Every day there is a new report out about the “new” scam that is out there, but are they really “new”? Scams are a VERY old business and when you start to look at the history of scams you see that the new ones are just variations of the old ones or the old ones just simply have gone unreported for so long that the scam only appears new.
I found the following information at http://money.cnn.com/magazines/fortune/fortune_archive/2002/03/18/319914/index.htm and it shows a wonderful timeline of scams dating back to the 1920’s
1920: The Ponzi scheme Charles Ponzi planned to arbitrage postal coupons–buying them from Spain and selling them to the U.S. Postal Service at a profit. To raise capital, he outlandishly promised investors a 50% return in 90 days. They naturally swarmed in, and he paid the first with cash collected from those coming later. He was imprisoned for defrauding 40,000 people of $15 million.
1929: Albert Wiggin In the summer of 1929, Wiggin, head of Chase National Bank, cashed in by shorting 42,000 shares of his company’s stock. His trades, though legal, were counter to the interests of his shareholders and led to passage of a law prohibiting executives from shorting their own stock.
1930: Ivar Krueger, the Match King Heading companies that made two-thirds of the world’s matches, Krueger ruled–until the Depression. To keep going, he employed 400 off-the-books vehicles that only he understood, scammed his bankers, and forged signatures. His empire collapsed when he had a stroke.
1938: Richard Whitney Ex-NYSE president Whitney propped up his liquor business by tapping a fund for widows and orphans of which he was trustee and stealing from the New York Yacht Club and a relative’s estate. He did three years’ time.
1961: The electrical cartel Executives of GE, Westinghouse, and other big-name companies conspired to serially win bids on federal projects. Seven served time–among the first imprisonments in the 70-year history of the Sherman Antitrust Act.
1962: Billie Sol Estes A wheeler-dealer out to corner the West Texas fertilizer market, Estes built up capital by mortgaging nonexistent farm gear. Jailed in 1965 and paroled in 1971, he did the mortgage bit again, this time with nonexistent oil equipment. He was re-jailed in 1979 for tax evasion and did five years.
1970: Cornfeld and Vesco Bernie Cornfeld’s Investors Overseas Service, a fund-of-funds outfit, tanked in 1970, and Cornfeld was jailed in Switzerland. Robert Vesco (below) “rescued” IOS with $5 million and then absconded with an estimated $250 million, fleeing the U.S. He’s said to be in Cuba serving time for unrelated crimes.
1983: Marc Rich Fraudulent oil trades in 1980-81 netted Rich and his partner, Pincus Green, $105 million, which they moved to offshore subsidiaries. Expecting to be indicted by U.S. Attorney Rudy Giuliani for evading taxes, they fled to Switzerland, where tax evasion is not an extraditable crime. Clinton pardoned Rich in 2001.
1986: Boesky and Milken and Drexel Burnham Lambert The Feds got Wall Streeter Ivan Boesky for insider trading, and then Boesky’s testimony helped them convict Drexel’s Michael Milken (above) for market manipulation. Milken did two years in prison, Boesky 22 months. Drexel died.
1989: Charles Keating and the collapse of Lincoln S&L Keating was convicted of fraudulently marketing junk bonds and making sham deals to manufacture profits. Sentenced to 12 1/2 years, he served less than five. Cost to taxpayers: $3.4 billion, a sum making this the most expensive S&L failure.
1991: BCCI The Bank of Credit & Commerce International got tagged the “Bank for Crooks & Criminals International” after it came crashing down in a money-laundering scandal that disgraced, among others, Clark Clifford, advisor to four Presidents.
1991: Salomon Brothers Trader Paul Mozer violated rules barring one firm from bidding for more than 35% of the securities offered at a Treasury auction. He did four months’ time. Salomon came close to bankruptcy. Chairman John Gutfreund resigned.
1995: Nick Leeson and Barings Bank A 28-year-old derivatives trader based in Singapore, Leeson brought down 233-year-old Barings by betting Japanese stocks would rise. He hid his losses–$1.4 billion–for a while but eventually served more than three years in jail.
1995: Bankers Trust Derivatives traders misled clients Gibson Greetings and Procter & Gamble about the risks of exotic contracts they entered into. P&G sustained about $200 million in losses but got most of it back from BT. The Federal Reserve sanctioned the bank.
1997: Walter Forbes Only months after Cendant was formed by the merger of CUC and HFS, cooked books that created more than $500 million in phony profits showed up at CUC. Walter Forbes, head of CUC, has been indicted on fraud charges and faces trial this year.
1997: Columbia/HCA This Nashville company became the target of the largest-ever federal investigation into health-care scams and agreed in 2000 to an $840 million Medicare-fraud settlement. Included was a criminal fine–rare in corporate America–of $95 million.
1998: Waste Management Fighting to keep its reputation as a fast grower, the company engaged in aggressive accounting for years and then tried straight-out books cooking. In 1998 it took a massive charge, restating years of earnings.
1998: Al Dunlap He became famous as “Chainsaw Al” by firing people. But he was then axed at Sunbeam for illicitly manufacturing earnings. He loved overstating revenues–booking sales, for example, on grills neither paid for nor shipped.
1999: Martin Frankel A financier who siphoned off at least $200 million from a series of insurance companies he controlled, Frankel was arrested in Germany four months after going on the lam. Now jailed in Rhode Island–no bail for this guy–he awaits trial on charges of fraud and conspiracy.
2000: Sotheby’s and Al Taubman The world’s elite were ripped off by years of price-fixing on the part of those supposed bitter competitors, auction houses Sotheby’s and Christie’s. Sotheby’s chairman, Taubman, was found guilty of conspiracy last year. He is yet to be sentenced.