Click on the headline below (underlined) to go to full original article
In the US the term "PONZI SCHEME" is used to describe what the rest of
the world calls "Pyramid Scheme" or in Spanish "ESTAFA PIRAMIDE". Here we present the biggest global Ponzi Schemes of
the 21st Century.
years after arriving at the Federal Correctional Complex in Butner, N.C., Madoff says he wants to help investigators recover
the billions of dollars his scheme robbed from innocent investors. "All I care about is to get the money back," he
it is hard to believe what he says when you consider the enormity of Madoff's crime.The Trustee says investors lost
$17 billion in capital they invested with Madoff and even Bernie says the scheme was "...a curse, it was a horror" that came
to a calamitous end in December 2008, when Madoff was arrested. Now he's changing his story.
In anemail penned from jail, one of the biggest Ponzi schemers in history told
Fox Business Network that those responsible for recouping his victims’ money should keep going after the banks where
he had accounts. “The Banks had to know what I was doing regarding the fraud,” Madoff wrote in the email.
Much like a professional athlete who turns to “juicing”
to rise to the top, Madoff began to apply his financial acumen in a more sinister manner, officially defrauding his investors
(which included Holocaust survivor charities) of over $18 billion. But as he has said in interviews, it really was never about
the money. Said Madoff, “We made a very nice living. I didn’t need the investment-advisory business. I took it
on and got myself involved in it, but if you think I woke up one morning and said, ‘Well, listen, I need to be able
to buy a boat and a plane, and this is what I’m going to do,’ that’s wrong. ” Madoff’s subtext?
It was never about the money. It was about respect.
Before long, Madoff’s too-good-to-be-true returns did result
in the recognition he craved. “The chairman of Banco Santander came down to see me, the chairman of Credit Suisse came
down, the chairman of UBS came down; I had all of these major banks” he says, “It is a head trip. (Those people)
sitting there, telling you, ‘You can do this.’ It feeds your ego. All of a sudden, these banks which wouldn’t
give you the time of day, they’re willing to give you a billion dollars.” Now Madoff was special, but as we have
seen, with recognition comes the tenuous task of maintaining the label. Madoff became a prisoner of his own need to be recognized.
He said of living this lie, “It was a nightmare for me. I wish they caught me six years ago. Eight years ago.”
Even in the face of this torment, he was unable to free himself from his need to be thought of highly by his peers, the Wall
Street insiders who had never really accepted the Jewish kid from Brooklyn as one of their own.
Problems persist with policing the financial industry, even after the wave
of rules enacted since the collapse ofBernard L. Madoff’s giantPonzi schemein 2008. And the challenge of oversight is not becoming any
easier, with the ranks of financial advisers swelling. As new regulations crimp profits, big banks like Wells Fargo are ramping
up their brokerage businesses in an effort to make up for lost revenue. Amid the renewed focus, banks have spent millions
of dollars to beef up their compliance systems and improve their oversight. Regulators, too, have bolstered their efforts,
increasing enforcement and adopting new measures. Every month, the Financial Industry Regulatory Authority, a Wall Street
watchdog, penalizes more than 100 brokers for various actions, including unauthorized trading and fraudulent activities, as
well as smaller violations. “Theft, Ponzi schemes and other financial scams continue to happen at an alarming rate,”
said Thomas Ajamie, a plaintiff’s lawyer...
Treasury Department watchdog ordered JPMorgan Chase & Co to work with U.S.regulatorsseeking documents in connection with a probe into the bank's relationship with convicted
Ponzi schemer Bernard Madoff, in a warning letter dated December 21...the Office of the Comptroller of the Currency has been unable to get documents
it requested. JPMorgan has argued it does not have to turn over certain kinds of documents to the OCC because it would impinge
on its attorney-client privilege rights, according to the letter.
Before confessing four years ago this month to the largest
investment scam in U.S. history, Madoff was prominent in the financial community. He served as a non-executive chairman of
the NASDAQ, and his firm was once among the largest market makers on Wall Street.
"(O)ne would be led to believe that with the recent
spate of insider trading prosecution that insider trading is a new development," Madoff writes. "This is false. It has been
present in the market forever, but rarely prosecuted. The same can be said
of front running of orders."
Peter Madoff has
been sentenced to ten years in prison for doctoring financial books during his brother's multi-billion dollar Ponzi scheme.
Laura Taylor Swain, US District Court judge, sentenced Madoff on Thursday and ordered the forfeiture of $143.1b which she
said would seal his "financial ruination". "To take his story at face value, he knew that the business operation was a little
bit crooked, and he was content to go along with that," said Swain. Madoff pleaded guilty in June to charges of conspiracy
to commit securities fraud while serving as the chief compliance officer and senior managing director at his brother's firm.He
previously denied knowledge of the Ponzi scheme until shortly before his brother was arrested, accepted "full responsibility"
for his actions at the hearing."I am deeply ashamed of my conduct," said Madoff.
It could be likened to the legal version of winning the lottery – a group
of investors in Bernard Madoff’s $65 billionPonzi scheme, once on the brink of having their $141 million claim denied and instead facing a $28 million clawback
lawsuit, now stand to not only recover their initial investment but tolegallyrealize asizeable profit from the largest Ponzi scheme in history. But such a remarkable outcome- indeed,
the first in memory – was not typical, and is due in large part to a clever legal strategy featuring multiple parties,
multiple lawsuits, and, of course, deep pockets.
The Ponzi scheme
was exposed four years ago Tuesday. The fraud wiped out an estimated $17 billion in principal, destroyed life savings, derailed
retirements and, in a few cases, ended lives. So
far, Mr. Madoff himself remains the only person connected to the fraud to receive a prison sentence, and he is serving a 150-year
term. His brother, Peter Madoff, pleaded guilty in June to falsifying records and conspiracy. He denied knowing about the
Ponzi scheme and is set to be sentenced Dec. 20. Two
former back-office employees, two computer programmers and former Chief Operating Officer Daniel Bonventre have been accused
of various actions that facilitated the fraud. The employees have pleaded not guilty, and a trial is set for October. Meanwhile,
Mr. Madoff's victims are deep into sentences of their own.
suspect that one reason why psychologists and other social scientists have avoided studying gullibility is because it is affected
by so many factors, and is so micro-context dependent that it is impossible to predict whether and under what circumstances
a person will behave gullibly. A related problem is that the most catastrophic examples of gullibility (such as losing one’s
life savings in a scam) are low frequency behaviors that may only happen once or twice in one’s lifetime. While as a
rule I tend to be a skeptic about claims that seem too good to be true, the chance to invest in a Madoff-run fund was one
case where a host of factors — situational, cognitive, personality and emotional — came together to cause me to
put my critical faculties on the shelf.
The recent $1 billionsuitagainstBank of America/Countrywide alleging that the bank sold
defective loans toFannie MaeandFreddie Macis
but a small piece of this unraveling series of financial flim-flams, which rival most scams because of its pervasive nature
and involvement of thousands of financial institutions and intermediaries...mortgage fraud ...combined easy money, greed and
securitizing that avarice all over the world. It was based on the myth that home prices don’t decline and quick profits
could be had by nearly anyone...it may prove to be the mother of all swindles because it nearly took down
the world’s largest financial system...Starting in 2006, the FBI got wind of some 7,500 suspicious mortgage activities. By 2008, that
figure doubled and peaked in the second quarter of last year at nearly30,000...these reports were the proverbial tip of the iceberg,
because they only looked at the problem from one step in the process.Here’s what else was going on, although we don’t have any hard numbers:
Mortgage Foreclosure “Rescues.”
Companies would set up shop to promise defaulting homeowners that they could halt the foreclosure process. They’d
fleece the hapless homeowner for a steep fee, then move on.
Appraisal Scams. Individuals would hire crooked appraisers to under-appraise a home, obtain a mortgage,
then sell it at a much-higher price.
Securitization Swindles. This may be the biggest scam of all. Junk mortgages were bundled, given
the highest credit ratings, then sold to investors in vehicles like collateralized mortgage obligations. These “sub-prime
loans” are still on the books of some of our largest banks, Fannie Mae and Freddie Mac.
Robo-Signing. Banks eager to sell loans toWall Streethurried
the process along by creating automated, illegitimate pipelines. State attorneys general settled with the banks on this issue,
although no one seems to have been prosecuted for these crimes and it’s done little to stem the foreclosure wave.
Predatory Lending. Low-income areas were targeted by rapacious brokers and bankers to sell mortgages
and home-equity loans with high rates and fees to people who couldn’t afford them.
The prosecutor's written request, which may or
may not be accepted by the judge, said UBS had to answer to claims it had "cheated" French clients by sponsoring a Luxembourg-registered
fund, Luxalpha, which for years fed assets directly to Madoff without saying so in the prospectus. These claims also form
part of an ongoing U.S. lawsuit against UBS pursued by Irving Picard, the trustee seeking money for victims of the Madoff
fraud. The bank has always denied the allegations.
Peter Madoff, who pleaded
guilty in June in Manhattan federal court, asked for more time to file the 11 years of amended tax returns required under
the terms of his agreement with the U.S. Bernard Madoff received a prison sentence of 150 years for perpetrating the biggest
investor fraud in U.S. history.
It was thought the massive deception began some time after the 1987 crash when Madoff scrambled
to improve performance after the downturn. Now it seems it began more than a decade earlier. Federal prosecutors recentlyindictedfive
long-time employees of Madoff Investment Securities LLC on 33 counts. The government alleges that the former Madoff workers
engaged in a ” conspiracy that dates back to at least the early 1970s. In addition, the superseding indictment includes
a variety of new charges against the defendants, including bank fraud charges related to both corporate and personal loans,
and new tax offenses.”
say Wall Street swindler Bernard Madoff had plenty of people working with him when he began his conspiracy to rip off investors
as far back as the early 1970s. The revelation came in a rewritten indictment that boosted charges against five long-time
employees of the investment firm Madoff ran from his Manhattan offices.
A November 2010
indictment had alleged that a conspiracy to defraud Madoff's clients began in 1992, and Madoff insisted at his sentencing
that he carried out his scheme alone. But the newly written indictment, revealed Monday, says it began decades earlier with
numerous other people in his office involved. The indictment also adds new charges of bank fraud and new tax offenses to the
cases against five people who worked with Madoff...
FBI acting assistant
director-in-charge Mary Galligan said, "This largest-ever Ponzi scheme was not the work of one person. Each of the defendants
in his or her way allegedly played a key role in designing, building or maintaining the house of cards. The habitual doctoring
of books and records, the fictitious trades, the phantom accounts, were the core of the charade. As alleged, they were the
work of these defendants."
Checks ranging from $1,784 to $526.9 million were mailed Wednesday
to 1,230 former customers of Bernard L. Madoff Investment Securities, according to Irving Picard, the trustee liquidating
the firm. The latest payout more than triples the total recovery to
$3.63 billion, Picard said Thursday. Thus 1,074 customers with valid claims, or 44 percent of the total number,
will be fully repaid, he added. Customers
had previously recovered $1.15 billion, including sums committed by the Securities Investor Protection Corp., which helps
customers of failed brokerages. The average payout in Wednesday’s distribution was $2.02 million.
The $65 billion fraud that Bernard Madoff perpetrated has
been called the largest Ponzi scheme in history. Though the magnitude, scale and details are different, Mr. Ponzi’s
scheme and Mr. Madoff’s fraud each reflect their respective, super-heated financial eras.
Madoff investment scandalbroke in December 2008 whenformerNASDAQchairman Bernard Madoffadmitted that the wealth management arm of his business was an elaboratePonzi scheme... Prosecutors estimated the size of the fraud to be $64.8 billion, based on
the amounts in the accounts of Madoff's 4,800 clients as of November 30, 2008...Madoff's personal and business asset freeze has created a chain reaction
throughout the world's business and philanthropic community, forcing many organizations to at least temporarilyclose.
Why do you think it is
important for anti-fraud professionals to understand the psyche of fraudsters like Bernard Madoff?
It is essential that all
of us, especially fraud fighters, understand how ordinary a Ponzi schemer’s personality can seem. Because we only define
them as Ponzi schemers in hindsight, it is very hard for us to put ourselves back into the pre-revelation mindset to appreciate
what made these characters so appealing. A scholar whose work I admire described a Ponzi schemer as someone who can perfectly
impersonate an honest person. Sometimes anti-fraud professionals underestimate how credible these crooks are since they typically
intervene after a crime has already occurred. If we ever hope to move in the direction of early detection, fraud fighters
have to learn the early signs of a Ponzi scheme.
Another important lesson
about the psyche of a fraudster like Madoff is his capacity for self deception. The first and most important lie that a Ponzi
schemer tells is to himself: that he can get away with it. His capacity to tell lies is impacted by his own capacity to lie
to himself. As I say in my book, The Wizard of Lies, a Ponzi scheme is the crime of an egotist, not a sadist. Ponzi
schemers are a different kind of criminal than other white-collar criminals. They don’t recognize they are hurting people
until the music has stopped. They don’t even think they have victims, but rather they have beneficiaries. You can always
tell yourself that the day of reckoning will never come.
Bernie Madoff brought
the term "Ponzi scheme" back into the limelight after his confession and now we see a new scheme uncovered almost every day
in the news. Why do you think the Ponzi scheme still continues to "work?"
The Ponzi scheme is an
ancient form of fraud. It is nothing but a liar with a bank account. Given how simple it is, the rest of it is just window
dressing. It’s like a Shakespearean play, just with different costumes, mannerisms and stage sets. You can dress it
up in real estate investment language, foreign currency language, elaborate derivatives, etc. Because it is so simple, it
has been able to constantly reinvent itself.
Anotherreason it continues to thrive is the inherent capacity of human beings to
trust one another. This is a good thing; we do not want to eliminate this from human life, but it is also a liability. To
some extent a Ponzi scheme is the flaw in the virtue of human trust. We can never afford to cut off the oxygen Ponzi schemes
live on: trust. We would never want a society without trust. With frauds like embezzlement or bribery, you don’t need trust.
With embezzling, trust is largely replaced with process and the criminal just finds a way around the process.
With bribery,trust is never part of the equation, except for the infamous "honor among thieves."
But only someone we trust can lure us into a Ponzi scheme -- without trust, the crime is
not even possible.
he claimed crisis-era successes, the SEC said, he actually sustained heavy losses in 2008. Among the major causes was the
Mr. Madoff's Ponzi scheme, in which several Battoo-managed hedge funds were heavily invested. Mr. Battoo also borrowed money
to increase the size of those investments, the regulator said. After Mr. Madoff's arrest, Mr. Battoo assured investors that
the Madoff fraud had only a nominal impact on the portfolios. Mr.
Battoo also faced major losses from a failed derivatives program, the SEC said.
The Official Stanford Investors Committee and the court-appointed receiver of Allen Stanford's
financial empire have sued Antigua and Barbuda, the Eastern Caribbean Central Bank and 23 former Stanford Financial Group
Co executives, accusing them of
assisting in the financier's $7 billion Ponzi scheme.
The committee is seeking at least $90 million of transfers to Antigua, according to the complaint
filed on February 15 in U.S. Federal Court in Dallas. It also is seeking punitive damages. It accuses Antigua and Barbuda
of shielding Stanford's activities in exchange for loans that were not repaid and real estate. The suit accuses the twin-island nation of being a "'blood brother' to Stanford,
and an integral component of Stanford's fraudulent enterprise", according to court documents....
The parties "reached
an agreement in principle that, if finalized and approved by the relevant authorities," would result in coordination of victim
claims, increased information sharing and cooperation on asset recovery, Wide and Dickson said in an e-mailed statement. An
estimated 20,000 investors were defrauded of more than $7 billion through a Ponzi scheme that Stanford created around bogus
certificates of deposit sold by Antigua-based Stanford International Bank Ltd. Stanford, 63, was convicted in March of leading
the fraud and stealing more than $2 billion to finance a lavish lifestyle and an array of money-losing ventures, ranging from
Caribbean resort developments to cricket tournaments. He is serving a 110-year sentence in a federal prison in Florida as
he appeals his conviction and sentence.
Two former associates
of R. Allen Stanford have been convicted of fraud for trying to help the imprisoned Texas financier conceal a $7 billion Ponzi
scheme. Prosecutors in Houston say 70-year-old Gilbert Lopez Jr. and 40-year-old Mark Kuhrt were both convicted Monday of
conspiracy to commit wire fraud and nine counts of wire fraud. Each count carries a maximum 20 years in prison.
Two Stanford Financial Group Co. accountants actively
assisted R. Allen Stanford in perpetrating a $7 billion investor fraud, a prosecutor alleged at the start of the last criminal
trial tied to the Ponzi scheme. Chief
Accounting Officer Gilbert Lopez, 70, and Global Controller Mark Kuhrt, 40, face 10 counts of wire fraud and one count of
conspiracy to commit wire fraud, which could send them to prison for more than 20 years if convicted. The men pleaded not
guilty after they were indicted with Stanford in June 2009. “This
trial is about two high-level corporate accountants who knew about the biggest part of the fraud and actively worked behind
the scenes for years to cover it up,” Jeffrey Goldberg, a prosecutor from the U.S. Justice Department, told a federal
Texas financier Allen Stanford was indicted with a former Antiguan regulator on charges they helped direct a $7 billion fraud
that U.S. prosecutors said put the“integrity of the markets” at risk...Stanford, 59, faces charges of conspiracy
to commit securities, mail and wire fraud...The scam used Stanford’s bank in Antigua and alleged bribes to officials
there to defraud at least 30,000 investors through the sale of certificates of deposit, the Justice Department said.
In their arguments, government prosecutors made a comparison
between Stanford's crimes and those of Bernie Madoff, who pleaded guilty and is serving 150 years.
Madoff's fraud was bigger - as much as $65 billion compared with
Stanford's $7 billion - but the Stanford case had more victims who had far less they could afford to lose.
Stanford targeted upper middle-class investors, many of them
retirees, looking for a safe haven for their money. He bamboozled them with reassures about deposit insurance that didn't
exist, and he assuaged their concerns about Caribbean banks.
Unlike Madoff, Stanford lived so lavishly that little of their
money remains. While Madoff's victims can divvy up billions that were recovered on their behalf, Stanford left little more
than the financial veneer of fancy offices, overvalued real estate and worthless investments.
In March, a jury found that Stanford ensnared thousands
of investors around the globe through a fraud centered at his Stanford International Bank on the Caribbean island of Antigua. During
Thursday's hearing, Stanford lawyer Ali Fazel set a combative tone by accusing prosecutors of misleading the public in describing
the Stanford case as a “Ponzi scheme” — one that pays early investors with funds raised from later ones
rather than from actual investments. “The government insists on calling this a Ponzi scheme because it sounds sexy
for the media,” Fazel said. Rather, he told Hittner, returning to themes debated during the trial that concluded
in March, Stanford made actual investments in myriad businesses and could have covered the CD balances if not for the heavy-handed
intervention of federal regulators. He also suggested that Stanford is being unfairly punished because of the backlash
that followed Bernard Madoff's historic Ponzi scheme. Madoff pleaded guilty three years ago and is serving a 150-year prison
Attention is turning to the role a respected Canadian
bank may have played in allowing Stanford to strip 21,000 investors of their savings.
The court-designated liquidators of Stanford’s
crumbling assets claim the Toronto-Dominion Bank was the principal foreign banking partner for Stanford as he flowed more
than US$9-billion through its accounts in Canada while looting his way to notoriety as a Ponzi schemer second only to Bernie
TD, Canada’s second-largest lender, is accused
of maintaining a relationship with Stanford International Bank (SIB) even as other financial institutions shunned the Antigua-based
bank over concerns over money laundering and shady dealing.
A member of the famed Winans
gospel singing family has pleaded guilty to defrauding investors in an $8 million Ponzi scheme, the United StatesAttorney’s
Office said today. Michael Winans, Jr., 30, ofJessup,Md., pleaded guilty today in federal court. He had been charged
with promising investors huge returns for investing in phony Saudi Arabian crude oil bonds.
Two figures at the center of an alleged $164 million real estate scam marketed
out of South Florida have been indicted by a federal grand jury in San Francisco on mail fraud and conspiracy charges...Accused
of fraudulently soliciting $91.3 million from investors to build a resort in the Dominican Republic that never opened...each
man faces up to 20 years in prison, and a maximum fine that is twice the value of the property involved.
A jury convicted Cladek in January of four counts of wire fraud,
nine counts of mail fraud and one count of conspiracy. It was a Ponzi scheme and at least $50 million of investors’
money was lost. Cladek opened Lydia Cladek Inc. in
1998 and the company, with an office in St. Augustine Beach, eventually grew to roughly 100 employees. The company bought
subprime automobile finance contracts from dealers at discounted prices.
Before the FBI raided her office in the spring of 2010, Cladek
had three vacation homes, lived in a gated community in St. Augustine Beach and had $2,000-sheets on her bed. She sipped tea
at socials, bought lavish real estate properties and was a churchgoer with a reputation of having a soft spot for animals.
But her victims say all of that was a facade she used
to help gain older, typically women, investors, who she promised a sizeable chunk of the income from the automobile notes’
In what sounded too good to be true, a South Carolinacompany offered investors the opportunity to cash in
on the boom by purchasing actual silver bars that would then be kept in storage at a DelawareDepository. The company, Atlantic Bullion and Coin, Inc. (“AB&C”)
and its owner, Ronnie Wilson (“Wilson”), proceeded to take in approximately $65 million during the three-year
period from January 2009 to February 2012, including$33
million alone from January 2011 to February 2012. Based on prevailing silver prices,this should have translated into the purchase of thousandsof 100-ounce and 1000-ounce silver bars
held in storage for investors. However, as authorities would discover in early 2012, the operation was
nothing more than a giant Ponzi scheme.
The Securities and Exchange Commission announced
Friday that fraud charges have been settled and an emergency asset freeze has been requested to halt an alleged $600 million
Ponzi scheme on the verge of collapse.The
that online marketer Paul Burks of Lexington, N.C., and his company Rex Venture Group have more than one million Internet
customers nationwide and overseas through the website ZeekRewards.com, which they began in January 2011. Customers were allegedly
offered several ways to earn money through the ZeekRewards program, and two methods involved purchasing unregistered securities
in the form of investment contracts.
The Securities and Exchange Commission today announced fraud charges
and an emergency asset freeze against a Denver-based company and two Colorado residents carrying out a $15.7 million Ponzi
scheme harming more than 120 investors nationwide...Bridge Premium Finance LLC, purported to be in the business of insurance premium financing.
They promised investors annual returns of up to 12 percent, and represented that investor funds would be used to make short-term
loans to small businessesto enable
them to pay their up-front commercial insurance premiums.
In a Ponzi scheme, potential investors are wooed with promises
of unusually large returns, usually attributed to the investment manager’s savvy, skill or some other secret sauce.
The returns are repaid, at least for a time, out of new investors’
principal, not from profits. This can continue as long as new investors line up with cash, and old investors don’t try
to withdraw too much of their money at once.
week Allen Stanford was sentenced to 110 years in a US jail for his role in an alleged $7bn (£4.5bn) Ponzi scheme, one of
the largest frauds in history. This prosecution follows a spate of recent convictions for Ponzi frauds including:
The sentencing of Kautilya
Nandan Pruthi here in the UK. He was recently convicted for duping celebrities, sports stars and hundreds of other victims
out of £115m in what may be seen as Britain’s largest and longest running Ponzi investment scam
The conviction of Keith
Franklin Simmons in the US in May, to 50 years in prison for four counts of fraud in connection with a £25.7m Ponzi scheme
One of the world’s
largest Ponzi scheme frauds to date totalled $65bn and was run by the now notorious Bernard Madoff who is currently in the
third year of his 150 year sentence.
This website is dedicated to providing a reference
source on the scourge that is whirling across planet Earth destroying governments, businesses, cities, families and imperiling civilized
culture by agregating and making available on one site sources of news, analysis and opinion about corruption.
Criteria for inclusion on this site of "BIG
Very High level corporate and/or government official(s) involved;
Very Large amount of money lost;
International financing/aid agency program;
Global impact on numerous countries/businesses/investors; and/or
Classic example that can be used in training/seminarsmajor cases of global fraud and corruption.
As a news agregator website this site primarily serves to gather for research and educational
purposes in one single place news and information specifically pertinent to major global corruption in business and government.
The news items, views, editorials and opinions summarized or reported on this website are taken from the general media and
reputable blogs, websites, etc., and are exclusively the responsibility of the original sources and/or authors. In accordance
with Title 17 U. S. C. Section 107, any copyrighted work on this website is distributed under fair use without profit or payment
to those who have expressed an interest in receiving the included information for nonprofit research and educational purposes
only. Ref: http://www4.law.cornell.edu/uscode/17/107html