Brief history of financial skulduggery

FTX founder Sam Bankman-Fried was arrested and charged with federal crimes in mid December, as the fallout from his once-lauded cryptocurrency exchange continues. Bankman-Fried, who is facing multiple fraud allegations, is the latest in a line of white-collar executives to draw scrutiny over their money management and business practices.

Here’s a look back at some of the biggest most recent financial fraud cases that have driven headlines.

The original Ponzi

In 1920, Charles Ponzi saw an opportunity with International Postal Reply Coupons, which allowed mail senders to pay for replies in advance. Ponzi offered Boston investors returns up to 50 percent for investing in the coupons and promised the money in 45 days.

Soon Ponzi received negative press attention, which sparked an investor run on their money. Ponzi, who had been using new investor money to pay older investors, could not pay everyone back. Of his scheme, Ponzi later said: “My business was simple. It was the old game of robbing Peter to pay Paul.” Ponzi’s name has became synonymous with this type of swindling.


Enron started as a Texas power company but eventually grew to sell things such as internet connections and more. In January 1998, its stock more than doubled to about $90 per share, making company leaders rich. But those profits were built on deceptive accounting techniques designed to make the company appear that it was doing great while, in fact, it was losing money.

When Enron revealed in 2001 that its earnings were hundreds of millions of dollars below what the company had previously disclosed, its stock value plummeted, causing employees to lose their jobs and money. Several of the company’s leaders were later convicted of crimes stemming from the scandal.

Bernie Madoff

For years, Bernie Madoff, who in the early 1990s was chairman of the Nasdaq, was regarded as an investment guru. Investors, from ordinary retirees to celebrities such as Steven Spielberg, trusted him when he promised high annual returns.

In 2008, when the financial crisis pushed investors to withdraw their funds, Madoff could not pay them. It turned out that Madoff was paying existing investors with money from newer ones. He’s estimated to have lost some $20 billion in investor money. Madoff was sentenced in 2009 to 150 years in prison after pleading guilty to 11 felony charges, including securities fraud and money laundering.


Sparking a financial scandal that has rocked the German fintech scene, Wirecard, provided services to gambling and adult entertainment industries, as Bloomberg News has reported.

But in 2020, the company revealed that 1.9 billion euros were missing from its balance sheet, and now prosecutors allege that when he was chief executive, Markus Braun approved balance sheets he knew to be false. Braun, whose trial is expected to last more than a year, has denied the charges.

Elizabeth Holmes

Theranos was a blood-testing start-up in Silicon Valley that pledged to make health care more affordable and less painful by developing a technology that purported to be able to run hundreds of tests from just a few drops of patients’ blood.

Founder and Stanford dropout Elizabeth Holmes raised hundreds of millions of dollars from private investors and added prominent political figures and business leaders to its board of directors.

But things crumbled after investigations found that the technology did not work as billed and that the company used traditional third-party machines to run much of its blood testing. Theranos eventually shuttered in 2018. Holmes was convicted on four counts of defrauding investors in 2022 and was sentenced to more than 11 years in prison.


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