Biggest Frauds on Wall Street

As Martin Scorsese’s financial epic The Wolf of Wall Street reigns supreme at the box office it got me thinking about the great financial shysters of all time. How common are these swindles? Has illicit activity within high finance always been a problem? After fastidious research, not simply limited to New York’s Wall Street, it became evident that financial scandals have always happened. Here are a few of the most notorious fraudsters in history with their innumerable crimes outlined.

Charles Ponzi

Charles Ponzi- TGJ.01The perpetrator of the original 1920 ‘Ponzi Scheme’; Charles Ponzi was different to most financial fraudsters. Most high finance swindlers started off honestly enough but then became corrupted by the system they were part of – not Ponzi though. He was a career criminal by trade and when he had the opportunity to falsify the value of postal reply coupons he embraced it, defrauding investors out $20 million, a massive amount of money at that time.

Nick Leeson

Nick Leeson - TGJ.01Leeson is an example of someone in high finance whose sin was incompetence rather than greed. He worked as a derivatives broker for the now defunct Barings bank – defunct I should say because of Leeson. In the early 1990’s he made a variety of unauthorised speculative trades whilst working for the bank in Singapore and quickly built up a deficit which he hid. Over the years the deficit grew and, after it was discovered that he had lost the bank £827 million, Barings collapsed.

Bernard Madoff

Bernard Madoff- TGJ.01

He famously ‘made off’ with everyone’s money and is estimated to have cheated investors out of $10 to $18 billion (depending on the source). His ‘Ponzi Scheme’ was one of the largest ever and the fact that the discovery of his fraud in 2008 coincided with the financial crisis of the same era meant that he became a poster boy for financial evils.

John Law

John Law - TGJ.01

The Scottish mathematical genius John Law was, for want of a better term, a bad-boy version of Adam Smith. He had an extraordinary aptitude for numeracy and was one of the earliest ‘pioneers’ of card counting. Law was responsible for the Mississippi bubble of 1719, one of the earliest financial bubbles in history. The French government was heavily involved in this rather unwise scheme to develop Louisiana and when the bubble finally bust, Law was hounded out of the country in disgrace.

Jordan Belfort

Jordan Belfort- TGJ.01Just like Leeson, Belfort has been immortalised by a film chronicling his indiscretions. Belfort started out by selling penny stocks and grossly inflating their value to naive investors. Belfort, astonishingly, served only two years in prison for his crimes and his name has since become a byword for hedonism and the high finance lifestyle of the 1980s.

By Guy de Vito

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