Great Ponzi Schemers
13dec2008
Ponzi Mug Shot
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Charles Ponzi The scam wasn't his invention, but Mr. Ponzi's scheme based in Boston in 1920 gave it a new name. Based on an obscure niche in the world's postal network, Mr. Ponzi, an Italian immigrant, promised 50% return on investments in 45 days or to "double your money" in 90 days, tempting about 40,000 people to invest a total of roughly $15 million, equivalent to about $162 million today. He was arrested less than a year after the scam began. He served three years for that crime. Released in 1924, Mr. Ponzi made for Florida just in time for the land boom. He set up a real-estate venture and offered investors profits of 200%. He returned to jail, was eventually deported and died broke. |
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Charles Ponzi |
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Barry Minkow As a 10th grader, Mr. Minkow launched a neighborhood carpet-cleaning business in Reseda. Calif.. that grew into a $300 million public company. Mr. Minkow claimed 7777 Best was making a fortune restoring water and fire-damaged buildings, often showing investors buildings with which he had no connection. After the company disintegrated in 1987, he served more than seven years in prison. Now, he works as a private investigator, helping regulators. investigators and prosecutors unravel and understand the sorts of fraud he once orchestrated.
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Barry Minkow |
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Steven Hoffenberg Mr. Hoffenberg, the former chairman of bill-collection company Towers Financial Corp., pleaded guilty in April 1995 to charges that he defrauded investors out of $475 million in connection with the company's collapse in 1993. He later tried unsuccessfully to withdraw his guilty plea, arguing that he was mentally impaired when he pleaded. He was sentenced to 20 years in prison. Towers filed for bankruptcy in 1993 after the Securities and Exchange Commission filed suit against the company. Mr. Hoffenberg later reached a $60 million settlement of the SEC suit.
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Steve Hoffenberg |
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Patrick Bennett Mr. Bennett was chief financial officer of the family-owned Bennett Funding Group Inc., a Syracuse, N.Y.. firm that allegedly bilked some 12,000 people out of $700 million. Prosecutors said Mr. Bennett used his company to sell securities based on phony office-equipment leases. Bennett Funding filed for bankruptcy protection in 1996. He was convicted on 42 counts of fraud and money-laundering, ordered to forfeit $109 million and sentenced to 30 years in prison in 2000.
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John G. Bennett Jr Mr. Bennett, founder of the Foundation for New Era Philanthropy, was sentenced to 12 years in federal prison in 1997 for defrauding charities. churches. colleges and philanthropists. New Era collapsed into bankruptcy proceedings in May 1995, leaving hundreds of nonprofit groups out a total of $135 million. The Radnor. Pa., organization had promised them it would double their money in six months through matching gifts from anonymous wealthy benefactors. But New Era's supposed matching benefactors didn't exist. and federal prosecutors say it operated as a Ponzi scheme. All New Era victims were eventually expected to get at least 80% of their money back, thanks to recoveries made by the bankruptcy trustee.
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John G. Bennett
Jr |
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Angelo Haligiannis Mr. Haligiannis pleaded guilty in late 2005 to defrauding investors in his hedge fund, Sterling Watters LLC. The government said he raised tens of millions of dollars by misrepresenting performance figures through a classic Ponzi scheme. Mr. Haligiannis faced as many as 15 years in prison, but fled the day before his sentencing in 2006. On Aug. 20, 2007, police arrested Mr. Haligiannis on the Greek island of Crete.
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Angelo
Haligiannis |
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Kirk S. Wright Mr. Wright hanged himself in a jail cell on May 24. 2008, three days after a federal jury in Atlanta convicted the hedge-fund manager of securities fraud, money laundering and other charges related to the 2006 collapse of his company. Authorities say Mr. Wright's International Management Associates LLC squandered investor funds on everything from bad stock-market bets to a collection of luxury cars that included an Aston Martin, Bentley and Jaguar. Because Mr. Wright's scheme involved collecting money from some investors in order to pay fictitious returns to other clients, dozens of Mr. Wright's former clients who didn't lose everything they invested are facing lawsuits saying they were technically taking possession of cash that wasn't theirs.
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Kirk S. Wright |
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Norman Hsu A purported clothing magnate who became a top donor to Democrats. including Hillary Clinton. Mr. Hsu was indicted last year on charges of running a fraudulent investment scheme and using proceeds to make political contributions. He skipped a court appearance last September and fled from authorities. Now, he is serving a separate three-year sentence for a 1980s scam in which he raised about $1 million to invest in a latex-glove business that didn't exist.
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Norman Hsu |
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Joseph Shereshevsky Federal prosecutors in New York charged Mr. Shereshevsky and a business partner at the Chicago-based private-equity firm WexTrust Capital with allegedly raising more than $250 million through a Ponzi scheme in August 2008. Mr. Shereshevsky used extensive connections in the Orthodox Jewish community to attract 1,196 investors. Investors said they were disarmed by Mr. Shereshevsky's faith. his endorsement by Rabbi Chaim Silver. and his reputation as a philanthropist.
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Joseph Shereshevsky |
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Thomas Petters The Petters Co. founder is at the center of what allegedly may have been a scheme that defrauded hedge funds and cost investors more than $3.5 billion. Those involved claim they lent money to Petters Co. to finance sales of electronic goods to discount retailers. Indicted in December, Mr. Petters allegedly deceived investors with phony documents showing fictional deals and used investors' money to enrich himself and pay off other lenders. He has pleaded not guilty.
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Thomas
Peters |
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Bernard L. Madoff On Dec. 11. Mr. Madoff was arrested for what federal agents described as a massive Ponzi scheme. which could leave investors with billions in losses. The Securities and Exchange Commission. in a civil complaint said it was an ongoing $50 billion swindle. The 70-year-old Mr. Madoff is the founder and primary owner of Bernard L. Madoff Investment Securities LLC. a firm is primarily known for its business in market-making. But Mr. Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions. According to the complaints. Mr. Madoff ran the investment advisory as a secretive business, independent from the firm's proprietary trading and market-making operations. The SEC complaint said that the alleged fraud was run through this arm of Mr. Madoff's company. Mr. Madoff's sons, who worked on the market-making side of business, reportedly turned him in the day before. Bernard Madoff, Money Manager for the Wealthy, |
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Bernard Madoff |
source: Wall Street Journal
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