But that alleged swindle has a lot of company in the annals of financial scams. Crooked financiers and rogue traders have tried everything from Ponzi schemes and old-fashioned embezzlement to the creation of phantom companies to enrich themselves or make up for huge losses before their clients or bosses noticed.
Here are some of financial skulduggery's greatest hits of recent years.
Allen Stanford - February 2009
High-flying Texas billionaire Allen Stanford and his companies are accused of fraud.
The US Securities and Exchange Commission alleged Stanford and two fellow executives fraudulently sold $8 billion in high-yield certificates of deposit.
The SEC said they reported "improbable" high returns and gave "false" assurances to investors. Federal authorities have charged the flamboyant 58-year-old financier and three of his companies with a "massive ongoing fraud."
The US Securities and Exchange Commission alleged Stanford and two fellow executives fraudulently sold $8 billion in high-yield certificates of deposit.
The SEC said they reported "improbable" high returns and gave "false" assurances to investors. Federal authorities have charged the flamboyant 58-year-old financier and three of his companies with a "massive ongoing fraud."
Norman Hsu - October 2008
Democratic fundraiser Norman Hsu was charged by the US Securities and Exchange Commission of operating a $60 million Ponzi scheme, leading former Democratic presidential candidate Hillary Clinton to return $850,000 in campaign contributions in 2007.
The SEC said Hsu made political contributions to give himself "a veneer of respectability" and then persuade investors that his investments were legitimate.
Hsu is in federal custody awaiting trial after he was indicted in December for mail fraud, wire fraud and violating the Federal Election Campaign Act.
The SEC said Hsu made political contributions to give himself "a veneer of respectability" and then persuade investors that his investments were legitimate.
Hsu is in federal custody awaiting trial after he was indicted in December for mail fraud, wire fraud and violating the Federal Election Campaign Act.
Anil Anand - June 2008
Anil Anand, the former CFO of Allied Deals, was ordered to pay restitution of $683.6 million for his part in an international Ponzi scheme that led to losses at some 20 banks around the world, including JP Morgan & Chase. He was also sentenced to seven months of time served.
Five metals traders for Allied Deals were found guilty of conspiracy related to bank, mail and wire fraud and money laundering in a 2004 trial.
Anand had pleaded guilty in 2002 and agreed to cooperate with the government's investigation into the fraud.
Five metals traders for Allied Deals were found guilty of conspiracy related to bank, mail and wire fraud and money laundering in a 2004 trial.
Anand had pleaded guilty in 2002 and agreed to cooperate with the government's investigation into the fraud.
Lou Pearlman - May 2008
Lou Pearlman, the impresario who launched 1990s boy bands the Backstreet Boys and 'N Sync, was sentenced to 25 years in prison for swindling investors and banks out of $300 million.
Pearlman convinced individuals and banks to invest in two companies that existed only on paper, showing them fake financial statements.
US District Judge G Kendall Sharp gave Pearlman the chance to cut his prison time by offering a one-month reprieve for every $1 million in cash he helps a bankruptcy trustee recover for his victims. Theoretically, Pearlman could cancel his entire 300-month sentence by repaying the $300 million debt.
Pearlman convinced individuals and banks to invest in two companies that existed only on paper, showing them fake financial statements.
US District Judge G Kendall Sharp gave Pearlman the chance to cut his prison time by offering a one-month reprieve for every $1 million in cash he helps a bankruptcy trustee recover for his victims. Theoretically, Pearlman could cancel his entire 300-month sentence by repaying the $300 million debt.
Jerome Kerviel - January 2008
French bank Societe Generale alleged that fraud by a single trader caused a $7.1 billion loss.
Jerome Kerviel, a junior trader, was jailed in connection with the case. He was later released but still faces accusations that he caused SocGen billions of euros of losses.
Richard Fuld, the chief of Wall Street firm Lehman Brothers, called the debacle "everyone's worst nightmare."
Jerome Kerviel, a junior trader, was jailed in connection with the case. He was later released but still faces accusations that he caused SocGen billions of euros of losses.
Richard Fuld, the chief of Wall Street firm Lehman Brothers, called the debacle "everyone's worst nightmare."
James Marquez - November 2007
James Marquez, who co-founded hedge fund Bayou Group with the now also incarcerated Samuel Israel III, and defrauded investors of more than $10 million.
Marquez admitted that between 1996 and 2001, he told investors the funds were reaping large gains even as they sustained consistent losses.
In the summer of 2008, Israel faked his own death and went on a road trip as a fugitive before getting nabbed after a few days.
His mother convinced him to end his high-profile run from justice and he is now in the hands of federal authorities.
Marquez admitted that between 1996 and 2001, he told investors the funds were reaping large gains even as they sustained consistent losses.
In the summer of 2008, Israel faked his own death and went on a road trip as a fugitive before getting nabbed after a few days.
His mother convinced him to end his high-profile run from justice and he is now in the hands of federal authorities.
Brian Hunter - March/April 2006
Hedge fund Amaranth Advisors LLC and former head trader Brian Hunter racked up $6.4 billion in losses from natural gas contracts before the fund folded in 2006.
In July 2007, the Commodity Futures Trading Commission sued Amaranth and Hunter, alleging they tried to manipulate natural gas futures prices.
In July 2007, the Commodity Futures Trading Commission sued Amaranth and Hunter, alleging they tried to manipulate natural gas futures prices.
Reed Slatkin - September 2003
Financier Reed Slatkin, who helped created Internet service provider Earthlink Inc, was sentenced to 14 years in prison for bilking investors out of hundreds of millions of dollars.
He had portrayed himself as a shrewd manager whose investments were outperforming the markets, but prosecutors said he was in fact running a Ponzi scheme. He was ordered to pay more than $240 million in restitution to clients.
He is serving time in the Lompoc, California penitentiary and is due for release in 2014, according to the Federal Bureau of Prisons.
He had portrayed himself as a shrewd manager whose investments were outperforming the markets, but prosecutors said he was in fact running a Ponzi scheme. He was ordered to pay more than $240 million in restitution to clients.
He is serving time in the Lompoc, California penitentiary and is due for release in 2014, according to the Federal Bureau of Prisons.
Ken Lay, Jeff Skilling - February 2002
Enron employees tell media outlets, including Reuters, about a fake trading floor set up by energy company Enron in 1998 to impress Wall Street analysts.
The news becomes the trigger that brings down the company. In May 2006, former Enron Corp Chief Executive Jeff Skilling and Ken Lay were found guilty of defrauding investors by using off-the-books deals to hide debt and inflate profits. The fraud destroyed the company and came to symbolize a dark era for corporate America.
Skilling, 52, was sentenced to almost 25 years in prison and ordered to pay $45 million in restitution to Enron investors, who lost billions of dollars when the company collapsed.
Lay, 64, died of a heart attack in July 2006. Following legal precedent, the judge in the case threw out the Lay convictions on October 17 because Lay died before a final judgment had been entered and before he could appeal.
The news becomes the trigger that brings down the company. In May 2006, former Enron Corp Chief Executive Jeff Skilling and Ken Lay were found guilty of defrauding investors by using off-the-books deals to hide debt and inflate profits. The fraud destroyed the company and came to symbolize a dark era for corporate America.
Skilling, 52, was sentenced to almost 25 years in prison and ordered to pay $45 million in restitution to Enron investors, who lost billions of dollars when the company collapsed.
Lay, 64, died of a heart attack in July 2006. Following legal precedent, the judge in the case threw out the Lay convictions on October 17 because Lay died before a final judgment had been entered and before he could appeal.
John Rushnak - February 2002
Ireland's largest bank, Allied Irish, revealed a rogue US trader, John Rusnak, had defrauded its US subsidiary of up to $750 million.
Rusnak was sentenced in January 2003 to seven and a half years in prison.
Yasuo Hamanaka - June 1996
He admitted devising a scheme that netted him $850,000 in salary and bonuses from 1997 to 2001.
Japanese trading house Sumitomo Corp suffered a $2.6 billion loss over 10 years from unauthorized copper trades, primarily by chief copper trader Yasuo Hamanaka. Nick Leeson - February 1995 One of Britain's oldest investment banks, Barings Plc, collapsed after a lone futures trader in Singapore, Nick Leeson, lost $1.4 billion in derivatives trading. Source : The Economic Times, Mumbai
Sumitomo fired Hamanaka, once dubbed "Mr Five Percent" because his trading team was believed to control 5 percent of the world's copper trading.
He was later jailed for eight years.
Leeson spent three and half years in a Singapore jail. Barings was subsequently sold to Dutch bank ING for one pound.
After returning to the UK, Leeson wrote a book about the scandal, “Rogue Trader”, which was later also made into a movie. In 2007, Leeson became chief executive of Galway United Football Club.
His agent has said Leeson charges up to $11,750 for appearing as an after-dinner speaker.
No comments:
Post a Comment