Hook, Line and Sinker: Ten of the Most Audacious Swindles Ever

Ever since the invention of money there have been con artists out there ready to swindle the unwary out of their cash. Last year around 28 million Britons were targeted, according to the government, and £1 billion was lost in financial scams.

Fortunately, most victims suffer a greater dent to their pride than their bank balance. But some involve the loss of millions or even billions of pounds and cause real financial hardship. Here are ten of the most audacious financial swindles ever.

1. Dave Rhodes, whoever he or she may be, has a lot to answer for. His is the name at the top of the most famous chain letter in the world – which more often than not is sent by e-mail nowadays. The original letter titled “Make Money Fast” and signed by Rhodes began doing the rounds about 20 years ago. Who the original Dave Rhodes was, or if he even existed, has never been ascertained. (A website reputed to be by the original Dave Rhodes is thought to be a hoax.)

Recipients are usually told to send money to the first name or names on a mailing list and then copy the letter to hundreds of other addresses. In return, they are promised huge profits for their small investment. “It is an undeniable law of the universe,” goes one letter promising £40,000 in cash within the next 60 days, “that first we must give to receive. Do this with a big smile on your face because “as ye sew (sic), so shall ye reap.” If you say so.

2. Canadians are usually thought of as law-abiding and frankly boring souls. But they were implicated in one of the nastiest swindles of recent years – the Canadian lottery scam. This involved organised criminals telephoning unsuspecting Brits – often elderly people – claiming they had won a fortune on the Canadian lottery. To claim the prize you had to send money to cover processing fees. In some cases, victims lost more than £40,000.

Those targeted were often chosen because they appeared on “sucker lists” circulated among criminal gangs because they had fallen victim to similar cons in the past.

3. The notorious Women Empowering Women pyramid selling scheme made headline news in 2001 after it swept across the country and left people with heavy losses. The swindle claimed to have women’s interests at heart. “Our main goal is the empowerment of women by providing for them the financial and emotional abilities to support themselves, their loved ones and the community", claimed the schemes’ gushing mission statement.

The scheme encouraged women to sign up family and friends by promising that they would generate £24,000 for each person who invests a £3,000 stake. While a few profited, thousands lost their £3,000 'joining' fee. The scheme resurfaced in 2003, in a more exclusive mode, under the name Hearts, targeting well-heeled society figures including Lady Elizabeth Anson, the Queen’s cousin, and celebrities such as Cilla Black.The government has since attempted to outlaw such scams, but driven by greed, it can only be a matter of time before it rears its ugly head again.

4. Have you ever received an unsolicited e-mail claiming to be from the family of a dead Nigerian dictator or someone high up in that country’s civil service? They will almost certainly have desperately needed help getting the family’s millions out of the country (their bank accounts have been frozen, you see). Did they ask you to provide them with money and supply your bank account details to help them transfer money out of the country? Then you’ve been targeted by the infamous Nigerian “419” scam. In return for your help they promise a handsome reward: in reality they empty your bank account.

These 419 scams have been so widespread that some enterprising individuals have started to fight back by scamming the scammers with some very funny results. Check out 419eater.com or thescambaiter.com

5. They say love is blind, which is perhaps why fraudsters are increasingly targeting victims through online dating services. It’s the ideal time to catch you with your defences- and maybe even your pants - down. Malihu Ramu, a married Singaporean woman was sentenced to six months in jail earlier this year after conning a man in America out of $45,000 (£22,000) after she promised to marry him.

Ramu used a false name and photographs of Bollywood actress Gayatri Joshi on an online chat room to seduce her prey. Using all the arts of seduction, she asked for the money to cover her mother's funeral expenses and for a friend's wedding. It was only when she asked him for more cash that his suspicions were aroused and he called in the police. To find out more take a look at romancescam.com.

6. One of the most popular scams is the pyramid scheme, and in 1920 trickster Charles Ponzi gave his name to the granddaddy of them all – the Ponzi scam. Ponzi raked in millions of dollars from Americans who were taken in by his promise to double their money in 90 days by trading hoax postal coupons. About 40,000 people invested about $15m (£7m) all together – which is worth about $150m in today’s money.

Returns were paid to the first investors out of the funds received from those who invested later – with Ponzi siphoning off a large chunk of the cash for himself. The simple arithmetic of the scheme meant that soon thousands and then millions of people were needed to keep passing money up through the pyramid chain. The scheme collapsed, Ponzi ended up in jail and the swindled investors got back only about a third of their funds, but it hasn’t stopped it being replicated thousands of times since.

7. Millions of Albanians lost their life savings in what must the most damaging pyramid selling trick ever: it caused rioting in the streets, brought down the government and sparked a near civil war in this desperately poor Balkan state in south-west Europe. About two-thirds of the population of the former Communist dictatorship were duped by a series of these schemes in the 1990s, which initially received the support of the government.

Thousands sold their houses and farmers flogged their livestock to invest in them, entranced by the promise of huge riches- more than 100 per cent a year at the peak of the mania. The dream didn’t last and the schemes crumbled leaving many Albanians penniless while thousands died in the ensuing violence.

8. Most con men are shady characters who try to keep a low profile, but they don’t always hide from the public gaze. The Barlow Clowes affair is one of Britain’s most notorious frauds. In the eighties, the firm attracted the savings of 18,000 private investors who believed they were putting their money into risk-free government bonds. In fact, hundreds of millions of pounds of this money was being diverted into the bank account of co-founder Peter Clowes, who spent the cash on private aircraft, cars, homes and a luxury yacht. Barlow Clowes collapsed in 1988 after the con was uncovered.

9. Some con-artists really know how to tug on the heartstrings. Eugene and Kathryn Stabe were charged with swindling $13,000 out of people in their home town of Huntington Indiana by claiming their daughter was dying of leukaemia. They said they wanted to fulfil as many of her dreams as possible before she passed away and used the generous donations to take the whole family to Disney World in Florida. The child was in fact in perfect health.

10. It only had to be a matter of time before financial scams made it into the virtual word. Earlier this year, Ginko Financial, a bank in the life simulation game Second Life tempted customers with the promise of unrealistically high returns of 40 per cent to 60 per cent. It quickly collapsed leaving some people nursing large real life losses. Then another bank, imaginatively called “The Bank” became embroiled in another scandal after it stopped processing customer withdrawals and its owner “Jasper Tizzy” and his staff – Paydayloan Lindman and Teanna Nomura - disappeared In Second Life players use "Linden dollars", which are converted into and out of real cash using a special exchange. Some residents lost 2.5m Linden dollars when the bank went bust – that’s the equivalent of about £5,000.

Whether these were actual scams or business mistakes have yet to be ascertained. But with no official law and order in Second Life, one thing is guaranteed: investors can wave good bye to the money they have lost.

List compiled by David Budworth.

More from Money Central:

The 10 biggest winners from the financial crisis

50 tips to beat a recession

The 10 worst property investments ever

The 10 stupidest taxes ever

The six safest places for your savings

Times Money's top 10 investment gurus

The 10 most decadent dictators

The 10 craziest parking tickets ever

The 10 most ridiculous fines of all time

50 great things you can get free

Ten people who predicted the financial meltdown

The 10 biggest stock market crashes of all time

Image courtesy of ToastyKen

Comments

[John Mills]

I can't help feeling that Albania is in South East Europe, not South West.

[leon]

I can not believe that the heavy weight scammers of all time are not on your top ten list unless that is because your editor would hang you up to dry if you were to explain to the masses how the Rothschilds and Rockerfellers and all the other big wigs have managed to con us all into voluntery slavery to feed there endless greed for profit and souls.The small time scams are allowed to filter through to everyday folk in order to mask the real frauds which control all of our lives.The world is waking from a very long sleep and its about time to!!

[peter]

Years ago when i was a teenager (45 years ago in fact) I read in a magazine the following. 'Free money.!! The Secret. Send one pound to .....!' So I did. The reply was '"Put an Ad in a magazine saying ' Free money, The Secret. Send one pound to ...!"
The pound I sent was the best value "Lesson in Life " I ever had !! Money well spent !!! P.S. one pound was a days work in those days.

[Soreofhing]

If a deal sounds too good to be true, it probably is.

[M R PRESTON]

A great one from Oz. People who responded to an advertisement for 'a bundle of hard core pornographic magazines for $5.00' received a letter back saying : "After investigation with legal authorities we have found that the material would have contravened the law. We apologise and are therefore returning your payment. Our cheque is enclosed."

The cheque was drawn in the name of 'Teenage Swedish Nymphomaniac Publications.'

Only a very small percentage of the recipients were brazen enough to remit the cheques to their banks.

[Flamingojonz]

The best comes from the 1970´s in the U.S. and simpley states, ¨last chance send $1.00 now to P.O.Box 11111

[USA]

Actually, Canucks ARE pretty boring. Quite painfully so.

[Ron]

How about"If we do not hear from you in the next two weeks telling us you do not want overdraft facilities, we shall debit your account with a twenty five pounds overdraft facilty fee." From a "repuable " British Bank in August when people are away on holiday.

[Fraser Rew]

What about Gregor McGregor? He invented a country called Poyais in Central America in the 19th century, took money from a huge number of unsuspecting people, largely his fellow Scots and many of whom were poor to begin with, put them on a ship and took the money. They landed to find plenty of verdant forest and a few villagers, but no Poyais. With no food some of them trekked to the nearest European settlement but most died.

[Barrie]

Perth Mint is legit as Tom says, and is a well known tourist attraction in Perth. Another possibility for gold purchase is Australian Gold Refiners, AGR, also in Perth. Try agr.com.au or something like that.

[Tom Porter]

Yes, the Perth Mint is legitimate. They have been in business for a long time and are well known to gold investors. www.perthmint.com.au - or look at industry sites such a Kitco.com to find proof.

Hope that helps.
Tom Porter
Long Time Gold Investor

[Simon Aiken]

The biggest pyramid scheme of all time was surely the UK property market, 1996-2007.

[Lisabeth]

Is the Perth Mint of Western Australia a legitimate investment site for gold purchase. How can one check this sort of investment site out?

[Lisabeth]

I'd like to know if the Perth Mint of Western Australia is legitimate. How can I check this.

[johnson]

Do not forget the Great UK broadband scam as well, Superfast speeds, no limits on loads and instant access to broadband promised by numerous "companies" legaly registered in the UK, everybody that signed up for this was scammed and no one was ever caught for it.

[Ian Kemmish]

I always liked the chain-wife letter. You pack your old woman off to the address at the top of the list, and a few months later 20 or so turn up on your doorstep. By the law of averages, one of them has got to be an improvement on the original.

[Peter]

Does anyone remember the flim-flam man Joseph something. He was a well known insurance fraudster.

[Tony]

European City Guide operates out of Valencia Spain and targets small business with a "free" guide posting - Only problem is the input form is misleading and attempts to contactualy bind the business for 3 years at a cost of more than Euro 3000. Plentiful postal demands and debt collection calls will follow. Check web sites on this scam, the scammers must be getting people to pay as they have been doing this for over 6 years throughout Europe.

[Fascinating Canuck]

As a Canadian, I am offended that you should label an entire nation "frankly boring souls". Canadians may be law-abiding, which is actually considered to be a desirable characteristic, but we are no more boring than any other nationality. Some of us are downright fascinating.

[Dr Michael A Ward]

My wife was swindled by a premium rate company which sent unsolicited reverse charge text messages to her phone over several months before we realized what was going on. In the end, after a long fight, we got our money back but we got no help from the "regulators" Ofcom and PhonePayPlus or from our network "O2" and there is, it seems, nothing you can do in advance to stop these premium rate firms stealing from you in this way - at least the people who were swindled by these firms using TV programmes had chosen to ring up. We had never had anything to do with premium rate.

[Suzy]

Mmmmmmm, just realised that I might have been taken for a bit of a numpty. I received a letter and a photograph of a bald little girl... it requested funding to give her a chance of expensive treatment abroad.... I got my purse and returned £20 to the address given. I did wonder at the time how they got MY name and address..!

[Two Eyes Wide]

Pyramid organisations per se are NOT the problem. In fact almost every organisational structure is a pyramid - whether it be army, government, church, police or corporation. It is not the shape of the organisation that is the problem. However, in my experience, most people confuse pyramid selling - which is quite rightly illegal in the UK - with multilevel marketing also known as network marketing, which is not illegal. People so often do not know how to tell the fundamental difference which means they can miss out on a genuine opportunity or be conned into a guaranteed loss of some, if not all, of their hard-earned savings. This is what to look out for: In multilevel marketing/mlm/network marketing there is a consumer-desired product or service with a fixed 'wholesale' price. People buy the product or the service to be just 'customers' so there are many more customers than network marketers (who are also customers) in a healthy multilevel marketing organisation. Whereas in pyramid selling there is a continuously inflating price for the product as it is sold on to lower levels of the 'pyramid' such that eventually there can be no demand whatsoever by consumers outside of the members of the pyramid. If ever there was demand outside of the pyramid. Or, in the case of Ponzi schemes, there is no legitimate product or service whatsoever. In conclusion, it is illegal for a promoter or participant in a trading scheme to persuade anyone to make a payment by promising benefits from getting other people to join a trading scheme.

[Mark in Alpine, Texas]

The Ponzi Scheme is still at work in the United States, except that it is now known as Social Security.

[playedTHEfool]

I joined a Women Empowering Women pyramid selling scheme in North London 2004. It was called Circle of Success. My mother and I lost £3k each and so did another family member. Prior to joining I had never heard of such schemes. Most of the women who attended were from black minority ethnic backgrounds.

[owen haren]

The article by Liz King on frauds carried out against insurance companies gets little sympathy from people such as me.You see I was in my opinion defrauded by an insurance company.It happened when Iwas in the middle of a divorce and had a flood in my house,the claim was even made through there own local agent,who arrived at the house as I was trying to clean up. A company came to asses the damage,but on seeing the condition of carpets etc advised me to call them back when I was ready to decorate and the leak repaired.As I was living on my own and working shifts this took some time,however when Iwas ready some months later I called the people who were to asses the claim.But instead I was visited by a member of the said insurance companys fraud department,who during the course of our discussion made the allegation,that due to the length of time from making the claim and recalling the assesors that Iwas plainly trying to defraud his employers, and no matter what I said he would look at it no other way.Having just come off nightshift that morning, my patience ran out as he truly was not going to listen and when he could only see it from the company side and accept anything Ihad to say,then I threw him out.True Ilost by not taking the claim further but at the time my circustances wouldn't allow me.But the irony is sometime later a policy that I still had matured and on it being paid out they sent some of their sales people to see if I would like to invest some of the money with them-Ill say no more!Except to say that company would never get another cent from me and advise others I know to do the same.

[B Clark]

It still amazes me the number of people who are scammed each year by these criminals. People must be very naive, stupid and plain greedy if they fall for these scams - Lotteries, Pyramid Schemes, Cash etc. It almost seems that some people leave their brains on the door-step when they go out. Scamsters use psychology, they play on folks stupidity, credulity and greed, above all greed. Something for nothing. An old Yorkshire saying states -"You get owt for nowt in this World!" However, people get scammed again and again and still think that they have 'Won!'. Oh Dear Me, a fool and their money are soon parted!

[Art]

Be aware of the phone call 'share-dealers' who offer discount priced shares & Initial Public Offers (IPO)in new or developing companies "prior to listing in a Stock Exchange"
Egs: AIMS Management,Frankfurt: Cardinal Securities,Barcelona: Hartford,?: Inflo-Interactive, Texas etc. etc.

[Alex]

Surely this joke was meant for The Sun. Plenty of real scams by large corporates, all an awful lot brighter and devious than the 419'ers.

"D'oh, duh yuh mean mah readers have a BRAIN? And I, like, have to have a POINT?"

[G Clerke]

People will always get conned by the con-artists. These Scamsters use psychology, by playing on people stupidity and greed. It never ceases to amaze me the number of folks who sincerely beleive that they have won 'Loads of Cash' on a lottery ticket, especially when they haven't even bought one. The lure of 'Free Cash' or 'Free Holidays' seems to blind certain folks to reality. They seem to beleive that they are 'putting one over' on the Scamsters -- No Dearie, its the other way round! There are NO free lunches in this life, and yet its often the same people who are scammed again and again because they still desparately want to beleive that have 'won'.
The old saying - "There No Fool like an Old Fool" and, "A Fool and their money are soon parted!"
Please DO NOT leave brain at front door when going to work!

[Steffan Lewis]

These scams are nothing compared to mischief the US banks have been up to of late. And what about lenders such as Cahoot who ensure borrowers only ever pay off an eternal interest. Or Farepak. Or holiday clubs. Or Russian gas suppliers. Or Gordon Brown's management of the economy transferring a national debt into a vast number of personal debts based on inflated property value. Genius, yes, but scandalous!

[Malcolm McLean]

A nice one is to sell tips - horses, or stocks and shares. If the tip proves wrong you promise to refund money. In fact you just pick the gee gees at random, and accept that you'll have quite a few unhappy customers, who at least get their money back so they don't blame you too much.

[Osvaldo Coelho]

What? no Bre-X? Sir, I take offense! Any respected list of scams must have BRE-X in it!

Cheers

Ossy

[anna]

wat is dis all about

[Stillpaying]

What about endowment mortgages bought from the Halifax Building Society?