Fraud isn’t just a problem in 2018, many have suffered from fraud for thousands of years. Personal Loans Now explores the biggest frauds in history going as far back as ancient Greece to modern-day America.

Biggest Frauds In History - Personal Loans Now

Learning Highlights
  • Hegestratos & the ‘lost’ cargo scam
  • Financial fraud in the Roman Empire
  • The Scottish ‘Prince’ & his principality
  • The theft of the Mona Lisa
  • The original Ponzi investment scam
  • The Enron bankruptcy of 2001
  • Conclusion – The biggest frauds in history

Fraud Through History

The media seem to be full of warnings about the latest scams, and how consumers can protect themselves. However, it might come as a surprise to learn that commercial fraud and scams are nothing new. They have existed since the bartering system was replaced by coinage as a portable, easily divisible alternative. Moreover, the only difference nowadays is that technological developments make it easier for conmen to reach more victims in a shorter time.

Hegestratos & the ‘Lost’ Cargo Scam

Would you believe that the first recorded incident of fraud was in 300BC in ancient Greece?
Hegestratos was a merchant who borrowed money on his ship which was carrying a cargo of corn. The short term loan, with interest, was due to be repaid when his ship and cargo reached harbour safely. If payment wasn’t received, then the terms of his bottomry agreement meant that both ship and cargo would be repossessed. To avoid repaying the personal loan, he had the bright idea of removing the corn to sell elsewhere and then scuttling the ship. Unfortunately, he was caught red-handed by his ship’s crew and in the ensuing pursuit, he drowned.

Biggest Frauds In History - Personal Loans Now

Financial Fraud in the Roman Empire

The Praetorian Guard was an elite body of professional soldiers whose role was to protect the reigning emperor. Unfortunately, in 193AD they turned rogue and assassinated Emperor Pertinax. Then they put the Roman Empire up for sale to the highest bidder even though it wasn’t theirs to sell. The winner of the auction was Julianus who bid 250 pieces of gold for every soldier in the army. The equivalent of around £1 billion in today’s money.

Unfortunately, Julianus faced difficulties in being recognised and was assassinated in only the third month of his reign. Things didn’t end well for the soldiers who sold him the empire either. Julianus’ successor, realising that they couldn’t be trusted, had them all put to death.

The Scottish ‘Prince’ & his Principality

In 1821 Gregor MacGregor, a Scottish army general announced that he had discovered and been crowned the ‘cazique’ (or prince) of a small island called Poyais located near present-day Honduras. MacGregor was the first swindler to appreciate the benefits of marketing. He gave newspaper interviews, placed adverts in the press, printed up leaflets and even paid for ballads to be sung about the joys of Poyais. He was flooded with money from investors who wanted to purchase some of its undeveloped 8 million acres or have lavish homes built there. It’s estimated that he made £200,000, including money from the exchange of sterling for the island’s currency. Unfortunately, the island didn’t exist, and the deeds and the island’s currency were completely worthless.

Biggest Frauds In History - Personal Loans Now

The Theft of the Mona Lisa

In 1911 the disappearance of Leonardo da Vinci’s masterpiece Mona Lisa caused an outcry throughout the world. It later transpired that an Argentinian, Eduardo de Valfierno, had bribed a Louvre employee to steal the painting. He wasn’t interested in possessing it himself, but it gave him the opportunity to sell his own fake copies of the painting to collectors. He was secure in the knowledge that they could neither check the painting with an expert nor complain to the police because of their compliance with receiving stolen property.

The Original Ponzi Investment Scam

Nowadays, investment scams are often called Ponzi schemes. This is when investors are tricked into believing in the success of a fake business enterprise when in fact the strong returns for original stakeholders are provided by later investors. However, do you know where they get their name from?

Charles Ponzi, born in Italy, found that he could make a modest 5% profit by buying IRC (International Reply Coupons) in America and then shipping them to another country where they were priced higher. To attract investors, Ponzi exaggerated the returns and claimed a 50% profit after 45 days and 100% after 90 days. As he paid the money off to his original investors, he was flooded with people eager to seize the opportunity to make money. When his scam was discovered, it was estimated that he had made $10 million.

Biggest Frauds In History - Personal Loans Now

Biggest Frauds In History - Personal Loans Now

The Enron Bankruptcy of 2001

Enron was awarded the title of ‘America’s most innovative company’ 6 times in succession by ‘Fortune’ magazine. In the year before everything fell apart, the company of 22,000 employees recorded revenue of nearly $101 billion. However, it was later discovered that the company’s management and its auditors were guilty of what is politely called ‘creative accounting’. Using tricks like recording fake revenue from shell companies and recording contracts under their gross (rather than net) value. They were able to keep up the illusion of a flourishing company. When the scale of one of the biggest frauds in history was discovered, Enron share prices collapsed from $90.75 to $0.67 wiping out many investors’ savings.

Conclusion – The Biggest Frauds In History

Despite the obvious differences in customs, way of life and technology, this brief examination of fraud throughout the ages really proves the truth of the saying that there is nothing new under the sun.

Another lesson to be learnt is that the unscrupulous will always try to find a way to cheat the system, Alternatively, they wil invent ways to take advantage of the unwary. All the biggest frauds in history that we’ve featured, and to a certain extent, their victims too were looking for an easy way to make money. Moreover, to avoid being taken for a ride, your best defence is to look at the maths. If an investment opportunity seems too good to be true, then, unfortunately, this means that it most definitely is a con. If you think that you are a victim of fraud, you can contact the ActionFraud police. They should be able to help you.

Biggest Frauds In History - Personal Loans Now