10 Financial Frauds that Shocked The World

Written by on July 30, 2012 in Money - No comments | Print this page


As shocking as the swindle of millions by American, Bernie Madoff was, his case isn’t the only example of huge financial fraud in history. Despite the constant changes in regulations and stronger enforcement of laws by government agencies, unbelievable financial fraud happened in the past and still continues to happen today.

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The Bernie Madoff case is now believed to be the largest financial fraud ever committed. Madoff, a New York fund manager and Wall Street icon, took money from investment clients with the promise of significant returns. Instead, he used the money to pay other clients and fund a lavish lifestyle for years. Private clients, banks and charities all fell victim to the scheme, losing billions.

Enron, an energy company that collapsed in 2001, falsified bank profit and loss statements to lure investors and hide the company’s troubles from stockholders. When the business went bankrupt in 2001, shareholders lost billions of dollars.

Charles Ponzi designed the original “Ponzi” scheme of fooling investors, which was the same method that Madoff used. Around 40,000 people lost an estimated 15 million to Ponzi in the 1920s in the United States.

Parmalat, a French food company, was involved in deceptive and fraudulent income and debt statements. Sometimes called the “European Enron,” around 10 billion of declared assets simply disappeared when the company collapsed in 2003.

Nicholas Leeson, a trader, caused the collapse of the British bank, Barings in 1995. Leeson lost 1.3 billion dollars in speculative investing at the bank’s office in Singapore. Leeson’s investing lost the bank money from the start.

Artur Virgílio Alves Reis was the culprit behind one of the largest frauds in history, against the Banco de Portugal in 1925. Reis introduced fake notes in the bank’s name and even used the money to buy shares in the bank itself.

Historically, Amaranth Advisors is one of the largest hedge fund collapses. The United States-based business lost six billion dollars by the end of 2006. Amaranth invested heavily in the rising price of natural gas, leading many to question its lack of risk management.

Jerome Kerviel, a trader in France, lost 4.9 billion dollars in unauthorized trades through the Société Générale. Allegedly, Kerviel’s actions were fueled by the death of his father two years earlier and his wife leaving him.

Bernard Ebbers, the former CEO of WorldCom, was involved in an 11 billion dollar fraud scheme in the company. By falsifying documents and misleading investors and the securities exchange, Ebbers would cost United States investors an estimated $100 million when the company went bankrupt in 2005.

Long Term Capital Management was a hedge fund giant on Wall Street. In 1998, the firm fell, losing over 90 percent of its capital. Long Term Capital Management shed 4.6 billion in just under four months, following the financial crisis in Russia at the time.


This great write up has been researched and contributed by Louis Rix, financial expert who currently maintains a Directorship role at Car Finance 247, who are the UK’s leading online car loans broker.


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