Over the years we’ve been educating you on what it takes to make money. Lots of it. Everything from part-time job ideas, investment opportunities, and most of all, molding your mindset into that of a successful and wealthy person so that you can achieve the riches you’re after. But don’t get us wrong, we’re not a bunch of Pollyannas here. We know that many make their fortunes by stealing money from others – primarily – through running what’s called a Ponzi scheme (a fraudulent investment vehicle in which the investors invest into something that doesn’t even exist). Schemes that made the following people extremely rich, and eventually, incarcerated.
Ever wonder where the term “Ponzi” scheme comes from? Well, it comes from Charles Ponzi, who was the original schemer back in the 1920’s. He would promise his investors a crazy 50% – 100% return on their investment of international postal coupons, which never even existed. Mr. Ponzi himself was able to steal an impressive $15 million – which back in those days was a king’s fortune – until he was later caught and forced to serve nine years in a federal prison. Amazingly, Charles Ponzi ended up dying without a penny to his name.
Remember Lou Pearlman, music producer to the Backstreet Boys and NSYNC? Well he became famous not for his musical talents, but from milking $300 million from his boy band boys over the course of 10 years. He would create fake financial statements, and create companies that only existed on paper – until he was busted back in 2008 for money laundering. Lou is now serving a 25-year prison sentence.
Michael Eugene Kelly
Michael Eugene Kelly made off with a $500 million fortune off the hard earned money of over 8,000 investors. Kelly created this fraudulent real estate scheme he called “Universal Leases”, which essentially promised investors an annual return rate of 15%. The jig was eventually up for Kelly and he ended up serving time in a federal prison from 2006 – 2012. Upon his release Kelly died of colon cancer not even a year later. What a bummer.
Gerald Payne was both a Pastor and a Ponzi schemer. Interesting mix for sure, but Pastor Payne caused his congregation a lot of pain when he milked them out of $20 million by convincing them that if they invested in the church, that god would double their money. Eventually the IRS got wise to Payne and he was sentenced to 27 years in a federal prison.
Scott Rothstein pulled off the largest Ponzi scheme in the history of Florida by promising investors a 20% return from fabricated structured settlements. He made away with $1.4 billion before being caught in 2010. He’s currently six years into a 50-year prison sentence.
Gary Gauthier was the host of a Tampa radio show called “It’s God’s Money” in which he used the lords name to steal $6 million from 40 senior citizens. He promised the victims a 10-40% return on real estate investments, but instead, he ended up keeping the money himself, while going on his radio and talking about how they all got rich quick. Gauthier was eventually charged in 2010 with racketeering and securities fraud.
If you’ve ever been agitated by those Nigerian fishing scam emails, it’s because they probably learned from the best, South African entrepreneur, Adriaan Nieuwoudt. Nieuwoudt made an undisclosed fortune off of selling his grandmother’s milk-based beauty regime called “kubus”. The rub was that there was actually never any product being sold, only kits on how to make it, which the South African government eventually deemed as illegal.
Tom Petters was able to fleece $3.65 billion from investors through a fictional electronic goods company. To his credit, Petters was a legitimate and highly successful businessman, but like so many, greed got the better of him – and like many – the law caught up to him in 2009. He’s now serving a 50-year sentence for 20 counts of fraud and money laundering.
Co-founder of the tech company, Earthlink, as well as being a Scientology Minister. Reed Slatkin ran a Ponzie scheme back in 1986 that lasted 15 years through an unlicensed “investment club,” where he guaranteed at 26% return on your funds. Reed took $590 million from his trusting investors, many of which were from his Scientology congregation. He was eventually charged back in 2013 and now lives in a halfway house.
Bernie Madoff is by far the most famous Ponzi schemer of all time. Bernie ran a wealth management company in New York that began as a valid business, but eventually turned into one giant Ponzi scheme where Bernie made off with an astounding $65 billion he stole from investors. His son Mark, who worked for him, claimed to not be involved, but suspiciously committed suicide back in 2010. HBO is currently making a movie about Bernie called The Wizard of Lies, which is based on the best selling book.