5 Scams That Shook the United States
If there’s one thing every American would desire the most, it is peace. We all want to be surrounded by honest individuals and live our lives in an orderly fashion. Unfortunately, it’s not that easy. In the words of the famous Rocky Balboa: “The world isn’t all sunshine and rainbows. It’s a very mean and nasty place…”. This definitely holds true when we talk about the biggest scams that took place in the USA.
The Original Ponzi Scheme (1920)
Charles Ponzi had realized that he could purchase coupons at a discount and then sell them abroad at full quoted price. He had asked many people to invest in this business of his. Where’s the scam, you ask? Ponzi exaggerated the profit to the investors. Instead of the 5 percent they would make, Ponzi told them they would make 50 percent. They all came running. All Ponzi did was pay off an investor from the money he’d collect from the subsequent one. When this scheme came to an end, people had lost about ten million dollars.
Lehman brothers was an organization which provided global financial services. In fact, it was the 4th largest invest bank in USA before it filed for bankruptcy in 2008. With $639 billion in assets and $619 in debt, Lehman Brother’s bankruptcy was perhaps the biggest there had ever been. Around 26,000 people lost their jobs and millions of investors had to face severe losses.
This is another case of a Ponzi scheme. In fact, the largest one. This is known as the largest fraud ever by an individual. In 2008, Bernard “Bernie” Madoff told his sons about the $65 billion Ponzi scheme that he had been pulling off. Even the SEC failed to unravel the fraud. When it blew up, Bernie was sentenced to 150 years in prison. However, for the investors, a wave $18 billion in losses wall street by a storm.
The Enron Bankruptcy
Enron, an energy company, had been doing a phenomenal job went it came down to generating revenue, or at least it made the world think so. Named the “most innovative company” by the fortune magazine six years in a row, employing as much as 22,000 employees, Enron had misrepresented its substantial profits and revenue to the world. When this company came to an end in 2001, the investors faced a loss of $74 billion.
Kenneth Lay, the founder of Enron, and Jeffery Skilling were both fined heavily. Skilling was sentenced to time in prison while Lay died waiting for his court sentence.
Bernard Ebbers was the CEO of WorldCom, the second largest telecommunication company in the united states of America at the time of its peak success. Ebbers made false representations of the company’s assets and even exaggerated them by $11 billion. When this broke down, the WorldCom stock dropped from $64 to about $1. This collapse caused about $100 billion in losses for the investors.
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