For anyone unfamiliar with the term, or at least its specific definition, a Ponzi scheme is where you create a fake business and then promise the absolute world to anyone and everyone you can bend the ear of, and convince them to invest. Then, and here’s the part that makes this scam so successful, use a portion of these invested funds to pay some of the people who initially invested rather than just taking all the money right away. The idea is that actually delivering on whatever ridiculous promises you made initially will result in even more people investing hoping to see similar returns. You then rinse and repeat these steps until you have a big enough pile and then, just take it all and run. A literal confidence scam.
Named for Italian “businessman” Charles Ponzi a hallmark of this classic swindle and the thing that makes it so popular, even to this day *cough*NFTS*cough*, is that until the scam part happens, it is technically possible for the average Joe to make money.
We’re not advising any people out there to throw their money into one of these things of course, but it’s important to note why this particular grift is so prevalent despite being so well-known the name for it is common parlance.
With that out of the way, here are 10 stories of the most audacious Ponzi schemes in history.
And as always, remember, if it’s too good to be true, it probably is…
10. Greater Ministries International
“Give, and it shall be given unto you” – Luke 6:38
This was the clarion call of Greater Ministries International, a “church” founded by some weirdo called Gerald Payne. Those are two things we feel pretty safe saying without it being considered defamatory in nature because we’re quite literally paraphrasing a report from the Anti-Defamation League on Payne.
Anyway, Payne was a swindler, conman, and lover of animals. That last part isn’t us trying to soften Payne’s image by the way, it’s just that he was once caught traveling through an airport with a bunch of bestiality porn and that detail will be burned into our heads forever, so now you have to think about it too.
Moving on, Payne’s scam was almost cartoonishly simple and he quite literally promised he would double any investor’s money, telling people he was investing in things like precious metals or the buying of foreign debt. However, Payne was able to avoid setting off too many BS alarms by making the targets of his scams people who were already a few sandwiches short of a picnic. The extreme religious right, white supremacists, and members of the sovereign citizen movement. You know, losers.
This isn’t to say ordinary folks weren’t swindled too, but as the scam grew in scale, Payne very deliberately focused his efforts on rabid anti-government types. Which we have to admit is pretty genius, because who are they going to complain to when they get ripped off? The Man.
Speaking of the government, they found it rather difficult to actually stop Payne and his associates due to the fact he was, technically, a church, allowing him to use various loopholes to avoid things like taxes or having to declare income. All in all, Payne was able to swindle people out of almost half a billion dollars before being convicted of big fraud in 1999.
9. ‘Julian Pete’ Oil Scam
Arguably the most important facet of any successful scam or swindle is plain old confidence. Conman is a shortening of Confidence Man after all, and Courtney Chauncey had confidence and then some.
As for the scam itself, Chauncey was able to buy a lease on an oil field in Santa Fe and rather than, you know, drill for oil, instead invested what little money he had left into weirdly antagonistic ads in local newspapers promising big returns. For example, one ad of Chauncey’s explicitly told widows and orphans not to invest in his oil drilling company (with, conspicuously, few oil drills) because it was an investment for people with some walking around money.
Positioning himself and his company, the Julian Petroleum Corporation, as independent with the average American as its ideal investor, Chauncey secured millions in investment with some people literally walking into his office just to hand him their wages.
And, they made some money because Julian did manage to hit oil. A few times, in fact. However, rather than being happy with a decent return on his investment Chauncey used this success to sucker in more people, selling more shares than he was legally able to and throwing the tax man off his scent by sending all his accounting paperwork to Delaware. Which was apparently the Wild West in the Roaring Twenties.
The whole thing eventually crumbled when Chauncey pissed off one too many people with the ability to actually do something about it. Read: the IRS and, weirdly, Charlie Chaplin, who is said to have gotten into a fistfight with the conman at one point. Though why isn’t clear. Someone also literally took a shot at Chauncey at one point though, in fairness, he did once tell investors that if he was lying to them they had his permission to shoot him. So he kinda had that one coming.
8. Towers Financial Corporation
Debt collection is a nasty, sleazy business that tends to attract the absolute worst kind of corporate, money-obsessed sociopath. It’s also potentially incredibly lucrative provided you have a screaming maw of blackness where your soul should be.
For years this is how Towers Financial made its money, buying debt for literal “pennies on the dollar” and then sending people to harass the debtor into paying. As if this wasn’t evil enough, one of the primary targets was people in medical debt. So, like, patients recovering from cancer and stuff. Yeah, believe it or not, this story is about to get worse.
Not content with hounding cancer patients for money they didn’t have, the company, helmed by current skeleton Steven Hoffenberg, began cooking the books and luring in investors with grossly exaggerated financial statements. Selling people on their legitimacy by pointing to their newly hired and handsomely paid consultant, Jeffrey Epstein. Yes, THAT Jeffrey Epstein. So before he was diddling kids he was fiddling the books. Also, unsurprisingly in later years, Hoffenberg would later try to pin the whole thing on Epstein because it’s not like it’s the worst thing that guy did.
When the scam was finally uncovered hundreds of millions of dollars from over 200,000 investors had been stolen and pissed away.
7. Lou Pearlman
Lou Pearlman, or Big Poppa as he liked to style himself (no, really), rose to prominence in the ’90s by being the guy who helped form and manage both the Backstreet Boys and *NSYNC as well as, for a time, a before-she-was-famous Britney Spears when she was a member of the girl-group Innosence. No, we didn’t spell that incorrectly.
Now while this video is about Ponzi schemes we kind of have to mention the other weird stuff Pearlman did because, well, we can’t stop thinking about it. For example, Pearlman was obsessed with blimps so much so that he bought multiple blimps throughout his life, almost all of which immediately crashed. Despite this, Pearlman was able to secure multiple, million-dollar investments in several blimp-orientated companies he founded even though his blimps kept crashing or detonating in mid-air moments after taking off.
On to the scam, using the clout he attained by managing, among other people, Mr. Sexyback himself, Pearlman convinced people to invest in non-existent, non-blimp-related companies with impressive sounding names like “Trans Continental Airlines Inc”. Yes, the guy who crashed, to quote “Almost every one of his blimps,” somehow convinced people to invest millions into an airline that didn’t exist. You cannot make this stuff up.
Eventually, the swindle was revealed, and Pearlman fled to Indonesia where he likely would have remained if not for the fact he continued to live the high life, which attracted the notice of a tourist who recognized him from the news and reported him to the authorities, who then deported his blimp-loving ass back to the US. He died in custody in 2016.
6. Moneytron
Right away, just from the name, you know this one is a scam. But somehow the guy behind Moneytron, supposedly a supercomputer using a proprietary algorithm that could predict the movements of the stock market with unerring accuracy, in effect, offering potentially limitless returns, was a bigger pause for thought than the crappy name.
Okay, so Jean-Pierre van Rossem did have a degree in economics and had worked, briefly, with a Nobel prize-winning economist, but he was also, just a really weird dude to the point he makes Lou Pearlman look positively normal. For example, Rossem, among other things wrote a bizarrely detailed guide to Belgian brothels all seemingly personally reviewed by himself. All 1,000 of them. He also, according to one source, kept his wife’s corpse in a fridge for a bit.
Now you’d think this would put off all but the most desperate or easily swayed investor. Hell, just the whole “potentially unlimited returns” thing is such an obvious and massive red flag it wouldn’t be out of place in Tiananmen Square. But no, Rossem was able to get a lot of people who should have known better, or at least afford to hire people who did, to invest in Moneytron. Including, apparently, the Belgian royal family. When investors inevitably asked to see Moneytron, Rossem would tell them it was totally in his office behind a mysterious door nobody but he could open. Amazingly, this excuse worked on people for years.
Again, the reason this went on as long as it did is that Rossem did pay back some investors to lure in more people, always being sure to skim a little off the top for himself of course. Which he was able to do because the company he owned had no outgoings besides his own extravagances, like buying 100 Ferraris.
5. The Swedish Match King
Some would likely contest the inclusion of Ivar Kreuger on this list because while he did swindle many people out of many millions of dollars he was also a very successful businessman. Which is kind of how he did the first thing.
You see, Krueger was known for selling matches, a lot of them. Well, actually, almost literally all of them with some estimates saying at the peak of his influence Krueger’s company Swedish Match (a conglomerate of various match factories Krueger bought after acquiring his own father’s match factory in the early 20th century) making anywhere upwards of 75% of matches used worldwide. A fact that likely makes it unsurprising that many took to calling Krueger the Match King.
This almost total, literally global monopoly understandably earned Krueger a lot of money and influence. Influence he’d use to bend the ear of many an important person and money he’d use to purchase a multitude of legitimate businesses. Which would ultimately become the cornerstone of Krueger’s con.
You see, Krueger would use the money earned by his legitimate business and just sort of move it around, shuffling the financials of companies that weren’t doing so hot to make it look as if they were, and leveraging his position as King of Matches to convince people to invest in them.
A detail of Krueger’s con that’s sort of brilliant in a messed up kind of way is that he would loan massive amounts of money to struggling countries in return for the exclusive right to sell matches within them. Once indebted to him, he’d then begin buying up various businesses to bolster his portfolio, thus giving him even more ways to hide his financial shenanigans.
After being found out he committed suicide leaving behind a troubled legacy and directly inspiring the creation of the securities acts.
4. Reed Slatkin Investment Club
As we’ve noted a few times in this article the key to a successful con is inspiring some degree of trust in people. One did this by posing as a man of God, one by touting their connection to Mr, Sexyback, and the one we just talked about by having the ear of world leaders. So what did Reed Slatkin do to engender a similar level of trust? Well, he was a minister (so, so far so good)… for the Church of Scientology. Then again, we guess that would encourage more cynical investors since we guess a Scientologist would know quite a bit about making money.
Moving swiftly on, Slatkin promised investors an obviously BS return of about 25% on any money invested into his club, using his connection to internet startup Earthlink and commitment to the tenants of Xenu, our great galactic tormentor, to convince them he was on the level. That’s not a joke, by the way. Many of Slatkin’s victims were Scientologists, and some of them were even famous. Like Greta Van Susteren, a BS merchant working for Newsmax. But like we said, some of his victims were famous, too.
Slatkin then began pissing the money away on everything from fast cars to, get this, a theme park. The latter was something he apparently wanted to invest people’s money in and then, just, never built.
Slatkin was found out in the early 2000s and sentenced to 14 years in prison. He died in 2015.
3. Mavrodi Mondial Moneybox
Remember when we said, “If something is too good to be true, it probably is” and how we’ve talked about the wildly unrealistic projections of a 25% return on investment should be immediate and obvious red flags that something is clearly a con? Well, Sergey Mavrodi was promising people a 3,000% return on their investment and they fell for it. Just, end it all now.
The crux of Mavrodi’s plan was an “aggressive” marketing campaign aimed squarely at working-class Russians that promised the aforementioned massive returns, luring them in with images of elated Russian investors being able to swap shares in MMM for a whole-ass house. Exactly what, if anything, MMM did was never really established, which didn’t matter because remember, this was a Ponzi scheme so some people did walk away as millionaires, which was great for them but not so much for the millions of others who were suckered in by their remarkably good fortune to get in while the going was good. Also yes, we said millions just then. That’s how many people this guy ripped off, earning him the well-earned moniker of the Bernie Madoff of Russia. As an idea of how much money Mavrodi made, Russian authorities reportedly ended up needing 17 trucks to get all of the cash he’d stolen out of his house.
What makes the story of Sergey Mavrodi so baffling though is the sheer gall with which he conducted himself. After being arrested for fraud and evading taxes he ran for office hoping that he could use his position to retroactively pardon himself. When this didn’t work he went on the run, while of course setting up new pyramid and Ponzi schemes.
Mavrodi was eventually arrested but only served four years in prison before almost instantly going back to ripping people off. Aiming his sights at the Third World, duping African investors with a new company he also called MMM (because why not, at this point), and a business pitch reads like the literal, textbook definition of a pyramid scheme. Telling investors that their money will come from the fees paid by new investors they convince to join. Insert that clip of Jim drawing a triangle on a whiteboard from The Office here.
Mavrodi eventually got his though, dying of a heart attack in 2018. A conman to the end, his funeral was reportedly paid for by investors in his African bitcoin business. Because of course this guy also got involved in crypto.
2. Scott Rothstein
For the most part, Ponzi schemes are really about one thing: making money. But for some the money, while undoubtedly a nice bonus, is secondary to what the money lets them buy. Power, influence, and the respect of their peers. This is what seems to have driven Florida-based lawyer Scott Rothstein to defraud people out of over a billion dollars.
We mean, he also bought lots of stuff, too, including a fleet of cars he kept in their own special air-conditioned garage, and gold-plated his and hers toilets for himself and his wife. He’s romantic like that, you see. But he seemed to really get off on the prestige his ill-gotten gains lent his profile.
Rothstein used the money he made from selling investments in lawsuits, which is like the most American-sounding thing ever, to fund politicians, sponsor local events in Florida, and donate extensively to charity. All of these things raised his profile considerably, allowing him to hob with the fanciest of nobs and mingle with celebrities like Arnold Schwarzenegger, Chris Tucker, and, erm, Kevin Spacey.
But here’s a not-so-fun fact for you all: if you donate illegally obtained money to charity and the IRS finds out, the charity kinda has to return the money. Which is what happened when Rothstein was found out, with the Fort Lauderdale Holy Cross Hospital having to return a million-dollar donation Rothstein made to fuel his own ego.
Something that may make you happy to learn is that, since 2010, Rothstein has been serving out a 50-year sentence for, among other things, fraud.
1. Tom Petters
That’s a quote from the judge who sentenced Tom Petters to 50 years in Federal prison for defrauding people out of literally billions of dollars.
So how did he do it? Well to put it simply, by lying his ass off for over a decade straight and seemingly never stopping to think what was going to happen when the IRS realized something was amiss. As an aside, while we haven’t mentioned it specifically, in almost every one of these cases the reason the person got caught is due to the IRS crawling up their butt with a microscope when they noticed “irregularities” in their finances.
Something that is wont to happen when you do what Petters did and sell stuff that simply doesn’t exist. Specifically, Petters would, through his company Petters Group Worldwide, invent fictitious orders for millions of dollars worth of electronics he’d claim were to be sold to Big Box stores like Costco or Walmart. Petters would then use these non-existent orders as collateral on loans. Now here comes the devious part.
Petters would use the money from these loans to pay off other loans he’d gotten using the same tactic, and then ask for an even bigger loan to buy more stuff. He’d then use that loan to pay off the other one, and so on. Eventually, Petters was casually asking for and receiving literal billion-dollar loans from banks using this method.
Now obviously, with the gift of hindsight, the scam was obvious, but how the hell were the banks to know? Petters always had official-looking paperwork showing that he was buying and selling billions of dollars worth of electronics and he always paid back his loans, plus interest, on time, sometimes early, and always happy to pay the fees for doing so. On paper, he was a slam-dunk investment. Which was kind of the problem: all of this stuff only existed on paper.
Petters was arrested in 2008 and is currently serving a 50-year sentence.
Lol.