White collar crime is the catch-all term given to a variety of financial offences, such as embezzlement, fraud and insider trading. These financial schemes and swindles can result in huge pay-outs for the architects behind them, which is probably why so many people find themselves tempted by the opportunities white collar crime presents.
Factually, white collar crime costs the US economy between $300 billion and $600 billion every year, with estimates suggesting that every US company will lose about 5% of their revenue to fraudsters and swindlers annually. These are damaging losses, for companies large and small, and go a long way towards explaining why law enforcement agencies, and businesses themselves, are taking white collar crime so seriously.
Despite the existence of the law, and a myriad of prosecuted individuals, white collar crime is still a great temptation, and the world has seen many of the biggest heists yet. Some of the biggest of these ‘professional’ crimes in history have seen their perpetrators steal and embezzle millions or even billions of dollars, yet many of these powerful and influential men and women seem to get their comeuppance in the end. After all, there is usually a paper trail, or more likely a computer trail these days, which investigators can use to “follow the money.”
So, what are 15 of the biggest white collar crimes in history? Read on to find out.
15. Martin Frankel’s Blanket Of Lies
Martin Frankel has already been banned from trading stocks and shares, following previous indiscretions, when he changed his name and bought a number of US-based insurance companies. He used the assets of these firms to buy a luxury home and several sports cars, all to impress women he met on the Internet, apparently. When authorities started to get suspicious, he even set up a fake Catholic charity to improve his PR and to discredit those making allegations against him. Eventually, Frankel’s web of lies disintegrated, and he was arrested in Germany after trying to flee the US. Frankel was ultimately sentenced to 16 years in jail.
14. Jerome Kerviel Lost Trades On Purpose
French banker Jerome Kerviel managed to lose an impressive $7 billion of his clients’ money, in just three years, all while making money for his employer, Société Générale. Kerviel actually created losing trades on purpose, in order to hide what he had been doing, and to offset the gains he had made illegally on behalf of his employer. As a result, Kerviel was sentenced to three years in prison in 2010, and was ordered to pay back some of the investors’ money that he lost in illegal trades. To date, there are a number of industry insiders who believe that Kerviel was made a scapegoat by his employer, who may not have been quite as innocent as they claimed.
13. Albert H. Wiggin Shorted Market Shares
The name Albert H. Wiggin may not be as familiar as Enron or WorldCom, but he does have the dubious honor of being one of the first white collar criminals in history. He was head of the Chase National Bank from 1904, but it was the stock market crash of 1929 that ended his successful career. It was eventually revealed that Wiggin had shorted 40,000 Chase National shares, essentially betting that his own company would fail. He made a personal profit of $4 million, a vast amount of money in 1929, but at that point in history, he wasn’t even breaking the law!
12. Bernard Ebbers Faked Company Accounts
As Chief Executive of telecoms company WorldCom, Bernie Ebbers had a reputation as a fearsome operator, overseeing a number of aggressive takeovers and mergers. When one such merger fell apart, Ebbers employed some “creative accounting” to make his company’s accounts look a lot healthier than they really were, and to keep the price of its shares higher than they should have been. The nearly $4 billion fraud was detected by a team of internal auditors, who then reported Ebbers to the US Securities and Exchange Commission, the body in charge of investigating financial crimes connected to the stock market. Ebbers was consequently sentenced to 25 years in prison for his part in the scam.
11. Jeff Skilling Masked Enron’s Massive Debt
Enron was another company which decided to use “creative accounting” to get out of a financial mess, but only ended up making the whole problem a lot, lot worse. Enron hid the company’s debt in made-up shell companies to make it appear as though the energy giant was in great financial shape, when they were actually billions of dollars in debt. CEO Jeff Skilling was eventually charged over the fraud and sentenced to 14 years in prison, but the Enron scandal had other white collar participants too. Established accounting company Arthur Andersen was actually forced out of business because of their own role in the Enron scandal.
10. Charles Ponzi, The Father Of Pyramid Schemes
Charles Ponzi is a white collar criminal so famous, that he gave his name to a very particular type of fraud, which is often otherwise known as a pyramid scheme. Ponzi carried out his own fraud back in the 1920s, conning a large group of investors into buying discount postage coupons. These initial investors were paid back by the money Ponzi took from a second group of investors, while the second group were paid back by the funds from a third group, and so on and so forth – until Ponzi, who had already made $20 million for himself, was caught, and ended up spending years in jail.
9. Jordan Belfort Caused $200 Million Investor Losses
If you have ever seen the movie Wolf of Wall Street then the name Jordan Belfort will probably be familiar to you. Belfort was the inspiration for Leonardo di Caprio’s character in the film, the loud, brash party animal, who loved making money more than anything else in the world. The movie also showed the authorities’ constant efforts to prove that Belfort was manipulating the market or taking part in illegal trades, and eventually, investigators did find the evidence they were looking for. Belfort spent two years in jail and agreed to pay back more than half the $200 million in investor losses identified by the FBI.
8. Jack Abramoff Deceived An Unsuspecting Congressman
Jack Abramoff not only defrauded his clients – a group of Native American tribes – out of millions of dollars, but also managed to rope an Ohio congressman into his web of deceit too. In fact, there were so many concerns about Abramoff’s political influence that the federal government set up a task force to investigate his lobbying activities, and to establish just who had been compromised by his white collar crimes. Abramoff’s fraud led to him spending six years in jail, and the courts also forced him to pay millions in restitution to his clients, while Republican congressman Bob Ney was also jailed for accepting bribes from Abramoff.
7. Nick Leeson Singlehandedly Caused A Bank To Collapse
British banker Nick Leeson managed to single handedly bring down the historic Barings Bank, thanks to his white collar crime. For several years in the early-90s, Leeson made a series of unauthorized trades that were so successful, that he managed to earn huge bonuses from his bosses at Barings. However, Leeson ran out of luck when an earthquake in Japan sent the stock market tumbling, and he could no longer hide the losses he had made. Leeson eventually fled Singapore, leaving behind losses of $1.4 billion, which were twice Barings’ trading capital, leaving behind a note of apology. Later on, Barings was declared bankrupt, and Leeson was sentenced to 6 and a half years in jail.
6. Aviv Mizrahi, The Broke Guy Who Tricked Banks Into Believing He Was A Millionaire
White-collar criminal Aviv Mizrahi is still on the run, and on the FBI’s Most Wanted list, after fleeing to Israel following his involvement in a $33 million bank fraud. Mizrahi was a relatively successful businessman, but he used a series of false financial documents to convince banks that his net worth was in the millions, rather than the thousands. Only too happy to help such a wealthy customer, these banks lent him a total of $33 million. Unfortunately for these banks, by the time they realized that Mizrahi had been lying, he had fled the US, and was on his way to Israel.
5. Barry Minkow, Ponzi’s Good Student
The life of white-collar criminal Barry Minkow reads more like a movie script than the antics of a real person. Minkow got his first taste of white-collar crime in the 1980s, when he earned $100 million from a Ponzi scheme. He was sentenced to 25 years in prison for a range of financial crimes, from tax evasion to racketeering. After he was released from prison early in 1995, it appeared that Minkow had really turned his life around, and he even helped investigators nab other Ponzi scheme operators in the area where he lived. However, his conversion turned out to be too good to be true, and in 2011 he was sentenced to five years in prison for insider trading and fraud.
4. Ivan Boesky Did Insider Trading, But Ratted Out Accomplices
Successful fund manager Ivan Boesky was just one of the larger than life personalities who served as inspiration for the fictional character Gordon Gekko in Oliver Stone’s film Wall Street – the man behind the infamous “greed is good” speech. Boesky made millions throughout the 1970s and 1980s, although many of the tricks of the trade that he used back then are now considered immoral if not illegal. By the late-80s authorities had started to crack down on the biggest funds and their managers, and unlike a lot of the names on this list, Boesky actually agreed to help investigators who were looking into insider trading on a massive scale. His evidence helped secure 14 convictions, and Boesky ended up serving just 22 months of his own three-year sentence.
3. Allen Stanford, A Fraudster In Disguise
Allen Stanford was once one of the richest men in America, until it emerged that his $2.2 billion personal fortune had been earned through a complicated and sophisticated Ponzi scheme. Investors had first raised concerns about Stanford’s business practices in 1997, but the authorities only started to investigate him after the financial crash of 2008. Despite the overwhelming evidence against him, Stanford continued to deny responsibility for his crimes – preferring instead to blame them on the lack of government regulations! He was eventually sentenced to an astonishing 110 years in prison, and will also have to pay a civil penalty of almost $6 billion.
2. Martha Stewart Indiscreet Insider Trading
Better known as a TV presenter and perfect home-maker, Martha Stewart may be an unexpected name on a list of white collar criminals, yet she spent five months in prison for insider trading in 2004. Stewart wasn’t just the face of her media business, but also the brains behind the operation. When she received an inside tip from her broker, Stewart sold shares she held in a pharmaceutical company, saving herself thousands of dollars in losses when the firm’s share price dropped the next day. Unfortunately for Stewart, such a suspiciously large trade attracted the interest of investigators, and she was found guilty of insider trading before serving five months of a two-year sentence.
1. Bernie Madoff, The Con Who Duped His Celebrity Friends
And finally, we come to the undisputed King of the Ponzi scheme, Bernie Madoff. Madoff was responsible for one of the biggest frauds ever perpetrated in the US, totalling an astonishing $65 billion. Madoff didn’t just target ordinary investors, but even suckered his celebrity friends into getting involved, including Kevin Bacon, John Malkovich and Steven Spielberg. Madoff was arrested after he unwisely confessed to his sons what he had been up to, and one of them promptly went straight to the authorities to spill the beans. Madoff was subsequently sentenced to 150 years in prison, but others involved in the wide-reaching Ponzi scheme are still being brought to justice.
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