Investors often fall under the spell of charismatic individuals selling "guaranteed" high returns with "little or no risk." This laundry list of the most notorious con artists who successfully perpetrated this scam on unwitting investors is a testament to the allure of the Ponzi scheme.
The original bad boy of finance, Charles Ponzi went from rags to riches in 6 months by promising investors a 50% return in 45 days in an international postal coupon arbitrage setup. He reportedly stole $15 million—a considerable sum for today's standards but even more so in the 1920s. His fraud is memorialized every time a new scheme is labeled by the phrase he coined.
Enrique, Osvaldo, and Freddy Villalobos
Based on a loan scheme that started in the late 1980s, this was a much less volatile version of the original plan. The three brothers from Costa Rica were disciplined and had real assets to back their staying power. The Villalobos men supposedly bilked mainly American and Canadian retirees out of $400 million over their staggeringly long run of 20 years.
Gerald Payne allegedly used his ministry to solicit investor cash. As a minister with Greater Ministries International, Payne's Ponzi scheme targeted his congregation with a precious metal investment plan that would "double the blessings" of participating investors. Unfortunately, Payne allegedly pocketed $500 million, and the majority of his investors never saw their cash again.
In the late 1990s, Lou Pearlman was the manager of boy bands such as ‘N Sync and the Backstreet Boys. Already known in the community, he decided to offer high-return investments through his FDIC-insured Trans Continental Savings Program. The scheme was not FDIC-approved or insured at all, but Pearlman reportedly raised nearly $500 million for his fraudulent scheme.
New information is still being uncovered regarding this most notorious scam artist's methods, which were shrouded in secrecy even to those working closely with him. Madoff spent years building what is now regarded as the largest Ponzi scheme in history to date. His incredibly long list of victims included nonprofit organizations, celebrities, other funds, financial institutions, and countless others. He allegedly swindled them out of more than $50 billion.
Michael Eugene Kelly
Michael Eugene Kelly allegedly targeted retired and elderly investors by offering enticing timeshare investments based in Cancun, Mexico. Investors believed that they would receive returns with very little risk, but the Ponzi scheme ended up taking $428 million instead. According to the SEC, at least $136 million of that amount came from investors' IRA / retirement accounts.
Sarah Howe ran her Ponzi scheme way back in 1880. What made her scheme work is the same kind of affinity fraud we continue to see today. Howe specifically targeted female investors with a "Ladies Deposit" that would offer 8% interest, but she ended up pocketing the cash for herself.