scams

1. Top 10 Scams in
History of 100 Years
PRESENTED BY
MOHD SHOAEB SHEIKH

2. Founded in 1985, the Enron Corporation claimed revenues of nearly $101 billion
during 2000 and employed approximately 20,000 staff. But the real value of the
company was exposed at the end of 2001, after which the company was
declared bankrupt. Enron was responsible for wiping out over $78 billion in
stock market value.

3.  The Enron Scandal revealed the loopholes in accounting rules in America.
The company used to book revenue from huge energy-derivative
contracts at their gross value instead of their net value. Basically, Enron
served as a middleman on deals. It would put together a seller with a
prospective buyer and take “delivery” of the contract. Then it would book
the entire “sale” as its own revenue.
 This was made possible due to a loophole in the procedures approved by
the Financial Accounting Standards Board (FASB). According to the
board, each company had a “free option” as to how to account for the
deals of energy contracts.

4. In the early 1990s, the infamous Italian criminal Charles Ponzi
scammed investors out of about $7 million by passing on new
investors’ money to existing investors and presenting it as a
sustainable investment.

5.  In the summer of 1919, Charles Ponzi was living in Boston. The idea for a scam began
forming in his mind when he received a letter from a Spanish company. The letter
contained an international reply coupon (IRC). This coupon could be redeemed by the
recipient for postage to the sender’s country. Ponzi realized that he can buy the coupon in
one country and then exchange them for postage in another country with a higher value of
postage. Soon, he set his plan into motion, but he required a large amount of capital to buy
the IRCs with cheap, European currencies.
 To raise the money, he went to his friends and promised them double returns in 90 days.
Some people invested and they got the interest as promised. In January 1920, Ponzi
opened his own company to promote this scheme. In the beginning, 18 people invested.
They got the promised interest the next month. As word spread about this unbelievable
scheme, investments started pouring in.
 By June 1920, the net total investment in Ponzi’s scheme rose to $2.5 million. People began
mortgaging their homes and even invested their life savings in the scheme. But no one
realized that Charles Ponzi was paying the earlier investors with the money invested by new
investors. Ponzi’s rapid rise drew suspicions, and his publicity agent found incriminating
documents related to the scam. The agent wrote an article for the Boston Post which
brought Ponzi’s scam into public view. From then on, things went downhill for Charles
Ponzi, and his investors lost about $20 million. In November 1920, Ponzi was sentenced to
five years in prison

6. In 1925, a Portuguese names Alves dos Reis Forged a government
contract authorising him to print money and "officially" printed himself 100
millions escudos, the equivalent of 0.88% of Portugal's GDP at that time,
leading to the "Portuguese Bank Note Crisis."

7.  In 1924, Alves dos Reis was in jail for embezzling money from a company. During his 54-
day stay in jail, he planned a scam which later came to be known as the “Portugal bank
note affair.” After being released from jail, Reis forged a contract in the name of the
Central Bank of Portugal, Banco de Portugal. Then he posed as a representative from
the bank and convinced a London-based company that the bank had authorized him to
print his own bank notes. Reis further claimed that the money they were going to print
was a part of a secret project, and it would be used to financially aid a struggling
Portuguese colony, Angola.
 According to Reis’s instructions, the London-based company printed an equivalent of
£1,007,963 of bank notes. The notes were then circulated into the Portuguese economy.
In June 1925, he created the Bank of Angola & Metropole to help Angola. He even went
on to buy the controlling interest in the Bank of Portugal following which he hoped he
would be able to successfully hide his scam. But the low-interest rates of the Bank of
Angola & Metropole piqued the interest of journalists, and they raised questions.
Finally, the Bank of Portugal noticed the bank notes with duplicate serial numbers, and
Reis’s scam was exposed. Five years later, he was sentenced to 20 years in jail.

8. In the 1920s, Ivar Kreuger, who owned banks, film companies, newspapers,
mines, telephone companies, and railways, decided to form a monopoly to
control all the world’s safety matches. International banks begged him to let
them invest, not knowing that his many companies existed only on paper,
profitable only because they were invested in each other.

9.  The Swedish civil engineer Ivar Kruger began his career by helping in building New York’s Plaza Hotel and
other landmarks. After gaining experience, he opened a company in Sweden in 1908. His company soon
became the best construction firm in Sweden. Then Kruger took over his father’s match business. In 1917,
he founded the Swedish Match Company. In the post-depression era after WWI, Kruger began to acquire
match-making factories around Europe.
 From 1925, Kruger began offering loans to insolvent countries at a bargain that was hard to refuse. He
would also provide loans to countries that offered him a national monopoly on match production. Using
his skills, he increased the sales in the country. Since the governments taxed matches, the increase in sales
would increase tax revenues used to repay the loans. By 1931, the Swedish Match Company controlled 250
factories in 43 countries. But his empire collapsed during the Great Depression. On 12 March 1932, he
committed suicide by shooting himself.
 The death of Kruger led to the “Kreuger crash.” It hit investors and companies all over the world, especially
in America and Sweden. After his death, Kreuger’s forgery of Italian bonds amounting to $142 million was
found out. In Sweden, Kruger owed more than the country’s national debt. As a result, the suicide rate
increased in Sweden and the prime minister fell. In America, his shares collapsed taking with it the life
savings of thousands of people.

10. Nigerian scammer Emmanual Nwude once sold a fake
airport to a major international bank for $242 million, and
the scam wasn't discovered until 3 years later.

11.  Emmanuel Nwude is a Nigerian fraud artist who was formerly the Director of
Union Bank of Nigeria. In 1995, he defrauded a Brazilian man, Nelson
Sakaguchi, who was the Director at the Brazil’s Banco Noroeste. Nwude
began his scam by impersonating the then Governor of the Central Bank of
Nigeria, Paul Ogwuma. Posing as the governor, he convinced Sakaguchi to
invest in a new airport located in Nigeria’s capital, Abuja. In exchange, he asked
for a $10 million commission.
 The fraud remained undetected until 1997 when a Spanish bank decided to
take over the Banco Noroeste Brazil. When an official from the Spanish bank
enquired about the large sum of Noroeste’s money which was sitting in the
Cayman islands unmonitored, it led to a criminal investigation. It was found
that Sakaguchi had paid $242 million in between 1995 to 1998 to Emmanuel
Nwude who promised him an airport which actually never existed.

12. When “Count” Victor Lustig discovered that the famous Eiffel Tower
was in need of repairs, he faked some government papers and sold
the tower to scrap metal dealers twice with a total of over $200,000 in
bribes to throw the multi-million dollar contract their way.

13.  Victor Lustig began his conman career through a “money-printing machine.”
The machine would produce a counterfeit bill of $100. His client would buy the
machine for a high price believing that it would provide them with huge profit
in the future, but the machine would produce $100 bills only for the next 12
hours after which its supply became exhausted resulting in blank notes. By the
time the person realized the scam, Lustig was long gone.
 Lustig’s sale of Eiffel Tower began in 1925 when he read about a repair and
maintenance of the tower in a newspaper. He invited six scrap metal dealers
and posing as a government official said that Eiffel tower would be taken
down. Then he asked them to submit a bid and finally secured a deal with one
of the dealers. For finalizing the deal, scrap dealer Andre Poisson offered a
large bribe and secured the deal. After receiving the money, Lustig went away
and Poisson was too embarrassed to lodge a police complaint. A month later,
Lustig returned back to Paris and repeated the same trick. His second victim
went to the police, but Lustig evaded arrest

14. The episode of Adarsh Co-operative Housing Society reveals how
a group of select officials, placed in key posts could subvert rules
and regulations in order to grab prime government land – a public
property – for personal benefit.

15.  A posh 31-storey building located in Colaba, Mumbai, was constructed for the
welfare of war widows and personnel of Defence ministry. In 2011, the
Comptroller and Auditor General of India observed that over a period 10 years
the society flouted various Environment ministry rules. It was noted that
politicians, bureaucrats and military officers bent several rules concerning land
ownership, zoning, and floor-space index.
 It was also alleged that members allocated flats to themselves in the
cooperative society below market rates. In 2011, the Comptroller and Auditor
General of India said, The scam forced the then Chief Minister of
Maharashtra, Ashok Chavan, to resign in 2010. Further, the CAG also
indicted three other former chief ministers — Vilasrao Deshmukh,
Sushilkumar Shinde and Shivajirao Nilangekar Patil — two former urban
development ministers— Rajesh Tope and Sunil Tatkare — and 12 top
bureaucrats, for various illegal acts.

16. This scam occur in year 2012 under Mr. Manmohan Singh government. While many think that 2G scam
remains the biggest one in size in India. But this coal allocation scam dwarfs it by the amount involved. This
scam is in regards to Indian Government’s allocation of nation’s coal deposit to PSU’s and private companies.
The basic premise of this scam was that wrongful allocation of Coal deposits by Government without resorting
to competitive bidding, which would have made huge amounts to the Government (to tune of 1.86 Lakh
crore). However, the coal deposits were allocated arbitrarily.

17. Abhishek Varma is believed to be the main arms dealer and the
prime suspect in the Scorpene submarines deal case,
AgustaWestland VVIP helicopters bribery scandal, and Navy War
Room leak case.

18.  Belonging to a politically connected family with both his parents holding
government portfolios, Abhishek was exposed to the media and public life
since his childhood days. He was even named as the youngest billionaire at
the age of 28 in 1997.
 With a wide range of business associations, including BSNL, multinational
FMCG brands, and even construction of an international airport, he was
known as the ‘Lord of War’ in the international defence and armament
company circles.
 In 2006, Abhishek was accused of receiving kickbacks of approximately
$200 million, through a $4-5 billion Indian military deal involving the
Indian government’s purchase of six Scorpène-class submarines. Further, in
2012, the CBI raided his residence and establishments after registration of
multiple cases of corruption and money laundering against him and his
wife. He was arrested in 2012.

19. The Comptroller and Auditor General of India stated that “the
difference between the money collected and that mandated to be
collected was Rs 1.76 trillion”.

20.  This scam surfaced when it was revealed that the government, in 2008, had
undercharged mobile telephone companies for frequency allocation
licences. These licences are used to create 2G spectrum subscriptions for
cell phones.
 In February 2012, the Supreme Court of India declared the allotment of
spectrum as “unconstitutional and arbitrary” and cancelled the 122 licences
issued in 2008 under A. Raja, then Minister of Communications and IT.

21. Thank You