Financial fraud is defined as an intentional act of deceiving
someone concerning financial transactions for the purpose of personal
gain. Financial fraud is a crime and it is also a violation against
civil law. Most of the time financial frauds are done by those white
collar criminals like business professionals that have enough knowledge
in financial transactions. Over the years, we have seen financial frauds
and there would be likely more in the future until we learn how
financial fraudsters and schemers work.
Charles Ponzi
We often hear Ponzi scheme but who is Ponzi? Charles Ponzi is an
Italian born con artist who promised new money scheme for his investors.
He used international reply coupons (IPC) and exchanged it for airmail
postage stamps abroad. He promised 50% profit within 45 days and 100%
for 90 days.
With his Ponzi scheme, he was able to earn an
equivalent of $4.5 million in today’s money. He lived a lavish
lifestyle, however police caught up to him. Authorities unraveled the
scheme that Ponzi used. Ponzi would use the money from his most recent
investors to pay previous investments. The scame affected six banks, and
the total loses of his investors totaled around $20 million. Ponzi was
charged with mail fraud and larceny, spending a total of 17 years behind
bars for his scams, before being deported to Italy.
Mark Dreier
Mark Dreier was a popular lawyer who sold fictitious securities to
hedge funds and other rich clients. He created fake documents to
convince his clients that the shares he was selling were real. Later on,
he would embezzle the money for personal gain. His illegal transactions
were stopped when he was caught in 2008. During the investigation,
Dreier estimated fraud had amounted to $400 million. He was convicted to
20 years in prison.
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