20 Biggest Frauds and Scams of Recent Times

Germany wanted a small car close to the price of a motorcycle. When it became apparent that it wasn’t possible, the German State stepped in. Adolf Hitler sponsored a savings scheme involving German workers to pay "five marks a week" to get a car. Workers were also promised a vacation at a luxury resort, gym and club memberships, and even food perks. This plan sounded amazing to Germans who were used to hyperinflation and really couldn’t afford a car. 336,000 German workers entered into the savings program. In the end, very few got their cars, and the luxury resort was later turned into housing for the slave laborers who were used to build the V2 rocket. Rest of the money was used for the war effort. The Russians took the remaining savings at the end of the war.

De Beers was created by British financiers who were worried that they'd lose money in diamond mines when even more mines were discovered in 1870 and took control of supply by becoming a cartel. To control demand (since prices collapsed in the 30's, only 10% of engagement rings had diamonds, and in Europe, diamond engagement rings were not a thing), their ad men at NW Ayer pushed free diamonds onto celebs/socialites, coined "A Diamond Is Forever" in 1947 even though diamonds can be shattered/chipped/discolored, and invented an idea that a ring should be a month or two's salary. Then small diamonds from the Soviet flooded the market, so De Beers invented "eternity rings." To prevent second-hand supply, retailers will not repurchase diamonds and due to the markup being 100-200%+, it wouldn't be profitable to do so. Furthermore, diamonds have varying grades, cuts, color, and quality, so they are nowhere near as fungible as metals like gold and price consistency is non-existent. So even thieves are surprised by the low prices they're offered.

It is a common wisdom that Better Business Bureau is a consumer advocacy group. Better Business Bureau is not run by the government but is a non-profit company that made $200 million in 2013. They are a business, nothing more, and have long been known to take money for ratings. Yelp's extortionate business model was basically ripped off from them.

In 1993, a small Canadian mining company Bre-X announced a huge discovery of gold at a site it purchased in the Indonesian Rain Forest. This site was estimated by a geologist initially to have 2 million Troy ounces of gold. This value steadily increased, rising by 3500% to 70 million Troy ounces in 1997. Over years the company shares went from penny stock to $280/share and in 1997 had a market cap of $6.6 billion dollars. Plenty of large institutional investors like retirement trusts were purchasing large amounts of stock.

In reality, it was all a fraud and the lead geologist was shaving off gold from his wedding band to add to drill core samples. An independent geologist test found that the site had little to no gold. After the news got out, the stocks went from a peak of $286 to $20 in a short time frame.

When the fraud was discovered, the original geologist committed suicide by jumping from a helicopter into the jungle, another partner died of brain aneurysm, and no one involved ever went to jail. The Ontario Teachers’ Pension Plan lost $100 million. The Ontario Municipal Employees Retirement Board lost $45 million. The Quebec Public Sector Fund lost $70 million.

In 1821, Gregor MacGregor invented a fictional Central American republic called "Poyais", convinced hundreds of people in his home country of Scotland to invest in the nonexistent country, and even oversaw the deployment of a ship of 250 people hoping to start a new life in Poyais. They expected to find a thriving city, complete with a cathedral, theater and opera house, surrounded by fertile farmland.

When their ship arrived, they found nothing but undeveloped, inhospitable jungle. They attempted to start a settlement there regardless, but over half of them died, in part due to diseases like malaria and yellow fever.

Gregor MacGregor not only did invent a fake country but invented a fake currency and had people exchange all their money for it, invented fake banks and issued fake land grants and bonds to investors. Not only did MacGregor raise £200,000 directly, the bond market value over his life ran to £1.3 million, or about £3.6 billion today.

Gary Bolton from the UK made £45 Million pounds selling bomb detection devices. He claimed his devices costing upwards of £10,000 each could find explosives, drugs, cash, tobacco and even people at distances of up to three miles. It was nothing more than a retractable antenna mounted on a plastic box. It had no scientific basis and did absolutely nothing for governments around the world. He was sentenced to 7 years in prison and had to pay a fine of £1.5 Million.

In 1896, Reverend Prescott Ford Jernegan in Connecticut claimed he could get gold out of seawater. He showed everyone and sold millions in stocks. It turned out he was a professional scuba diver with money and put gold flakes in them every night. He fled the country with a lot of money.

The savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of 1,043 out of the 3,234 savings and loan associations in the United States from 1986 to 1995. In the late 70s, the Federal Reserve Chairman, Paul Volcker, let banks treat the liabilities they were required to keep from depositors (savings, and to a greater extent the mortgaged loans everybody had out on their houses) as assets, and to invest, sell ownership of and sell the "dividends" from (in the form of mortgage payments).

Banks basically got greedy and were eaten alive by firms like Salomon Brothers, who treated them like the Fool On The Market they were. In sort of a prelude to the housing crises 20 years later, the banks and Wall Street firms overextended, couldn't meet obligations, doubled down knowing the government would bail them out rather than let millions of constituents lose their homes, and they ran the whole train into the ground. In the end, everyone paid out of the taxpayer's wallet, and the small time banks got shut down.

In 1996, the General Accounting Office estimated the total cost to be $160 billion, including $132.1 billion taken from taxpayers.

The ENRON Scandal is considered to be one of the most notorious scams within American history and many historians and economists consider it to be an unofficial blueprint for a case study on White Collar Crime. By misrepresenting earnings reports while continuing to enjoy the revenue provided by the investors not privy to the true financial condition of ENRON, the executives of ENRON embezzled funds funneling in from investments while reporting fraudulent earnings to those investors. This not only proliferated more investments from current stockholders but also attracted new investors desiring to enjoy the apparent financial gains enjoyed by the ENRON Corporation.

Due to the actions of the ENRON executives, the ENRON Company went bankrupt. The loss sustained by investors exceeded $70 billion. Furthermore, these actions cost both trustees and employees upwards of $2 billion; this total is considered to be a result of misappropriated investments, pension funds, stock options, and savings plans – as a result of the government regulation and the limited liability status of the ENRON Corporation. Only a small amount of the money lost was ever returned.

Someone, probably not the founder, Mark Hughes, figured out that ephedrine was an amazing drug. It was legal in the 80s, found in a Chinese plant called Ma Huang. It is a stimulant. He himself, and friends found that it was a really potent aid in weight loss, helped give a strong perception of energy boost and vitality. You could say that it is a chemical analog of amphetamine. So, he had this great product, Green Herbalife, and he was selling it out of the trunk of his car. It really worked. The customers were actually becoming very big fans of the product. Some would even say that they were addicted to it. Mark didn't want to hire salesmen, so he offered a partnership buy-in scheme. The customers who loved the product were some of his best customer, spreading the word and demanding more and more ephedrine. At some point, recruiting sales help become just as profitable as selling the drug itself.

The weight loss and entrepreneur sales pitches worked hand-in-hand, sweeping the country like wildfire. The product was eventually matched by commercial products like mini-thins, leaving the Herbalife business opportunity as the top selling point. First salesmen into new territories made a lot of money. Mark Hughes got very rich and died of an overdose. Then ephedrine became illegal to sell in some states, so the product was changed and diversified. The company got busted for being responsible for all those "Work at Home, full time/part time $15,000-$5,000/ month" signs in every corner of the USA.