In the financial world, there will always be people with less than honest intentions. That is only to be expected, primarily because a lot of people want to make money at all costs. Ponzi Schemes are often a great way to attract a lot of money, even though they will always be shut down in the end. The following 21st-century examples show how crafty scammers can get.
Mutual Benefits Company (2003)
Little over 15 years ago, the SEC decided to crack down on a company known as Mutual Benefits Company. Although their business model seemed legit at the time, it turned out a lot of nefarious activity was taking place behind the scenes. On the surface, Peter Lombardi – who ran this Ponzi Scheme – claimed he would use investor money to pay viatical settlements to HIV patients. This worthy cause attracted well over 25,000 investors, all of whom lost their money in the end. Lombardi currently serves a prison sentence for a few more years.
Moshe and Zvi Leichner (2005)
Even though most people always revert to financial instruments they know, foreign exchange money-making options will attract attention. This is exactly what Zvi and Moshe Leichner engaged in, as they promised investors a monthly return between 2% and 4%. This money was supposed to be earned through their various companies, with Midland Euro Exchange leading the charge. In total, this father-and-son team collected $130m in investments, although they hardly ever paid out any of it to investors.
Interestingly enough, this is also one of the more recent Ponzi Schemes involving a well-known bank. Lloyds TSB, the British bank, paid $12.5m in damaged to victims falling victim to this Ponzi Scheme. While the bank never admitted liability, they decided to compensate fraud victims. This news came at a time when the bank was named in a class action lawsuit condemning them of abetting a breach of fraud. Since their arrest in 2003, Zvi Leichner has served 11 years in prison, whereas his father has four years left on his sentence.
SwissCash HYIP (2006)
Ponzi Schemes often seem to thrive in Asian countries, for some unknown reason. SwissCash is a great example, as this High-yield Investment program – or HYIP – offering returns of up to 300% after 15 months. This business model attracted a lot of investors looking to improve upon their financial situation at that time. Especially citizens of Malaysia, Singapore, and Indonesia were targeted. This ultimately resulted in the arrest of various Malaysian individuals in October of 2006.
Practical Property Portfolio (2009)
Real estate has always been one of the more popular financial commodities around the globe. Unfortunately, it also attracts a lot of con artists. In the United Kingdom, the firm Practical property Portfolio made a lot of headlines around a decade ago. It offered a promise of a house in the North East of England in exchange for a 25,000 GBP upfront investment. With over 1,750 investors being defrauded in the end, the scheme was eventually shut down by the United Kingdom Serious Fraud Office.
Zeek Rewards (2012)
In the United States, penny auctions are often subjected to a terrible reputation. This is primarily due to numerous Ponzi Schemes affecting these offerings, including the notorious Zeek Rewards venture. It promised users returns of up to 1.5% a day, which is simply impossible to achieve in the financial sector. This money was to be earned through Zeek Rewards’ own penny auction, known as Zeekler. Investors also had to recruit new members to increase their returns, and pay a monthly fee on top of their initial investment.
At its peak, officials estimate Zeek Rewards was a $600m Ponzi Scheme, and over 1 million investors were defrauded by this company. Founder Paul Burks eventually agreed to pay $4m to the SEC and has been actively cooperating with the agency ever since. To date, the total financial losses sustained by investors remain uncertain. However, it seems likely to assume most of the funds has never been returned to its rightful owners.
The Utah Property Investment Scam (2018)
Not all of the Ponzi Schemes in history have a fancy name to go by. In 2018, the Ponzi Scheme known as the “Utah property investment business” was shut down. This Ponzi Scheme was operated by Claud R. Koerber, who successfully pocketed close to $100m from investors. This is another great example of how real estate and Ponzi Schemes can go hand-in-hand, no matter how legitimate the offering in question may appear.
Rust Rare Coin (1995 – 2019)
On the surface, Rust Rare Coin has been a legitimate business active in Utah for some time now. Their Ponzi Scheme dates back to as early as 1995, when the company started collecting investments to pool together and buy silver. These silver amounts would then be sold as the price rose, which would allow everyone to profit from this business venture.
As one would come to expect from such a “normal” business model, Rust Rare Coin attracted up to $200m from investors. Rather than buying the silver in question, all of the money was sued to pay new investors, finance his own personal expenses, and sluice funds to his other companies. Gaylen Dean Rust, who runs the company, has been indicted earlier this week. His potential prison sentence remains unclear, as that verdict has yet to be rendered.
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Author: JP Buntinx