‘American Greed’: The Biggest Scams Ever Featured on the Show
No one likes to get scammed. But who hasn’t been swayed by a fast-talking salesman or succumbed to a can’t-miss deal that turned out to be anything but? Getting played by hucksters hurts both your pride and your wallet, but often the damage is fairly minimal. You come to terms with your losses and resolve to be smarter next time.
A “live and learn” attitude might work when you realize you got tricked into buying a useless extended warranty, but it’s much harder to swallow losses that can total thousands or even millions of dollars. Yet that’s exactly what happened to the people who were the victims of some of the biggest scam artists in history. The exploits of these criminals are detailed on CNBC’s American Greed, and their cons are so brazen even Charles Ponzi would blush.
Some of these notorious scammers bilked thousands of victims out of billions of dollars. Others got away with less money, but their crimes were especially brazen or bizarre. From the financier who conned millionaires out of millions of dollars to the fraudster who picked over the bones of the dead (literally), here are 15 of the biggest scams ever featured on American Greed.
1. Bernie Madoff
Size of the fraud: $65 billion
Bernie Madoff’s financial crimes were so notorious they received a special 2010 episode of CNBC’s popular show. This New York investor pocketed $20 billion as part of a $65 billion Ponzi scheme — the biggest financial con in history. His many investors included numerous hedge funds, charities, and banks, as well as individuals, such as Kevin Bacon and Sandy Koufax.
After the fraud came to light, Madoff confessed and received 150 years in prison. While some victims who invested directly with Madoff have had some of their money returned, those who invested through third parties are still waiting on payouts nearly a decade later.
Next: The scammers who said God was on their side
2. Greater Ministries International Church
Size of the fraud: $500 million
Gerald Payne’s scam netted him roughly half a billion dollars in the mid-1990s. That’s relatively small potatoes compared to the jaw-dropping sums Madoff made off with, but what makes this con distinctive (and distinctively despicable) is he got that money by preying on people’s faith. Payne told his 18,000 investors he could double their money in 17 months with a little help from God.
Payne’s outsize promises were bunk, and he landed in prison for 27 years as a result of his con. But he and his co-conspirator wife went to jail swearing their actions were legal and “guided by the Holy Spirit.”
Next: The con artists who profited off the Sept. 11 terrorist attacks
3. 9/11 fraudsters
Size of the fraud: $5.8 million
It takes a special kind of moral bankruptcy to try to profit by fleecing the victims of a national tragedy. But that’s exactly what several different scammers featured in the special “9/11 Fraud” episode of American Greed tried to do.
This episode featured criminals, such as the family “friend” who stole nearly $250,000 from the widow of a man killed in the attacks and a guy who lied about having lost his partner in the Twin Towers in order to collect tens of thousands of dollars from the Red Cross. Unfortunately, those two stories are just the tip of the 9/11 fraud iceberg. More than 500 people made off with $5.8 million in 9/11 cons and scams, according to the New York Daily News.
Next: This corporate con cost thousands of people their jobs
4. Bernard Ebbers and WorldCom
Size of the fraud: $11 billion
When it comes to crooked CEOs, you don’t get much more twisted than Bernard Ebbers, the man in American Greed episode “Behind the WorldCom Scam.” Ebbers, with the help of others at the company, orchestrated an $11 billion accounting fraud that eventually bankrupted the telecommunications company in 2002. He received 25 years in prison.
Ebbers’ crimes were reportedly motivated by a desire to protect his large personal fortune, according to CNN. But his greed came at a big price. Nearly 30,000 people lost their jobs when WorldCom collapsed.
Next: The corrupt CEO who spent his company’s money on a $6,000 shower curtain
5. Dennis Kozlowski, Tyco
Size of the fraud: $600 million
Either CEOs were greedier in the early 2000s, or the government was better at catching them with their hand in the cookie jar. Dennis Kozlowski, the CEO of Tyco, fell around the same time as Ebbers and the crooks at Enron. He’d looted hundreds of millions from the security systems company he ran — money that went to pay for lavish homes, yachts, and a $6,000 shower curtain, according to The New York Times. He and the company’s CFO also misrepresented the company’s financial situation in order to boost the price of Tyco stock they wanted to sell. Kozlowski served 6½ years in prison.
Next: This CEO-turned-felon has tried to remake himself as an inspirational speaker.
6. Richard Scrushy, HealthSouth
Size of the fraud: $2.8 billion
Richard Scrushy founded HealthSouth in 1984 and quickly grew it into a $1 billion network of rehab hospitals and outpatient clinics. But behind the company’s smashing success was a massive $2.8 billion accounting fraud, perpetuated, according to those involved in the scandal, because Scrushy was addicted to living like a “rock star” CEO.
Scrushy was tried for his role in the scam but was acquitted. But he did go to prison for bribing the governor of Alabama. After his release, Scrushy remade himself as a “business and inspirational speaker,” touting himself as a “dynamic risk taking entrepreneur with a powerful track record.”
Next: The Minnesota businessman who stole nearly $4 billion
7. Tom Petters
Size of the fraud: $3.65 billion
Tom Petters was a Minnesota businessman who persuaded his victims to give him money he said would be used to buy electronics, which would then be sold to retailers, such as Costco. The only problem? Those electronics didn’t exist. Petters was simply pocketing the money to finance his extravagant lifestyle. The $3.65 billion Ponzi scheme unraveled in 2008.
One reason Petters’ con worked was because his company did some legitimate businesses. It owned part of Sun Country Airlines, among other companies, and employed 3,200 people. The fraud revelations helped push the airline into bankruptcy and some employees at Petters’ company who weren’t involved in any crime had to pay back their bonuses.
Next: Investors lost $7 billion in this offshore banking scam.
8. Allen Stanford, Stanford Financial Group
Size of the fraud: $7 billion
Allen Stanford might not have quite the same name recognition as Bernie Madoff, but his con was nearly as large. The Texas businessman stole $7 billion in a Ponzi scheme that ended with a 110-year prison term.
Stanford scam involved selling fake certificates of deposit through an offshore bank in Antigua. For a time, the “business” made him one of the richest men in America, but eventually the government shut him down. Thousands of people who believed Standford’s promises of low-risk, high-return investments lost their life savings, and many have received little, if any, restitution.
Next: Union members paid dearly for this con artist’s crimes.
9. Melissa King, The Sandhogs Local 147
Size of the fraud: $40 million
Members of New York’s Sandhogs Local 147 dig the tunnels for the city’s water lines and trains, such as the new Second Avenue subway. The job isn’t glamorous, but a lifetime of work underground does come with the promise of solid pension benefits at retirement. At least that’s what workers expected.
Many union members found their retirement dreams dashed when it was revealed Melissa King, the administrator for the union’s benefit funds, had helped herself to $40 million of workers’ retirement money. She used the loot to pay for things, such as housekeeping and grooming services for her dogs. King was sentenced to six years in prison in 2012.
Next: A massive life insurance con
10. Mutual Benefits Corporation
Size of the fraud: $835 million
Mutual Benefits Corporation was a brokerage that sold investors life insurance policies belonging to people with AIDS, cancer, and other serious illnesses. Policyholders would get cash immediately, while the buyer got the proceeds of the policy when the insured died. It sounds weird, but it’s a legit — though risky — practice.
What isn’t legal is lying to investors about the life expectancy of the people insured by the policies being sold and using money from new investors to pay back other investors (the classic sign of a Ponzi). But that’s what Mutual Benefits Corporation and its executives did. The scheme eventually collapsed, investors lost $835 million, and the architects of the con went to prison.
Next: This Scientologist-turned-scammer stole more than half a billion dollars.
11. Reed Slatkin
Size of the fraud: $600 million
What do you get when you mix an internet entrepreneur, Scientology, and insatiable greed? A $600 million Ponzi scheme. Reed Slatkin co-founded EarthLink and was a former Scientology minister. But he eventually turned from legitimate businessman to scam artist.
Slatkin bamboozled hundreds of people in a classic Ponzi scheme, some of whom lost millions of dollars. The victims included wealthy socialites, actors, and film producers, as well as less famous investors who lost their life savings.
Next: The case of the body snatcher
12. Michael Mastromarino
Size of the fraud: $4.6 million
Michael Mastromarino pocketed millions in what be the most gruesome scam every featured on American Greed — harvesting tissue from dead bodies for use in medical products. Mastromarino paid undertakers to give him access to corpses, then harvested the tissues without the family’s knowledge, making $10,000 or $15,000 per body by selling it to companies that made medical devices. Some of the tissue came from people who died of cancer or AIDS. He was sentenced in 2008 to 15 to 30 years and died in 2013 while still in prison.
Next: The Ponzi scheme that triggered a college football scandal
13. Nevin Shapiro
Size of the fraud: $930 million
Nevin Shapiro orchestrated a $930 million Ponzi scheme that landed him in prison for 20 years and rocked the college football world. The University of Miami booster supposedly ran an investment firm, but really he was just pocketing his clients’ money. The ill-gotten funds went to fund a lavish lifestyle, including spending money on cash gifts, cars, and trips to strip clubs for Miami players, Shapiro said. The payoffs led to NCAA sanctions against Miami in 2013.
Next: This Iowa businessman’s scam went on for more than two decades.
14. Russell Wasendorf, Peregrine Financial Group
Size of the fraud: $215 million
Russell Wasendorf, the head of Iowa’s Peregrine Financial Group, stole $215 million from at least 24,000 clients over two decades, according to prosecutors. Once regulators caught on to his embezzlement scheme, Wasendorf attempted suicide outside of his company’s headquarters. He admitted in his suicide note to falsifying bank statements and engaging in other chicanery to cheat investors out of their money. He was sentenced to 50 years in prison in 2013.
Next: The lawyer who tricked investors into giving him more than $1 billion
15. Scott Rothstein
Size of the fraud: $1.2 billion
Disgraced lawyer Scott Rothstein pulled off the biggest con in Florida history when he bilked people out of $1.2 billion in a vast Ponzi scheme. Rothstein wanted to build a big law firm, and to raise the money to do so he sold shares in fake settlement lawsuits. He used the money to fund his high-roller lifestyle and make big donations to Florida charities and politicians. Eventually his scheme was revealed, and he was sentenced to 50 years in prison in 2010.