Legal Guide

5 Famous Investment Scams in Recent US History

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There have been so many investment fraud cases over the past few years that it can become hard to keep count. But for those who may be a potential victim in such a case, it is really important to take quick action. Speak with a LA Investment Fraud Attorney as soon as possible. And there are certain cases where the fraud simply reaches such a large scale where the matter becomes hard to ignore. And we can now take a look at some of those cases.

  1. Charles Ponzi

There is a reason the phrase “Ponzi Scheme” is now in our vocabulary: it was named after a certain Charles Ponzi. He ran a simple pyramid scheme where he would get funds from new investors in order to pay out the previous people who had given him their money. People were making record returns every year, with some getting over 50 percent returns within a month and a half. Yet for so long, no one questioned what was going on.

  1. Bernard Ebbers

Back in 2005, Bernard Ebbers was accused of exaggerating the amount of money his company was making. He was in charge of WorldCom at the time, and he falsely increased the company’s assets by roughly $11 billion. However, the company’s true assets were nowhere near the figures claimed by Ebbers, which is why their share price eventually tanked from $64 to $1 within a few days of the news story coming out. He was eventually convicted for his financial crimes.

  1. Jordan Belfort

Through a pump and dump scheme, Jordan Belfort managed to make a tremendous amount of money, and influence the market in a big way. He would use his brokers to drive up the price of the stock, and then Belfort would cash out big time, which would result in the stock price plummeting. He would get it done by using brokers who wanted to make it big in the financial world - getting them to sell worthless items to people who did not know much about the financial markets. He was finally caught in 1998.

  1. Bernie Madoff

One of the longest running scams in the financial world was operated by Bernie Madoff. And in some ways, his scheme was the simplest and the easiest to spot. Much like other schemes, Madoff promised record returns to his clients. They were getting crazy returns on an annual basis – much better than how the market was performing. And there was no reason Madoff would ever have been caught, had it not been for the financial crisis. As his big clients started to get jittery, he simply did not have the money to pay everyone back. It turns out Madoff never even invested people’s money – he simply stuck it all in a Chase bank account!

  1. Enron

The two men in charge of Enron, Kenneth Lay and Jeffrey Skilling, exaggerated the company’s earnings and value by enormous amounts. When the news broke, the company’s share price went from $90 to $1 within a single year!

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