Wikimedia Commons // Public Domain
 Wikimedia Commons // Public Domain

15 of the Most Brazen Ponzi Schemes in Business History

 Wikimedia Commons // Public Domain
 Wikimedia Commons // Public Domain

Since the 2008 financial collapse, Americans have become all too familiar with the concept of Ponzi schemes: A savvy swindler convinces hopeful investors to give him their money, guarantees big returns, then uses the funds from new investors to cut checks to those who’ve already paid in (while keeping most of the money for personal use). Eventually, if financial conditions worsen or if too many investors try to cash in, the house of cards comes crashing down. The scheme is astonishingly common, and clever hucksters have found some creative plots—from mythical lands to racing pigeons—to attract willing investors. Here are 15 of the most remarkable. 


The namesake of the scam was an Italian-born businessman living in Boston in the early 20th century who convinced investors that profits could be made by purchasing international reply coupons (IRC) in Europe and redeeming them in the United States, profiting off the exchange rate. He and an aggressive team of solicitors were soon pulling in a quarter-million dollars a day, based on promises of 50% profit in only 45 days. Six months into the scam things started unraveling when the head of Dow Jones & Company noted that for the scheme to work, there would have to be millions of IRCs in circulation, which would overwhelm the supply. By the time the scam was exposed and Ponzi was charged with 86 counts of mail fraud, his investors had lost $20 million ($237 million today).


In one of the largest accounting frauds in U.S. history, Bernie Madoff made off with $17 billion of investments in his phony hedge fund, claiming consistent, above-market returns that kept prominent charities, banks, and people ranging from Sandy Koufax to Kevin Bacon paying into the scheme. Though a number of investigations had raised concerns about the operation, it was not until the financial crisis of 2008, as investors began withdrawing their billions, that Madoff was forced to admit it was all a lie.


In the mid-1990s, Pastor Gerald Payne urged the spiritually minded to invest in his Greater Ministries International church, which he promised would double investors’ money in 17 months by trading in precious metals, gems, and foreign currencies. The congregation heard his call and some 18,000 people supplied Payne and his wife with at least $20 million. He got away with it for a while by cashing checks below the IRS’s $10,000 reporting limit, but soon enough he was exposed and in 2001 was convicted and given 27 years in prison. 


Another godly grifter, Gary Gauthier hosted Tampa radio show It’s God’s Money, which he used to evangelize the impressive returns true believers could get by spending their money on his Florida real estate projects. He was eventually arrested in 2014 for bilking 38 faithful Floridians of some $6 million. 


In a very strange variant of the typical Ponzi set-up, Arlan Galbraith targeted highly religious groups in Canada, including the Amish and Mennonites, with a scheme in which they would pay to raise pigeons, which were then sold for pigeon racing, enjoying lucrative returns on the buybacks (as much as $500 a pair). The folksy Galbraith, who would often conduct interviews in overalls and compared himself to Steve Jobs, pulled in $42 million between 2004 and 2008 before he was exposed


China’s Wang Fengyou may top the Pigeon King when it comes to crazy get-rich-quick schemes. In 1999, he founded the Yilishen Tianxi Group, which provided farmers with a box of “special ants” in exchange for 10,000 yuan (about $1,500). The farmers were supposed to spritz the ants with a honey and sugar solution daily. After 74 days, the ants would be picked up and ground into an aphrodisiac, providing the farmers with more than 30% returns. Unlike a number of schemers who never actually created the products they claimed to, Wang’s ant-phrodisiacs were sold in some 80,000 pharmacies across China before the whole thing was exposed as bogus


South African entrepreneur Adriaan Nieuwoudt began marketing a beauty product that used “kubus”—an ingredient supposedly based on his grandmother’s milk cultures—in 1984. Interested investors would be sent dried-plant activator kits that they could grow at home themselves, selling the grown cultures back to Nieuwoudt’s company. It turned out there was no actual beauty product and the cultures would simply be ground up and sent to the new investors. After tons of milk culture were found rotting in a shed, the scheme was declared an illegal lottery by the South African government and he had to close up shop. 


In the 1990s, Sergei Mavrodi took advantage of Russia’s ill-defined financial regulations following the fall of communism, launching MMM, which began as an importer of office furniture before moving into investments with promises of as much as 2000% returns. He was eventually found guilty of defrauding some 10,000 investors of about $4.3 million. After serving a brief prison stint, he returned to pyramid scheming with the launch of MMM-2011


Though Lou Pearlman gained fame in the 1990s for producing boy bands like *NSYNC and The Backstreet Boys, it would turn out he was guilty of much more than questionable music taste. For more than 15 years, a pair of companies he invented—complete with fake financial statements—would bring in more than $300 million in investments before he was found out in 2006.


From 1999 to 2005, Michael Eugene Kelly managed to pull in almost half a billion dollars from elderly and retired people who thought they were investing in time-shares. They could either stay in the hotel rooms for one week out of the year, or lease them at a return rate of 11%—and every investor chose the latter option. The funds from new investors were used to make these “rental payments.” Kelly was found out and charged by the SEC in 2007, and eventually sentenced to five years of prison before dying behind bars.


Tom Petters began as a legitimate businessman, with operations that included Polaroid Corp and Sun Country Airlines. But between 1995 and 2008, as part of his Petters Group Worldwide, he began pulling in money from investors who believed they were buying consumer electronics that would be sold to big box retail stores at a profit. There was never any electronic equipment, no interested big box stores, and all documents were faked. In the end, Petters was found guilty of a $3.65 billion Ponzi scheme and sentenced to 50 years in prison.


Another sometimes-legitimate businessman, Slatkin co-founded EarthLink while also running a fraudulent “investment club” for 15 years, beginning in 1986. It promised investors better-than-market returns and attracted prominent victims, including actors Joe Pantoliano and Giovanni Ribisi and news anchor Greta Van Susteren. But he didn’t keep all the money for himself: Slatkin donated millions to the Church of Scientology, for which he served as a minister (the church eventually paid the money back). In 2003 he was sentenced to 14 years in federal prison.


Between 1996 and 2009 money managers Paul Greenwood and Stephen Walsh attracted high-end investors from educational groups like Carnegie Mellon University and the University of Pittsburgh to their firms, Westridge Capital and WG Trading Company. Former owners in a stake of the Islanders hockey team, among the extravagances the two bought with their ill-gotten funds were a 54-acre riding school and horse farm, and an $80,000 collection of Steiff teddy bears


National Museum of American History, Smithsonian Institution via Wikimedia Commons // Public Domain

Posing as the prince (or “Cazique”) of the Central American territory of Poyais (in what is Honduras today), the Scottish adventurer Gregor MacGregor convinced London’s elites to invest millions in Poyaisian government bonds for a stake in the tropical paradise. Some 250 eager settlers even headed to the bucolic getaway around 1820, before realizing the whole place was MacGregor’s invention. While the investors lost their money, 180 of the would-be settlers lost their lives in the disastrous expedition.


About a century after MacGregor, a Chicagoan named Leo Koretz devised his own mythical land, selling stock in a place called Bayano River, in Panama, from where he claimed great amounts of oil were being extracted. Unlike MacGregor, who told anyone who would listen about his investment opportunity, Koretz kept his scam exclusive. He offered only limited amounts of stock and only to those deemed worthy. It only made his offering more desirable, and he became the toast of Chicago before a group of eager investors set out to view their Bayano holdings themselves, and discovered no oil wells or anything else. Koretz was sentenced to a decade in prison, which he cut short in 1925 after eating an entire box of candy gifted from one of his girlfriends (a diabetic, Koretz would have known that so much sugar would mean a quick death).

All images courtesy of Getty Images unless otherwise noted. 

Scientists Reveal Long-Hidden Text in Alexander Hamilton Letter

Age, deterioration, and water damage are just a few of the reasons historians can be short on information that was once readily available on paper. Sometimes, it’s simply a case of missing pages. Other times, researchers can see “lost” text right under their noses.

One example: a letter written by Alexander Hamilton to his future wife, Elizabeth Schuyler, on September 6, 1780. On the surface, it looked very much like a rant about a Revolutionary War skirmish in Camden, South Carolina. But Hamilton scholars were excited by the 14 lines of writing in the first paragraph that had been crossed out. If they could be read, they might reveal some new dimension to one of the better-known Founding Fathers.

Using the practice of multispectral imaging—sometimes called hyperspectral imaging—conservationists at the Library of Congress were recently able to shine a new light on what someone had attempted to scrub out. In multispectral imaging, different wavelengths of light are “bounced” off the paper to reveal (or hide) different ink pigments. By examining a document through these different wavelengths, investigators can tune in to faded or obscured handwriting and make it visible to the naked eye.

A hyperspectral image of Alexander Hamilton's handwriting
Hyperspectral imaging of Hamilton's handwriting, from being obscured (top) to isolated and revealed (bottom).
Library of Congress

The text revealed a more emotional and romantic side to Hamilton, who had used the lines to woo Elizabeth. Technicians uncovered most of what he had written, with words in brackets still obscured and inferred:

Do you know my sensations when I see the
sweet characters from your hand? Yes you do,
by comparing [them] with your [own]
for my Betsey [loves] me and is [acquainted]
with all the joys of fondness. [Would] you
[exchange] them my dear for any other worthy
blessings? Is there any thing you would put
in competition[,] with one glowing [kiss] of
[unreadable], anticipate the delights we [unreadable]
in the unrestrained intercourses of wedded love,
and bet your heart joins mine in [fervent]
[wishes] to heaven that [all obstacles] and [interruptions]
May [be] speedily [removed].

Hamilton and Elizabeth Schuyler married on December 14, 1780. So why did Hamilton try and hide such romantic words during or after their courtship? He probably didn’t. Historians believe that his son, John Church Hamilton, crossed them out before publishing the letter as a part of a book of his father’s correspondence. He may have considered the passage a little too sexy for mass consumption.

[h/t Library of Congress]

Scott Barbour/Getty Images
7 of History’s Most Unusual Riots
Scott Barbour/Getty Images
Scott Barbour/Getty Images

Some sociologists theorize that most rioters only join a crowd because the crowd is big enough to justify joining. But there’s always that one person who sparks the violence, and sometimes the reason for doing so can seem pretty baffling. Maybe a work of art scandalizes its audience, like the famous premiere of Igor Stravinsky’s The Rite of Spring. Or maybe it’s simply a notable act of disrespect, like history’s first recorded mooning (in Jerusalem in the first century CE). From balloonists to brown dogs to daylight saving time, here are seven weird reasons things just got out of hand.


The Darts Invitational Challenge, an international tournament held in Melbourne, attracted international gawking in January 2015 during the finals match between Michael "Mighty Mike" van Gerwen and Simon "The Wizard" Whitlock. The dart players weren’t making a scene, though: Rather, hundreds of spectators, many of them drunk and in costume, began throwing plastic chairs as they watched (pictured above). The reasons for the fight remain unclear; footage and photos show police trying to control adults dressed as Oompa-Loompas, numerous superheroes, and, in one instance, in a ghillie suit (heavy camouflage meant to resemble foliage).


In 1864, balloonists were the great daredevils of their time, and a major draw for eager audiences. That summer, Henry Coxwell, a famous professional aeronaut, was set to make an appearance for 50,000 paying ticketholders in Leicester, England. Unfortunately, a rumor spread that he hadn’t brought his biggest and best balloon to the event. After heckling from the crowd, Coxwell deflated his balloon, and attendees rushed it, ripping it to shreds, setting it on fire, and threatening to visit the same fate on Coxwell. Rioters even paraded the remains of the balloon through the streets of town, which briefly brought residents a new nickname: Balloonatics.


Toronto was still a pretty rough place in the 1850s, but not so rough that the circus wouldn’t come to town. As it turns out, circus entertainers were also a tough lot back then, so when a group of off-duty clowns spent an evening at a brothel popular with the city’s firefighters on July 12, 1855, tensions came to a head. Accounts differ as to who started the fight, but after one firefighter knocked the hat off a clown things escalated into a full-on rabble intent on chasing the circus out of town. Only the mayor calling in the militia put an end to the uproar, an incident Torontonians credit with kicking off much-needed local police reforms.


A painting by Charles Soubre of the Belgian Revolution
Charles Soubre, Wikimedia Commons // Public Domain

Not many nations can claim their independence started with an aria, but for 19th-century Belgians sick of living under Dutch rule, an opera was just the right fuse for a revolution. To honor the birthday of King William I of the Netherlands, a theater in Brussels put on La Muette de Portici, about an uprising in Naples against Spanish rule. One song, "Amour Sacre de la Patrie" ("Sacred Love of the Fatherland"), aroused nationalistic passions so much that after the opera ended, the crowd began destroying factories and occupying government buildings. That was August 25, 1830; Belgium declared independence on October 4.


Hamilton fans, take note: Everyone’s favorite Founding Father once tried to quiet a mob bent on burning corpses. For centuries, anatomists and medical students relied on gruesome means to learn about the human body. Cadavers for dissection class often came from grave robbers, since the corpses of executed criminals were the only legal source—and they were in limited supply. In New York in 1788, rumors abounded that medical students were digging up paupers’ graves and black cemeteries. When one mob came after the doctors responsible, Alexander Hamilton tried, and failed, to restore the peace. The crowd swelled to about 5000 before militiamen intervened, leading to up to about 20 deaths.


Photo of an anti-vivisection demonstration in Trafalgar Square, London, to protest the removal from Battersea Park of the Brown Dog statue
The Anti-Vivisection Review, Wikimedia Commons // Public Domain

Riots against the dissection of dead human bodies were not rare in the United States at one time. But on December 10, 1907, a thousand Britons marched in support of vivisection, or surgery on live animals. At the center of the controversy was a small terrier allegedly vivisected without anesthetic in 1903 during a class at London’s University College. Animal rights activists erected a statue to the dog in 1906, which enraged area medical students, and protesters tried to destroy the statue using crowbars and hammers. For the 1907 march, 400 mounted police were deployed to contain marchers. The statue became such a flashpoint (and an expense to local authorities) that in 1910, it was removed and melted down.


Palingtrekken (eel-pulling) was once a popular contest in Amsterdam, in which a writhing eel was suspended over a canal and hopefuls on boats would leap to snatch it as they passed beneath (usually landing in the water instead). However, “eel-pulling” was also illegal—the government deemed it a “cruel popular entertainment”—and in July 1886, police intervened at a particularly large gathering in the city’s Jordaan district. Civilians threw stones and bricks at police, and when some nearby socialist protestors joined them, a riot broke out that lasted for several days. The army finally intervened and opened fire on the protestors. All in all, 26 people died and 136 were wounded, but somehow, the eel itself at the center of the riots was allegedly saved and auctioned off in 1913.

A version of this story originally ran in 2015.


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