This is a list of Ponzi schemes, fraudulent investment operations that pay out returns to investors from money paid in by subsequent investors rather than from any actual profit earned from the operation of a business.
Historical examples
19th century
1860s Jacob Young, William Abrams, and Nancy Clem (see Cold Spring murders) ran what author Wendy Gamber argues, in her book The Notorious Mrs. Clem: Murder and Money in the Gilded Age, was the first-ever Ponzi scheme. In Munich, Germany, Adele Spitzeder founded the Spitzedersche Privatbank in 1869, promising an interest rate of 10 percent per month. By the time the scheme collapsed in 1872 it had become the largest case of fraud in 19th-century Bavaria.
1870s Johann Baptist Placht ran a Ponzi scheme in Vienna from 1872 to 1873, claiming to invest in the stock market. Fraudster Sarah Howe opened a savings bank called Ladies' Deposit Company in 1878 meant to target unmarried women. She claimed that the bank worked in conjunction with a Quaker charity that wanted to help less privileged women. She promised high interest rates of eight percent per month. There was in fact no such charity. Howe was able to gain over 1,200 clients and US$500,000 in deposits before the Boston Daily Advertiser began outing the bank as a fraud in 1880. Howe was arrested, convicted, and served three years in prison. She attempted some other schemes after release in the 1880s, either being arrested, or fleeing to avoid it, eventually becoming a fortune teller until her death in 1892.
1880s In 1880, Ferdinand Ward entered into a brokerage partnership with James D. Fish, president of Marine National Bank, and former U.S. president Ulysses S. Grant. Grant, along with his sons, invested $200,000 of capital to the firm (Grant & Ward), and the financial operations were left entirely to Ward. After a number of bad investments erased the Grants' initial stake, Ward hid the loss by falsifying the firm's ledgers, and turned to a Ponzi scheme to attract new money and heighten the firm's reputation. Ward promised investors a 10% monthly profit, sometimes delivering up to 20%, while Grant shrugged off warnings that Ward's profits were suspicious. In May 1884, Marine National Bank became insolvent after major withdrawals from New York City's account. Ward had borrowed $1.3 million from the bank on nonexistent collateral, leaving the bank unable to cover the withdrawals and exposing Ward's fraud. Ward fled with the remainder of the firm's cash (including a $150,000 emergency loan from William H. Vanderbilt). After his arrest, he was sentenced to ten years in Sing Sing, serving six. Grant was ruined, although the sales of his posthumously published memoirs recovered his fortune and provided income for his widow. In total, Ward defrauded investors of nearly $17 million.
1890s In 1899 William "520 Percent" Miller opened for business as the "Franklin Syndicate" in Brooklyn, New York. Miller promised 10% a week interest and exploited some of the main themes of Ponzi schemes such as customers re-investing the interest they made. He defrauded buyers out of $1 million and was sentenced to jail for 10 years. After he was pardoned, he opened a grocery store on Long Island. During the Ponzi investigation, Miller was interviewed by The Boston Post to compare his scheme to Ponzi's—the interviewer found them remarkably similar, but Ponzi's became more famous for taking in seven times as much money.Zuckoff, Mitchell. Ponzi's Scheme: The True Story of a Financial Legend. Random House: New York, 2005. ()
20th century
1920s Charles Ponzi became noted in 1920, in Boston, for his supposed arbitrage scheme, which ultimately proved to be merely a masquerade for paying off early investors with the deposits of later investors. The Ponzi Scheme is named after him. He claimed he would double investors' money in 90 days through a bizarre plan to buy and resell international postal-reply coupons. (These, according to the U.S. Postal Service, then operating as the Post Office Department, actually cannot be redeemed for cash.) Ponzi collected more than $8 million from about 30,000 investors in just seven months, before the scheme collapsed. He served 14 years in prison, was deported from the United States, and spent the rest of his life vainly seeking ways to provide restitution for the losses of his investors.
1930s Ivar Kreuger, a Swedish businessman known as the "match king", built a Ponzi scheme, defrauding investors based on the supposedly fantastic profitability and ever-expanding nature of his match monopolies. The scheme soon collapsed in the 1930s, and Kreuger shot himself.The Incredible Ivar Kreuger, Allen Churchill; Weidenfeld, London; Rinehart & Co., New York; 1957
1970s Between 1964 and its bankruptcy in 1973, the mutual fund and life insurance conglomerate Equity Funding ran a Ponzi scheme using fictitious life insurance policies. It sold these policies to reinsurance companies, using the money it received from these sales and from alleged deaths of policyholders to pay the incurred premiums. At its peak in 1972, it claimed assets of over $500 million. In the 1980s, Jean Pierre Van Rossem ran a stock market investment company called "Moneytron" in Belgium. Van Rossem claimed that he had developed a statistical model to predict the behavior of the stock markets and beat the capitalist system. Investors believed Van Rossem's claims, and that trust, coupled with his gift for self-promotion, allowed Van Rossem to accumulate US$ 860 million (about 32 billion Belgian francs). He also traded duplicate stocks. In 1991, he was sentenced to five years in prison for what was in part a Ponzi scheme; according to him, it was "a way to fuck the system". Between 1970 and 1984 in Portugal, Dona Branca maintained a scheme that paid 10% monthly interest. In 1988, she was sentenced to 10 years in prison. She always claimed that she was only trying to help the poor, but in her trial it was proven that she had received the equivalent of €85 million (almost US$120 million). In January 1984, Adriaan Nieuwoudt started the so-called "Kubus" scheme with an apparent beauty product in South Africa. Subscribers to the scheme bought a supposedly biological substance called an "activator", that was used to grow cultures in milk. After growing for a week or two, the cultures were harvested and dried, and sold back to the scheme. The cultures were never used for a beauty product but were simply ground up and resold to further investors as activators. 1600 investors in Diamond Mortgage Company and A.J. Obie, two firms with the same managers, lost approximately $50 million in what the Michigan Court of Appeals described as "the largest reported 'Ponzi' scheme in the history of the state". It led to the passage in 1987 of the Mortgage Brokers, Lenders, and Servicers Act."People v. Greenberg", 176 Mich App 296, 299; 439 NW2nd 336(1989) cited in U.S. Supreme Court, 05-1342, Watters vs Wachovia Bank, page 6. At American Bar Association site ABAnet.com. Retrieved August 29, 2007. Keyfetz, Lisa, "The home ownership and equity protection act of 1994: extending liability for predatory subprime loans to secondary mortgage market participants". Loyola Consumer Law Review, Vol 18:2, pp, 165–66. Retrieved August 29, 2007. In the 1980s in San Diego, California, J. David & Company, a purported currency and commodity trading and investing operation named after its founder, J. David Dominelli, a withdrawn and shy currency and commodity trader, was revealed to be a Ponzi scheme which took in $200 million and returned $120 million to investors, leaving a net loss of $80 million. The scheme touched all levels of upper-class business and professional life in San Diego and environs. One of those most closely involved was Nancy Hoover, the mayor of Del Mar, California, a cozy upscale beach town just north of La Jolla. Hoover was J. David's assistant and live-in companion at the time. Also involved was the prominent New York law firm Rogers & Wells (now Clifford Chance), which had advised J. David (through a rogue partner) and others.Rancho Santa Fe, California When the fall came, J. David briefly escaped to Montserrat in the Caribbean, but was returned ultimately to plead guilty to federal charges and was sentenced to 20 years' imprisonment. Between 1978 and 1983, Ron Rewald ran an investment firm in Hawaii. The firm declared bankruptcy in 1983 and was revealed to have been a Ponzi scheme which defrauded over 400 investors of more than $22 million. Rewald claimed that he had been operating the firm as a front for the U.S. Central Intelligence Agency. Rewald was convicted and sentenced to 80 years in prison; he was paroled in 1995. From 1986 to 2001, Reed Slatkin raised almost $600 million from about 800 wealthy investors in one of the largest Ponzi schemes in the history of the United States. was a pyramid scheme run by Ken'ichi Uchimura (). Behind the Tenka Ikka no Kai was the Dai-ichi Sōgo Keizai Kenkyūsho (), run by Uchimura. This organization, established in 1972, once had a million members. It was a cause of the enactment of Japan's law prohibiting pyramid schemes. In 1986, the Dai-ichi Sōgo Keizai Kenkyūsho declared bankruptcy, leaving debts amounting to 189,600,000,000 yen.天下一家の会・第一相互経済研究所 / ワードBOX / 西日本新聞 Nishinippon Shimbun (Retrieved on March 17, 2009) It has been called "the biggest pyramid scheme in history."天下一家の会・第一相互経済研究所 | ニュースクリップ [読売新聞] Yomiuri Shimbun (Retrieved on March 17, 2009)
1990s МММ was a Russian company that perpetrated one of the world's largest Ponzi schemes of all time. By different estimates from 5 to 40 million people lost up to $10 billion. The company started attracting money from private investors, promising annual returns of up to 1,000%. It is unclear whether a Ponzi scheme was the initial intention, as such extravagant returns might have been possible during the Russian hyperinflation in such commerce as import-export. In Romania, between 1991 and 1994, the Caritas scheme run by the "Caritas" company of Cluj-Napoca, owned by Ioan Stoica promised eight times the money invested in six months. It attracted 400,000 depositors from all over the country who invested 1,257 billion lei (about US$1 billion) before it finally went bankrupt on August 14, 1994, having a debt of US$450 million. The owner, Ioan Stoica, was sentenced in 1995 by the Cluj Court to a total of seven years in prison for fraud, but he appealed and it was reduced to two years; then he went on to the Supreme Court of Justice and the sentence was finally reduced to one year and a half. Anubhav Teak Plantations scam (India): From 1992 to 1998, a number of teak plantation Ponzi schemes were floated in India, prominent being Anubhav Plantations. These promised extravagant profits for people who invested in planting teak (done by purchasing "teak shares"). In 1998, Anubhav plantations collapsed leaving more than 31,000 depositors defrauded to the tune of Rs. 10712 Crores. Towers Financial Corporation, a bill collection agency, collapsed in 1993; in 1995, chairman Steven Hoffenberg pleaded guilty to bilking investors out of $475 million. Judge Robert W. Sweet sentenced him to 20 years in prison, plus a $1 million fine and $463 million in restitution. He settled a civil suit with the U.S. Securities and Exchange Commission for $60 million. He briefly was the owner of the New York Post. At the time the SEC considered the fraud to be "one of the largest Ponzi schemes in history." In late 1994, the European Kings Club collapsed, with ensuing losses of about $1.1 billion. This scam was led by Damara Bertges and Hans Günther Spachtholz. In the Swiss canton of Uri and Glarus, it was estimated that about one adult in ten invested into the EKC. The scam involved buying "letters" valued at 1,400 Swiss francs that entitled buyers to receive 12 monthly payments of 200 Swiss francs. The organisation was based in Gelnhausen, Germany.