The scale of the crisis is unprecedented. In fact, a landmark report from this year’s United Nations High-Level Panel on International Financial Accountability, Transparency and Integrity to Achieve the 2030 Agenda (FACTI) found that global money laundering is currently draining $ 1.6 trillion annually from global resources, with the greatest impact those the poorest in the world.
The growing size of the financial sector, the increasing complexity of the structures of global corporations, and an increasing number of professional enablers (tax advisors, asset managers, lawyers, accountants, founding agents, and trust companies) have created fertile soil for money laundering, fraud, and corruption.
To move forward, we need to learn lessons from past crises, not toss them as one-off events in the annals of history. Here we introduce some of the biggest financial scammers in recent history, and take a quick look at how unscrupulous individuals robbed innocent investors and ruined economies:
Isabel dos Santos – $ 5 billion
Isabel dos Santos, daughter of the former strong ruler of Angola, claimed she made her multi-billion dollar fortune through business acumen, determination and entrepreneurship. But the 2020 Luanda Leaks documents offered a dramatically different story.
The synopsis described two decades of government insider trading and giveaways, supported by Western lawyers and accountants, who enabled dos Santos to become the richest woman in Africa through embezzlement and money laundering, and to exploit their land at the expense of ordinary Angolans.
Angolan prosecutors accuse Dos Santos of causing more than $ 5 billion in damage to the economy of the southwest African country and their assets have been frozen since 2019. From self-imposed exile in Dubai comes Dos Santos, who denies all wrongdoing, and watches her fortune and empire collapse.
Bernie Madoff – $ 20 billion
Influenced by the strategies of Charles Ponzi, one of the world’s most famous scammers, Bernard Madoff made history when he committed one of the greatest financial crimes in history in 2008.
Undiscovered for decades, the respected financier, who was once Nasdaq chairman, was able to induce thousands of investors to surrender their savings and falsely promised constant profits in return.
He reportedly invested in blue chip stocks and then got involved in portfolio hedging by buying options on the S&P 500. In fact, Madoff hasn’t made a single trade for his advisory clients in years. He simply deposited the investors’ funds in a single bank account, paid off new customers with funds from previous customers, and provided his customers with fake bank statements. At one point, those statements totaled over $ 65 billion.
Things collapsed in 2008 when a large number of investors sought a payout of around $ 7 billion and Madoff didn’t have nearly enough cash to cover the withdrawals requested.
He was arrested in 2011 and sentenced to 150 years in prison. Madoff died in prison on April 14, 2021, aged 82.
Dmitry and Alexei Ananyev – $ 6 billion
These Russian brothers made their fortunes in technology, mining, and later banking, and at their peak they amassed a combined net worth of nearly $ 3 billion. But in recent years, they’ve fallen into the hot water after being accused of fabricating the biggest financial scandal that most of the world still haven’t heard of.
At the end of 2016, the Ananyev brothers’ business empire ran into serious financial difficulties. To raise money, the brothers allegedly devised a plan to sell $ 240 million in guaranteed promissory notes to unsuspecting ordinary Russian savers through their private bank Promsvyazbank (PSB). Presented to trusted customers as safe, these were actually the first step in a scam that allowed the bank’s owners to milk PSB as much as possible before it went under.
A few months later, the Russian central bank put the PSB in administration and took over an empty shell with no financial reserves. To fill a capital gap of around $ 4 billion, PSB had to be bailed out twice.
In the days that followed, the brothers fled Russia and shortly thereafter, Russian authorities issued an arrest warrant against them for money laundering and embezzlement of around $ 2 billion, allegedly aided by their ability to move money across the United States Bank accounts.
An attorney for Alexei said the charges and arrest warrant were “absolutely unfounded,” while Dmitri denied any wrongdoing.
The Ananyev brothers still face criminal charges when they return home. Elsewhere, their reported victims continue to file lawsuits against them in jurisdictions linked to their complex network of offshore entities.
Thanks to their Cypriot passports, they can continue working in Austria, Great Britain and other parts of Europe without any impact. But you can’t help feeling that you won’t be enjoying this luxury for long.
Katzutsugi Nami $ 1.4 billion $ 2.1 billion
The largest investment fraud in Japanese history resulted in Japanese businessman Katzutsugi Nami, chairman of Tokyo-based L&G Bedding, hitting 50,000 investors between Yen 126 and 226 billion (US $ 1.4-2.1 billion) between 2001 and 2009 Dollar) cheated.
In a scheme that would sound better known on today’s financial pages focused on digital currencies, the scammer promised investors in the struggling L&G fortunes via a virtual currency called ducks that guarantees a 36% annual return. When L&G dividends were paid in ducks instead of cash in February 2007, the business was hit by a series of lawsuits and account closings.
Police ransacked L&G headquarters and Nami’s house in Tokyo in September 2007 on suspicion that the company had violated investment laws. Shortly afterwards, in November, the company filed for bankruptcy.
Nami and 21 of his employees were arrested in Tokyo in February 2009 on suspicion of fraud by major investors and sentenced to 18 years in prison. Nami denies all allegations.
1MDB – $ 4.5 billion
1Malaysia Development Berhad (1MDB) was a Malaysian state-owned investment fund originally set up to improve the standard of living of ordinary Malaysians by financing infrastructure and other business-related businesses in the Southeast Asian country.
However, according to US and Malaysian prosecutors, the billions of dollars raised for public development projects ended up in the pockets of private individuals, including former Prime Minister Najib Razak and financial refugee Jho Low, and were used to fund their lavish lifestyles with super yachts , Million dollar parties in St. Tropez and luxury real estate, as well as political campaigns and Hollywood films.
Between 2009 and 2014, an estimated US $ 4.5 billion were allegedly embezzled by high-ranking officials and their staff from the 1MDB, turning a blind eye to suspected corruption in pursuit of profit.
Earlier this year, Malaysia, as part of its year-long efforts to recover the stolen funds, announced 22 civil lawsuits against companies and individuals charged with involvement in the massive scandal, including units from Deutsche Bank and JPMorgan.
Former Prime Minister Najib Razak has been charged with corruption, while Jho Low remains the world’s best-known financial refugee believed to be in China. Both Razak and Low deny any wrongdoing.
R Allen Standford – $ 8 billion
Stanford was a prominent financier and professional sports sponsor who found himself in a bind in 2009 when SEC and FBI agents raided the Houston headquarters of his financial services firm Stanford Financial Group. In a civil lawsuit, the SEC accused Stanford and its staff of “massive, ongoing fraud” involving the sale of nearly 8 billion -based brokerage arm.
While Stanford claimed the CDs were backed by solid assets and generated returns that consistently outperformed the market, the SEC claimed the entire operation was a scam that funded Stanford’s lavish lifestyle.
He was convicted of 13 criminal offenses in 2012 and is currently serving a 110-year sentence in a maximum security prison in Florida.