Top 10 Stock Market Scammers Who Got Busted
Whenever there is a legitimate way to make honest earnings there are people willing to break the law to make more money faster. The stock market is no exception. Here are ten incidences of stock market scammers in the order of the least amount of money scammed to the greatest.
#10 – Amr Ibrahim Elgindy
Amr Ibrahim Elgindy, also known as Tony Elgindy, is an Egyptian-born Arab whose family moved to Chicago when Amr was only 2 or 3 years old.
Elgindy owned two stock websites and charged his subscribers $600 per month to access his accurate stock predictions.
He was accused and convicted of obtaining confidential information on companies through his partner, FBI agent Jeffrey Royer. Royer used his government credentials to access the information. He also tried to extort money from these companies by promising silence in exchange for money.
#9 – Stock Exchange Scam of 1814
This was one of the first stock exchange scams.
In February, 1814, a man dressed as a soldier walked into an inn and declared Napoleon dead and the war over. Englanders celebrated the news by driving up the price of stock on the England Stock Exchange. They soon learned that Napoleon was very much alive and accused Lord Thomas Cochrane of profiting from the scam. Lord Cochrane was later exonerated by the King.
The guilty party was never found.
#8 – ZZZZ Best, Inc.
A brilliant 16-year-old, Barry Minkow, started ZZZZ Best, Inc. a cleaning company specializing in insurance restoration cleaning, out of his garage.
The fraudulent company was listed as having 1,400 employees and won big cleaning contracts of mob origin. Barry took his company public in 1986 making the company temporarily worth $200 million. Barry and 54 others were convicted for running a Ponzi scheme.
He was sentenced to 11 years in prison and served 7.5 years.
#7 – Bre X
Bre X was a company that bought a plot of land in Busang, Indonesia and announced a find of nearly 70 million ounces of gold.
The scam involved gold shavings from jewelry that were imbedded into the core samples to give the illusion of a massive gold find.
When the truth came out the company’s stock collapsed and bankruptcy and lawsuits followed.
#6 – Nick Leeson
Nick Leeson was the stock trader who brought down the UK’s oldest investment bank, Barings Bank, by using an “error account” used to hide his losses.
When he had a loss he hid the loss in account number 88888.
The loss account reached 200 million pounds which led to even riskier trades to recover the losses. An earthquake in Japan led to bigger losses than Nick could recover.
He fled the authorities but was later captured and Barings Bank became insolvent.
#5 – Scandal in Japan
Hiromasa Ezoe, chairman of Recruit, sold shares of Recruit Cosmos to prominent political leaders including the current and former prime ministers, the chief cabinet secretary and the chairman of NTT.
Business leaders and journalists also participated in the scam. The shares were unlisted and sold at the lowest prices to appear legitimate to other investors.
When the details of this scam leaked out the end resulted in several politicians stepping down and Japan’s economy took a major hit.
#4 – Michael Milkin
Michael Milken, the “Junk Bond King” was the first to use high-yield debt (junk bonds) to finance corporate raids and takeovers.
Michael was not satisfied with these profits and began using his knowledge of future takeovers to buy warrants in these companies.
Milken built his net worth to over $1 billion.
When partner Ivan Boesky was arrested he turned state’s evidence against Milken and the whole plan collapsed.
#3 – Guinness Scam
Ivan Boesky was involved in this scam as well.
The plan was to buy as many Guinness shares as possible and maintain those shares until the market cap was inflated enough to take over Distillers, a larger company.
Guinness fronted enough money to investors such as Boesky to buy shares in the company and receive a kickback. When this scam was discovered it rocked the global financial markets.
#2 – Tang Wanxin
Tang, one of China’s richest men, raised more than 45 billion yuan in 4 years without regulatory approval. He also inflated share prices by misrepresenting the prices of three of his companies and using the inflated shares as collateral for loans. Many prominent men of business were involved.
When the scam was discovered one of the largest businesses of China fell along with Tang.
#1 – Enron
Enron holds the #1 position as the biggest of all stock market scams.
Enron was the 7th largest company in the US, had several prominent political connections and the highest approval of the stock market. Enron employees trusted the company enough to put their life savings in Enron stock. All of this for a fraudulent company that hid millions of dollars of debt from its stockholders and created shell companies to make side deals.
Enron’s take down began the end of the US stock market “boom era.”