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The Most Infamous Ponzi Schemes in History

Updated February 21, 2020 283 votes 94 voters 11.5k views18 items

Here in the modern world, most of us have developed a healthy cynicism that helps us look past "get rich quick" schemes with a smirk and an eye roll. So you'd think we would be able to avoid the total financial ruin that comes from joining in on a scam. And yet, when it comes to these infamous Ponzi schemes, we apparently are not as smart as we think we are.

In the face of real human cost, it's hard to maintain a sense of humor while poring through the true costs of greed. Hard, but not impossible. Oh, sure, it's got its moments (if you're into irony), but at the end of the day, even the most hardened cynic would struggle to find the punchline in the utter devastation some of these scams have wrought upon the poor, naive, and undeserving.

What is a Ponzi scheme? The basic definition involves a fraudulent company that promises big returns to early investors. Those returns are usually furnished by the money from later investors, instead of from a legitimate enterprise.

Indeed, these days, we tend to look at cases like Bernie Madoff and shrug it off with "Well, that's what you get for trusting Wall Street." But looking over this list of scams, it's hard to apply the same logic to the refugees of the Kosovo conflict, women and children fleeing anarchy in Albania, and the utter decimation of the poor in Haiti.

The last 30 years have been something of a new Golden Age for investment scams. Everyone's got a plan to get rich doing as little as possible; it's almost come to define the new American dream. But risking it all on a business that seems too good to be true can have disastrous consequences, as these examples of the biggest Ponzi schemes in history prove.    
  • 1

    Dona Branca

    A villain to some and a hero to others, Branca's rags to riches story started a chain reaction of Wall Street scams that continues to this day. Born poor and raised in the slums of Portugal, Branca opened a "bank" using Ponzi scheme investment strategies. Her goal was to provide low-interest loans to the poor, and that she did -- while also maintaining her original Ponzi scheme and making about $120 million on it herself.

    Branca began her scheme in 1970 and got caught in 1984. During her very public trial, Wall Street rediscovered the incredibly profitable art of investor scams. That year, the number of Ponzi and pyramid schemes exploded. Indeed, Dona Branca's bizarrely inspiring rags to riches tale effectively made her Patient Zero for today's plague of investment scams. 
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  • 2

    William "520 Percent" Miller

    The scheme might have been named for Charles Ponzi, but William "520 Percent" Miller was actually the first to do it in 1899. Under the cover of his Brooklyn-based, not-at-all-suspiciously-named "Franklin Syndicate," Miller promised his investors a 10-percent return within a week of investment. And according to him, they got it. Most of them wound up "re-investing" those profits to make even MORE easy money. But the only person making money was Miller. He was sentenced to jail for 10 years, then pardoned. Because, reasons. 
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  • 3

    Mutual Benefits -- or "How I Learned to Stop Worrying and Profiteer from AIDS"

    Florida-based Mutual Benefits, run by Peter Lombardi, made a killing by profiteering on AIDS. They claimed to provide what are known as "viatical settlements" on life insurance to HIV patients. A viatical settlement is a kind of early lump sum payout on a life insurance policy, and it is a legitimate (even merciful) concept for people who are suffering from terminal illnesses.

    Viaticals can help to make the last years of a dying person's life worth living. Except that Lombardi wasn't doing it. Instead, he kept the $1 billion raised from over 28,000 investors, and wound up with a 20-year trip to prison in return. Yes, prison...the one place where someone like Lombardi may become far better acquianted with HIV than he expected.
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  • Photo: Boston Library / Wikimedia Commons / Public Domain
    Of course, some homage must be paid to the guy for whom the scheme is named, Charles Ponzi. From his home base in 1920s Boston, Ponzi bilked about 30,000 investors for a combined total of $8 million. His promise to double their investment within 90 days using a bizarre postal coupon re-mailing scheme seemed to pay off at first. Initial investors did indeed see their money doubled...using money from other investors. After those initial investors spread the good word of Mr. Ponzi's brilliance, the money from new investors came pouring in. Ponzi served five years in prison for using the mail to defraud. 
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