds from later investors in order to pay the first investors. He would than give the first group as an example of his success. Overall, Slatkin won 593 million $ from 800 wealthy persons. In 2003,he was convicted to 14 years of prison.