30 of the biggest scams in modern history
In 1849, police in New York City arrested a man named William Thompson. Charismatic and "a man of genteel appearance," according to a New York Herald report from the time, Thompson approached strangers, engaged them in conversation, and won their confidence, which he then used to convince them to part with their money or valuables. Prior to his arrest, authorities dubbed the prowling swindler the "Confidence Man," the first time the phrase was ever used to describe what would soon be shortened to "con man" or "con artist."
An old proverb cautions that "a fool and his money are soon parted," and con artists justify carrying out that parting with one of Murphy's Laws: "It is morally wrong to allow suckers to keep their money."
Some of history's most brazen, most brilliant, and most lucrative swindles have occurred in the modern era; sometimes the caper was carried out with computers, sometimes with blank checks, and even once with a three-wheeled car. Some scam artists have received unsurvivable prison sentences, others have been glorified on the big screen, and others have been sprung from prison in exchange for helping law enforcement prevent scams and even to run scams of their own.
Some frauds were carried out by charismatic and confidence-inducing individuals, while others were the work of massive corporations that were supposed to be operating under the watchful eye of government regulators. Either way, their fortunes were built on the dashed hopes, ruined dreams, and empty pockets of their victims.
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Swindlers sell the Brooklyn Bridge
The street smart have long taunted the naive and gullible with the phrase, "If you believe that, I've got a bridge to sell you." The statement is an homage to the long line of con artists who began "selling" the Brooklyn Bridge almost as soon as it was completed in 1883 to suckers who thought they had scored the deal of a lifetime. In 1899, con artist and future mayor Peaches O'Day sold the bridge for $200, William McCloundy served two-and-a-half years in Sing Sing prison for selling the bridge in 1901, and George C. Parker sold it several times over the course of his life.
Charles Ponzi earns infamy for his name
Scams that borrow from Peter to pay Paul—that is, use payments from new "investors" to satisfy promises made to previous victims—are known as Ponzi schemes. The most famous con artist in modern history, Charles Ponzi raked in $15 million over the course of 18 months by promising outrageous short-term profits of 50% to 100% when he was, in fact, just shuffling money from one person to the next while keeping most for himself. Ponzi was convicted in 1920, imprisoned, paroled, continued running other scams, was imprisoned again, and finally was deported to his native Italy.
Lou Blonger scams the West
At the same time Ponzi was running his scam in New York, the reign of a towering figure from the Old West was coming to an end. Lou Blonger and his brothers worked and conned their way across the Western frontier and eventually organized all of the major con men, grifters, and scam artists in lawless and violent Denver into a single underworld operation that continued for decades. The Civil War veteran, who hobnobbed with Wild West giants like Doc Holliday, Bat Masterson, and the Earp brothers, was convicted in 1924 and died in prison.
Baker estate con
In December 1936, 28 people were indicted in what was then the biggest mail fraud scheme in history. The fraud revolved around the fabulously wealthy Jacob Baker of Philadelphia, who had died while his estate remained unprobated and therefore remained open to claims by anyone named Baker—or so the swindlers wanted Bakers across America to believe. Purporting to represent the estate, the swindlers collected $3 million from 3,000 people who paid to stake their claims. In reality, there was no Jacob Baker, and no such estate ever existed.
McKesson and Robbins scandal
Today, McKesson Corporation is one of the largest health care companies in the world, but in 1938, when it was still McKesson and Robbins, it was at the heart of one of the biggest frauds of the century. A career criminal named Philip Musica, who, during Prohibition, used a pharmaceutical company as a front for bootlegging operations, bought the drug company and quickly enlisted his brothers to set up fictitious partner companies. They inflated assets to the tune of hundreds of millions of dollars in today's money and skimmed millions, which they then distributed to themselves via the fake partner companies, in a scam that changed America's accounting and auditing laws.
Quiz show scandals
By the end of the 1950s, quiz shows were so dominant that "The $64,000 Question" became the first show ever to topple "I Love Lucy" from the #1 spot. As many as 24 quiz shows were on at any one time, and the competition was so fierce that many started cutting corners until a long-reigning "Twenty One" champion contestant claimed the show was rigged. His accusation, and the many others that would soon follow, were never proven, but they sparked criminal and Congressional investigations, and so much public outcry that every single quiz show soon went off the air—until 1963, that is, when Merv Griffin came up with "Jeopardy," a show that would reassure skeptical audiences by giving the contestants the answers first and then making them respond in question form.
Payola radio scandal
Almost immediately after he wrapped up the quiz show hearings, a powerful Congressman named Oren Harris launched an investigation into Payola, the name given to a common practice in the record industry that had recently been publicly decried by President Dwight Eisenhower himself. In Payola scams, the record industry manufactured hit songs by paying DJs large sums of money to give their records extra air time. Since the airways were public, the 1960 Payola hearings investigated the practice as a breach of the public trust.
Catching Frank Abagnale Jr.
Leonardo DiCaprio has portrayed more than one scammer on this list, and the first is Frank Abagnale Jr. of "Catch Me if You Can" fame. A grifter from his teenage years when he used gas cards to pay for thousands of dollars worth of dates, Abagnale passed millions in bad checks, posed as a doctor, a lawyer, a professor, and even an airline pilot while charming his way through multiple double lives in a series of cons around the world. A massive manhunt ended with his capture in France in 1969, but he received an early release from prison on the condition that he help law enforcement foil con men and forgers like him.
Equity Funding insurance scam
In the 1960s and 1970s, the Equity Funding Corporation of America became a Wall Street sweetheart through its highly successful and profitable sale of life insurance policies that were tied to mutual funds. Unfortunately for investors and policyholders, 60,000 of those policies were fake, and the company sold the fake policies to reinsurance companies for a profit, sold other phony policies to pay the premiums on the originals, and even faked the deaths of policyholders to collect the benefits. The company declared bankruptcy in 1973, and several top executives went to prison.
Crazy Eddie's lives up to its name
What started as a single electronics store in Brooklyn, N.Y., in the 1970s became Crazy Eddie's, one of the biggest retail chains in the region with some of the most memorable commercials ever produced—all of which was supported by one of the biggest frauds in the modern era. Before the company went public, founder Eddie Antar hid money, filed false paperwork, and paid employees in cash to avoid payroll taxes. After it went public, he pumped some of the money he had been skimming back into the company to make it appear more profitable so he could sell his stock at an inflated price. As the 1980s came to a close, the jig was up, his stores were bankrupt, and Antar was sentenced to six years in prison.
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