Σάββατο 5 Μαρτίου 2011

Financial scandals dream team

Here are the financial standards with the biggest estimated losses. Details about the scandals are from Forbes/ Business Week.


Bernard Madoff
Year made public: 2008
Estimated Losses: $65 billion
Madoff lured many high-profile investors by promising to beat the market through a slow and steady investment strategy. But Madoff actually engaged in an elaborate Ponzi scheme. As the markets tumbled late last year, alarmed investors asked to pull their money out. Madoff couldn't come close to providing the $7 billion requested and was turned in by his sons.

Charles Ponzi
Year made public: 1920
Estimated Losses: About $20 million
In 1920, Charles Ponzi duped thousands of investors, promising massive returns on international reply coupons, which could be purchased in one country and redeemed for postage stamps in another. The profit was to be made on the difference in prices between countries. Ponzi became a millionaire in a few months, but the scam's scope brought him down. Curious parties began examining the accounts because there weren't sufficient international reply coupons for his investment plan to function. In fact, Ponzi was repaying investors with newer investors' money, pocketing much of it himself. He took in $20 million in a few months, equal to $222 million in current dollar values, and six banks crumbled.

R. Allen Stanford
Year made public: 2009Estimated Losses: $8 billion
Stanford, founder of Stanford Financial Group and the Antigua-based Stanford International Bank, was a trusted figure among elite investors. The SEC, FBI, and IRS had inquired for years about his company, which promised high-yielding returns on certificates of deposit. In mid-February, the SEC filed a civil case against Stanford and two associates, accusing the Houston-based company of "orchestrating" a massive fraud


Jerome Kerviel
Year made public: 2008
Estimated Losses: $8 billion
Société Générale trader Kerviel is said to have made tens of millions worth of futures trades without the knowledge of his superiors. Once the French bank discovered his actions, it realized that his trades had already generated tremendous losses. Kerviel is awaiting trial and if convicted, faces up to three years in prison.

Ralph Cioffi and Matthew Tannin
Year made public: 2008
Estimated Losses: $1.6 billion
Bear Stearns hedge fund managers Cioffi and Tannin allegedly lied to investors about the health of their funds, which were heavily backed by subprime mortgages. The funds were struggling, but their alleged falsehoods lured further investment, according to the federal indictment. The funds buckled in June 2008, costing investors $1.6 billion. Cioffi and Tannin were both charged with conspiracy and fraud; both pleaded not guilty and are awaiting trial.

Edward Strafaci
Year made public: 2002
Estimated Losses: $350 million
According to court documents, Strafaci, executive vice-president of New York-based Lipper Holdings, told investors in reports that their investments into two Lipper hedge funds were growing at up to 15% annually. In reality the funds were losing money. In 2004, Strafaci pleaded guilty in federal court to securities fraud and was sentenced to six years in prison 
Tom Petters
Year made public: 2008
Estimated Losses: At least $1 billion
Petters, a money manager who ran Petters Group Worldwide in Minnesota, was indicted in December by a federal grand jury on 20 counts of money laundering, conspiracy, and wire and mail fraud. He is alleged to have duped investors from 1995 to 2008. According to court documents, Petters allegedly received over $1 billion from investors and subsequently provided them with false reports claiming that his firm was using their money to buy and resell wholesale consumer goods for profit. The complaint alleges that these transactions never took place. Petters, who pleaded not guilty, is awaiting trial.

Kazutsugi Nami
Year made public: 2009
Estimated Losses: $1.4 billion

According to authorities in Japan, Nami, chairman of Japanese bedding linen company L&G, claimed he could get a 36% annual return on investments in a fictional currency he created and dubbed Enten, meaning "divine yen." Nami allegedly took $1.4 billion from roughly 37,000 investors by convincing them that after the world's economies collapsed, his digital Enten currency would make them wealthy. Investors grew frustrated when Nami allegedly began repaying them in Enten. In February he and 21 former executives of the company were arrested and charged with fraud in Tokyo.

Nick Leeson
Year made public: 1995
Estimated Losses: $1.4 billion
In the early 1990s, Leeson, a trader who worked for British investment bank Barings, made numerous risky moves on the Singapore International Money Exchange (SIMEX), hiding his losses from the firm in a secret account. By the time Barings discovered the ruse, it was too late: The bank was $1.3 billion in debt and had to shut its doors. Leeson, who served more than six years in prison, publicly owned up to his wrongdoing in two books about the scandal and its fallout.



Paul Greenwood and Stephen Walsh
Year made public: 2009
Estimated Losses: $554 million.  According to SEC documents, New Yorkers Greenwood and Walsh ran a fraudulent commodities trading company, WG Trading Investors. Instead of pursuing a "stock index arbitrage strategy," Greenwood and Walsh allegedly used the funds as their own "piggy bank," starting in 1996. The firm's assets have been frozen and the SEC has filed a civil complaint in federal court in Manhattan charging the men with fraud. They also face criminal charges



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