The history of American business is a history of business scandals. In a number of cases, the fraudsters posing as businessmen displayed incredible imagination and talent.
Many experts believe that scandals and fraud in the financial sector are inevitable, since unscrupulous people will always try to get around the current rules. However, such failures ultimately benefit the economy. After identifying gaps in this area, government, public and commercial structures begin to use new control mechanisms, ensuring the integrity and transparency of business. We offer a brief history of some of the most high-profile and extraordinary corporate America scams.
Yazu Land
In 1795, a scam involving the sale and purchase of land plots in the area known as Yazu was carried out.
Yazoo. The situation was as follows: at that time, most of the North American continent was not mastered by Europeans, most of the population lived along the coast of the Atlantic Ocean, and the expansion to the West - to lands inhabited by Indian tribes - proceeded rather slowly. Each state hoped to get a large territory on undeveloped lands, believing that this would increase the population, strengthen the economy, etc. Usually, Western lands at the official level were "augmented" by the servants of the law, and not by entrepreneurs. That is, first, new administrative units were created with clearly defined boundaries, and then plots of land were provided to new residents, farmers, businessmen, etc. under certain conditions. However, in the state of Georgia, the method was changed. By the decision of the Parliament of Georgia, a huge and not even fully explored territory,now almost entirely under the jurisdiction of the states of Alabama and Mississippi, it was sold cheaply to four large companies co-owned by many of the Georgia legislature. After the details of the deal became known, the residents of the state were outraged because they considered the land their own, and not corporate property. After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress co-owned by many of the Georgia legislature. After the details of the deal became known, the residents of the state were outraged, because they considered the land their own, and not corporate property. After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress co-owned by many of the Georgia legislature. After the details of the deal became known, the residents of the state were outraged because they considered the land their own, and not corporate property. After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress \After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress \After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress.
US Congress, which refused to make any concessions to companies. However, in 1810, the US Supreme Court decided the issue in favor of the merchants, arguing the verdict that, although the contract was fraudulent, nevertheless, it did not exempt the contractors from its terms, since it was signed. As a result, companies received gigantic compensation that exceeded their purchase costs by 8 times. The Credit Mobilier scam.
In 1867, the major railroad company Union Pacific Railroad set up a shell firm, Crédit Mobilier of America, and awarded it contracts to build railways. At that time, the US Congress sought to support the development of communications and provided significant benefits and subsidies to road builders. As a result, Crédit Mobilier shares were offered to some “useful” congressmen not at market prices but at par. In return, MPs who became shareholders of the company beat out government subsidies to cover the company's seriously inflated expenses.
The scam became known in 1872, during the presidential election, thanks to the journalists of the New York Sun newspaper. The informant was the Assistant Director of the Crédit Mobilier. From the documents he submitted, it was clear that, of the $ 47 million provided by the state to the Credit Mobilier, Union Pacific embezzled $ 21 million. The scandal led to the resignation of many influential congressmen and officials. However, one of Crédit Mobilier's alleged clients, then Congressman James Garfield, was subsequently elected President of the United States.
"Black Friday"
The "heroes" of this scandal were the legends of the "golden era" of American business - financiers Jay Gould and Jim Fisk. Both had highly controversial reputations. However, Fisk is now credited as one of the founders of Broadway, and Gould once owned the now-existing Western Union company. The essence of the scam was as follows. President Ulysses S. Grant pursued an active monetary policy, the meaning of which was to reduce the amount of cash in the economy: the state sought to buy dollars in exchange for gold. Gould and Fisk planned to buy as much gold as possible and, after waiting for a serious rise in prices, sell it. In order to convince Grant to change policy, the swindlers hired the financier Abel Corbin, who, by a happy coincidence, was the president's son-in-law. The versions of further events differ.One of the hypotheses says that Grant suspected something was wrong (he supposedly caught sight of Corbin's frank letter) and decided to punish the conspirators. He waited for the moment when Gould and Frisk began to play for a raise (for this Frisk spread the corresponding rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.that Grant suspected something was wrong (he supposedly caught sight of Corbin's frank letter) and decided to punish the conspirators. He waited for the moment when Gould and Frisk began to play for a raise (for this Frisk spread the corresponding rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.that Grant suspected something was wrong (he supposedly caught sight of Corbin's frank letter) and decided to punish the conspirators. He waited for the moment when Gould and Frisk began to play for a raise (for this Frisk spread the corresponding rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.when Gould and Frisk began to play for a rise (for this Frisk spread the corresponding rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.when Gould and Frisk started to play bullish (for this Frisk spread the rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.
Conspiracy of distillers
After the end of the Civil War, the federal authorities increased tax rates on alcoholic beverages several times. This was done primarily in order to balance the state budget. In some large US cities (St. Louis, Milwaukee and Chicago), whiskey producers began to bribe officials: they willingly turned a blind eye to the real size of production, which allowed distillers to minimize the tax base for a long time. The scheme was rumored to have been used to fund local GOP chapters, but no evidence could be found.
However, information about the fraud reached Washington, and the Treasury Department launched a secret investigation. In 1875, quite unexpectedly for local officials and whiskey producers, a group of auditors arrived in St. Louis, Milwaukee and Chicago, arrested businessmen and sealed the distilleries. 238 people appeared before the court, 110 of them were convicted. Federal budget received $ 3 million
Ponzi pyramid
In the 1920s, Boston businessman Charles Ponzi created a fraudulent scheme that was later called the Ponzi scheme. With some variations, this scheme has been repeated many times in many countries around the world. Ponzi offered customers of his coupons a payout of 500% of the deposit within 45 days. The old investors received money from the contributions of the new ones. More than 10 thousand people became victims of Ponzi. On some days, Ponzi received up to $ 250 thousand, there was nowhere to put cash dollars - he even dumped them in the trash can. In total, he raised $ 9.5 million. After the collapse of the financial pyramid he built and serving a prison sentence, he was deported to Italy, where he was able to use the "Ponzi scheme" again. At the end of his life, he moved to Brazil, where he died in poverty.
Smell of oil
In 1921, the Tipot House, the first oil political scandal in US history, broke out. The oversight of the oil reserves intended for the supply of the navy was entrusted to the head of the Ministry of the Interior, Albert Fall. Fall, in particular, was responsible for overseeing the state of affairs in the strategic Teapot Dome oil storage facility. Fall, in particular, depended on the choice of the Navy's suppliers. Oil companies, which were interested in government orders, tried to win over the official to themselves, and Fall could not resist bribery. The corrupt official and the oil barons were killed by greed. Fall tried to gain control of the army's oil reserves, the military opposed and demanded to check how successfully he was performing his duties. Inspection showed that Fall not only received bribes,but also bought petroleum products of inferior quality at higher prices. Fall was imprisoned and the oil barons who bribed him were acquitted by the court.
Stock exchange genius
Richard Whitney, president of the world's largest New York Stock Exchange, one of the most famous financial experts in the United States, was caught in a scam. Through dummies, he bought up shares of some companies and, using the tools at his disposal to influence the stock market, artificially raised or lowered their rate. However, all his skill did not allow to avoid losses. Whitney was not taken aback: he began to simply steal money. In particular, he stole money from a public fund that provided assistance to widows and orphans. By the time of his arrest in 1938, Whitney managed to steal approximately $ 800 thousand.
Inflated bail
Businessman Anthony (Tino) De Angelis has been nicknamed "The American Salad Butter". He owned the largest vegetable oil company in the United States. After two decades of success, De Angelis (after his business was shaken) received loans from banks and investment companies for $ 175 million. Millions of liters of vegetable oil, which did not exist in nature, were used as collateral for obtaining loans. De Angelis used his knowledge of the school physics course: in his warehouse, he demonstrated huge tanks filled with oil. In fact, there was water in the cisterns, and the oil only covered it with a thin film. After the scam was exposed (1968), two financial companies went bankrupt, investing in De Angelis shares.At the same time, another American businessman Billy Estes also received bank loans secured by non-existent agricultural implements, tools and machines. He acted more simply: he simply forged the corresponding papers.
Dead Souls
Operating in the 1960s and 1970s, Equity Funding combined the features of an investment and an insurance company. Shareholders received dividends in the form of insurance premiums, and Equity Funding sold insurance policies to reinsurance companies. It was a lucrative vehicle, but Equity Funding managers went further. They filled out bogus insurance policies and also sold them to reinsurers. The funds received went into the pockets of proactive managers. After the scam was exposed, Equity Funding clients lost $ 300 million, and several dozen of the fund's employees went to jail.
Many experts believe that scandals and fraud in the financial sector are inevitable, since unscrupulous people will always try to get around the current rules. However, such failures ultimately benefit the economy. After identifying gaps in this area, government, public and commercial structures begin to use new control mechanisms, ensuring the integrity and transparency of business. We offer a brief history of some of the most high-profile and extraordinary corporate America scams.
Yazu Land
In 1795, a scam involving the sale and purchase of land plots in the area known as Yazu was carried out.
Yazoo. The situation was as follows: at that time, most of the North American continent was not mastered by Europeans, most of the population lived along the coast of the Atlantic Ocean, and the expansion to the West - to lands inhabited by Indian tribes - proceeded rather slowly. Each state hoped to get a large territory on undeveloped lands, believing that this would increase the population, strengthen the economy, etc. Usually, Western lands at the official level were "augmented" by the servants of the law, and not by entrepreneurs. That is, first, new administrative units were created with clearly defined boundaries, and then plots of land were provided to new residents, farmers, businessmen, etc. under certain conditions. However, in the state of Georgia, the method was changed. By the decision of the Parliament of Georgia, a huge and not even fully explored territory,now almost entirely under the jurisdiction of the states of Alabama and Mississippi, it was sold cheaply to four large companies co-owned by many of the Georgia legislature. After the details of the deal became known, the residents of the state were outraged because they considered the land their own, and not corporate property. After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress co-owned by many of the Georgia legislature. After the details of the deal became known, the residents of the state were outraged, because they considered the land their own, and not corporate property. After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress co-owned by many of the Georgia legislature. After the details of the deal became known, the residents of the state were outraged because they considered the land their own, and not corporate property. After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress \After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress \After the election of new members of parliament, the contract was canceled. All copies of the contract were burned with the exception of one copy, which was sent to the President of the United States. However, the businessmen did not want to refuse such a lucrative deal and in every possible way sought the execution of the purchase and sale agreement. In 1802, a special decision on this case was made by the US Congress.
US Congress, which refused to make any concessions to companies. However, in 1810, the US Supreme Court decided the issue in favor of the merchants, arguing the verdict that, although the contract was fraudulent, nevertheless, it did not exempt the contractors from its terms, since it was signed. As a result, companies received gigantic compensation that exceeded their purchase costs by 8 times. The Credit Mobilier scam.
In 1867, the major railroad company Union Pacific Railroad set up a shell firm, Crédit Mobilier of America, and awarded it contracts to build railways. At that time, the US Congress sought to support the development of communications and provided significant benefits and subsidies to road builders. As a result, Crédit Mobilier shares were offered to some “useful” congressmen not at market prices but at par. In return, MPs who became shareholders of the company beat out government subsidies to cover the company's seriously inflated expenses.
The scam became known in 1872, during the presidential election, thanks to the journalists of the New York Sun newspaper. The informant was the Assistant Director of the Crédit Mobilier. From the documents he submitted, it was clear that, of the $ 47 million provided by the state to the Credit Mobilier, Union Pacific embezzled $ 21 million. The scandal led to the resignation of many influential congressmen and officials. However, one of Crédit Mobilier's alleged clients, then Congressman James Garfield, was subsequently elected President of the United States.
"Black Friday"
The "heroes" of this scandal were the legends of the "golden era" of American business - financiers Jay Gould and Jim Fisk. Both had highly controversial reputations. However, Fisk is now credited as one of the founders of Broadway, and Gould once owned the now-existing Western Union company. The essence of the scam was as follows. President Ulysses S. Grant pursued an active monetary policy, the meaning of which was to reduce the amount of cash in the economy: the state sought to buy dollars in exchange for gold. Gould and Fisk planned to buy as much gold as possible and, after waiting for a serious rise in prices, sell it. In order to convince Grant to change policy, the swindlers hired the financier Abel Corbin, who, by a happy coincidence, was the president's son-in-law. The versions of further events differ.One of the hypotheses says that Grant suspected something was wrong (he supposedly caught sight of Corbin's frank letter) and decided to punish the conspirators. He waited for the moment when Gould and Frisk began to play for a raise (for this Frisk spread the corresponding rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.that Grant suspected something was wrong (he supposedly caught sight of Corbin's frank letter) and decided to punish the conspirators. He waited for the moment when Gould and Frisk began to play for a raise (for this Frisk spread the corresponding rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.that Grant suspected something was wrong (he supposedly caught sight of Corbin's frank letter) and decided to punish the conspirators. He waited for the moment when Gould and Frisk began to play for a raise (for this Frisk spread the corresponding rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.when Gould and Frisk began to play for a rise (for this Frisk spread the corresponding rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.when Gould and Frisk started to play bullish (for this Frisk spread the rumors). At a time when the price of gold reached a record high, Grant gave the order to put up for sale part of the state's gold reserves. As a result, the gold price fell sharply. Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.Many traders went bankrupt. This day went down in the history of Wall Street as "Black Friday". Corbin and Frisk lost almost all of their fortune. Gould managed to sell his gold almost at the peak of the price and suffered almost no losses. Curiously, the investigation into this case has yielded no results.
Conspiracy of distillers
After the end of the Civil War, the federal authorities increased tax rates on alcoholic beverages several times. This was done primarily in order to balance the state budget. In some large US cities (St. Louis, Milwaukee and Chicago), whiskey producers began to bribe officials: they willingly turned a blind eye to the real size of production, which allowed distillers to minimize the tax base for a long time. The scheme was rumored to have been used to fund local GOP chapters, but no evidence could be found.
However, information about the fraud reached Washington, and the Treasury Department launched a secret investigation. In 1875, quite unexpectedly for local officials and whiskey producers, a group of auditors arrived in St. Louis, Milwaukee and Chicago, arrested businessmen and sealed the distilleries. 238 people appeared before the court, 110 of them were convicted. Federal budget received $ 3 million
Ponzi pyramid
In the 1920s, Boston businessman Charles Ponzi created a fraudulent scheme that was later called the Ponzi scheme. With some variations, this scheme has been repeated many times in many countries around the world. Ponzi offered customers of his coupons a payout of 500% of the deposit within 45 days. The old investors received money from the contributions of the new ones. More than 10 thousand people became victims of Ponzi. On some days, Ponzi received up to $ 250 thousand, there was nowhere to put cash dollars - he even dumped them in the trash can. In total, he raised $ 9.5 million. After the collapse of the financial pyramid he built and serving a prison sentence, he was deported to Italy, where he was able to use the "Ponzi scheme" again. At the end of his life, he moved to Brazil, where he died in poverty.
Smell of oil
In 1921, the Tipot House, the first oil political scandal in US history, broke out. The oversight of the oil reserves intended for the supply of the navy was entrusted to the head of the Ministry of the Interior, Albert Fall. Fall, in particular, was responsible for overseeing the state of affairs in the strategic Teapot Dome oil storage facility. Fall, in particular, depended on the choice of the Navy's suppliers. Oil companies, which were interested in government orders, tried to win over the official to themselves, and Fall could not resist bribery. The corrupt official and the oil barons were killed by greed. Fall tried to gain control of the army's oil reserves, the military opposed and demanded to check how successfully he was performing his duties. Inspection showed that Fall not only received bribes,but also bought petroleum products of inferior quality at higher prices. Fall was imprisoned and the oil barons who bribed him were acquitted by the court.
Stock exchange genius
Richard Whitney, president of the world's largest New York Stock Exchange, one of the most famous financial experts in the United States, was caught in a scam. Through dummies, he bought up shares of some companies and, using the tools at his disposal to influence the stock market, artificially raised or lowered their rate. However, all his skill did not allow to avoid losses. Whitney was not taken aback: he began to simply steal money. In particular, he stole money from a public fund that provided assistance to widows and orphans. By the time of his arrest in 1938, Whitney managed to steal approximately $ 800 thousand.
Inflated bail
Businessman Anthony (Tino) De Angelis has been nicknamed "The American Salad Butter". He owned the largest vegetable oil company in the United States. After two decades of success, De Angelis (after his business was shaken) received loans from banks and investment companies for $ 175 million. Millions of liters of vegetable oil, which did not exist in nature, were used as collateral for obtaining loans. De Angelis used his knowledge of the school physics course: in his warehouse, he demonstrated huge tanks filled with oil. In fact, there was water in the cisterns, and the oil only covered it with a thin film. After the scam was exposed (1968), two financial companies went bankrupt, investing in De Angelis shares.At the same time, another American businessman Billy Estes also received bank loans secured by non-existent agricultural implements, tools and machines. He acted more simply: he simply forged the corresponding papers.
Dead Souls
Operating in the 1960s and 1970s, Equity Funding combined the features of an investment and an insurance company. Shareholders received dividends in the form of insurance premiums, and Equity Funding sold insurance policies to reinsurance companies. It was a lucrative vehicle, but Equity Funding managers went further. They filled out bogus insurance policies and also sold them to reinsurers. The funds received went into the pockets of proactive managers. After the scam was exposed, Equity Funding clients lost $ 300 million, and several dozen of the fund's employees went to jail.
