White collar crime is the sweetest gig on earth. You can strip the earth bare or rob your shareholders blind, and most likely you’ll just have to pay some money, or a small amount of time in a minimum security prison. Worst case scenario you get locked up for decades and your son kills himself. But that’s only if you’re really bad. Maybe it’s not such a great idea after all. These guys didn’t see it that way, and that’s how they made it on this list.
Charles Ponzi, aka the Babe Ruth of white collar crime, was an inventor of insidious ways to screw people over. Actually, even his Ponzi scheme was most likely stolen from William F. Miller, a Brooklyn bookkeeper who used the same scheme to make $1 million. Essentially, in the 1920’s Ponzi would get large investments, purportedly used to buy mass amounts of discounted postage coupons (why would this ever be profitable?). Then Ponzi would pay his oldest investors with money from his newer investors. The money invested in Ponzi would be enough to cover 160 million postage coupons, but only 27,000 were actually in circulation. Ponzi’s investors lost $20 million in 1920 dollars ($225 million in 2011). Far in the future, Bernie Madoff would use the same scheme to lose 40 times as much. Ponzi spent the rest of his life in jail, running, imprisonment and exile. He died in poverty in 1949. Kids, it just doesn’t pay to commit white collar crime — especially when you re-use a scheme that’s almost as old as our financial system itself.
Martin Frankel is a classic white collar criminal subtype: a ne’er-do-well who fooled a bunch of other rich idiots into investing with him. Frankel used astrology to make his financial trading decisions, and the stars did not smile down upon him. He was caught several times for improper trading and embezzlement, and had to change his name to David Rosse to continue his thievery. Eventually, through a trust that hid his involvement, “Rosse” stole $200 million from several Midwest insurance companies. Eventually Frankel fled to Germany but was busted in Hamburg. In 2004, he was sentenced to 16 years in prison for his luxurious tomfoolery.
In perhaps the most famous white collar crime of all time, Enron repeatedly lied to its staff and the world at large, projecting profit lines on future imaginary investments that rarely, if ever, came to fruition. Through repeated institutionalized fraud, Enron’s executives and traders were able to funnel millions to themselves while their company’s investments tanked. By 2001, Enron was billions of dollars in debt, and went belly up. Several of the executives were sentenced to prison time, but the company’s creator and former owner Kenneth Lay died of a heart attack before he could begin serving his 45 years for securities and wire fraud. Countless employees of Enron were left pensionless, and the reverberations of Enron and similar behavior would come to define the following decade’s global economic collapse.
Ponzi schemes were invented back when people were still named Ponzi, but that doesn’t stop people from falling for them today. Bernie Madoff essentially became rich via the Ponzi scheme, using it from the 1970’s to the late Aughts unchecked. The meat of the scheme is so simple and criminal it’s shocking it could work for so long. Madoff would take investors money, and instead of investing it, stick it in a bank account. Then he and his team of wizards would make up returns the money “should” earn based on investments not made. When people wanted their money, or some of it, Madoff would give them pieces of the accounts he’d set up. When Madoff wanted something, he would take money out of the accounts. The accounts grew thin in the 2000’s, and by 2009 Madoff plead guilty to 11 federal felonies and admitted to the whole plot. He was sentenced to 150 years in prison. He was worth an estimated $800 million of stolen cash. In 2010, Madoff’s son Mark hung himself inside his NYC apartment.
Often white collar criminals will hide behind the guise of “rags-to-riches” and, less frequently, “WWII veteran.” John Rigas was one of these. The son of greek immigrants, and a certified war hero (see how quickly they spin it?) Rigas created Adelphia Communications in 1952. In the coming decades, it became the fifth largest cable company in the US. But it was a cable car built on a house of cards. Rigas and his sons had hidden $2.3 billion in debt and false earnings, and secretly used millions in corporate funds for personal fun. Rigas was convicted of fraud and sentenced to 15 years in 2003. He refused to plead guilty for a lesser sentence, along with his son Timothy. Another son, Michael did plead guilty, and was sentenced to 10 months of house arrest and two years probation. Today all that is left of Adelphia Communications is a skeleton staff which exists solely to deal with all the lawsuits it faces.
In the world where millions and billions get thrown around like twinkies, a junior futures trader can lose $5 billion before anyone even notices. Jerome Kerviel was trading at a French bank called Societe Generale in 2007 (and by trading I mean betting on the economy to fail), trading tens of billions at a time, and hiding profits. He would also make fake trades, and then pretend they were accidental, but then replace the trade via another account or device, to be extra sneaky. It turned out that this was easily trackable, and Kerviel was caught in 2008. The French briefly released him, but then charged him with fraud. In 2010 he was convicted and sentenced to three years in prison, and restitution of the money he had lost. In a few short years, Kerviel had managed to lose $6.7 billion worth of investors’ money — an amount known to normal people as “more money than God and only slightly less than Warren Buffet”.
Bernard Ebbers and WorldCom
WorldCom, created in the 80’s, grew to a communications giant in the late 90’s through a series of acquisitions and mergers. When WorldCom acquired MCI in 1999, they seemed poised for white collar greatness. Unfortunately, executive Bernard Ebbers had miscalculated, and the MCI deal hurt the company, which he hid with a variety of book cooking over easy. Oh and funny fact: Ebbers also borrowed $400 million from WorldCom to finance other businesses that made no money! Ebbers claimed he knew nothing about illegal practices within WorldCom, which means he was either the most dishonest or incompetent CEO in history. In 2005 a jury of his “peers” convicted him of conspiracy and fraud. The amount defrauded was around $11 billion. WorldCom filed for bankruptcy, and Ebbers was sentenced to 25 years in prison.
Rich people aren’t trying to part with their money, no matter how much of it they have. Martha Stewart heard her ImClone Systems stock was going to drop in 2001, and she quickly pulled her almost 4,000 shares out, avoiding a loss of only $45,673 in 2001. The day after her sale the stock fell by 16%. The problem was, she’s Martha Stewart. She’s on TV all the time, and other matronly trolls want to take shots at her. She was quickly exposed for her insider trading, and in 2003 she was indicted on nine counts, including securities fraud and obstruction of justice. But you knew she wasn’t going to do any real time! Martha got 5 months, and a fine of $30,000, which if you’re counting is about $15,000 less than she saved through the insider trading. Chump change! Martha got out of jail and was more popular than ever. She is now worth over $600 million dollars
Abramoff was a ubiquitous lobbyist in Washington from the 1980’s-2000’s. “Lobbyist” of course being an Old English manner of pronouncing “serial briber and defrauder”. In 2006, Abramoff pled guilty to fraud, conspiracy and tax evasion after cheating a casino out of an estimated $85 million. Soon after he was sentenced to 70 months after a fake transfer to qualify for a $60 million loan. On top of it, Abramoff got caught for bribing representatives, including then-Republican Ohio Representative Bob Ney, who was convicted of accepting Abramoff’s bribes. It seems like anyone with “off” in their name is probably going to steal your money.
Tyco International, a global manufacturing company based in Switzerland, became embroiled in a white collar crime scandal in 2002. The CEO Dennis Kozlowski and CFO Mark H. Swartz were accused of theft of over $150 million from the company. During their trial, a juror made an “okay” sign to the defense, and a mistrial was declared. In 2005, during their retrial, Kozlowski and Swartz were convicted of over 30 counts of theft and fraud. They were each sentenced to eight years in prison. Tyco was forced to pay $2.92 billion to defrauded shareholders. As of press time, Bob the Builder wished to stress that he has no affiliations with Tyco international.