5 WG Trading Investors
In 2009, the SEC figured out that Stephen Walsh and Paul Greenwood of New York misappropriated funds since the 1990s through their company WG Trading Investors. Walsh and Greenwood promised investors that they would pursue a stock index arbitrage strategy. Instead, the two pocketed the money and bought themselves big homes, luxury cars and collectibles, authorities said. Of the $667 million that investors gave them, Walsh and Greenwood misappropriated about $554 million, according to the SEC in 2009. In 2011, the SEC began distributing $792 million to the fraud victims.
4 Petters Group Worldwide
In 2009, a federal grand jury found Tom Petters of the Petters Group Worldwide in Minnesota guilty on 10 counts of wire fraud, three counts of mail fraud, five counts of money laundering, one count of conspiracy to commit wire and mail fraud and one count of conspiracy to commit money laundering. According to the FBI, Petters and his associates tried to get away with scheming $3.65 billion in cash and property out of investors between 1995 and 2008. He promised them that he’d buy and sell properties to turn a profit. Petters never purchased any properties. Instead, he and his co-conspirators used the cash to pay off others in the scheme and support their lavish lifestyles.
3 Manhattan Capital Management
Michael W. Berger started Manhattan Capital Management in 1996. The U.S. Securities and Exchange Commission (SEC) reported in 2002 that Berger acquired over $593 million from about 280 investors in the late 1990s, but lost about $400 million of it in Internet stocks. Instead of reporting the losses to his investors and the SEC, Berger doctored the financial data so it appeared as if the investments were profitable. Berger entered a guilty plea in 2002 to hedge fund securities fraud, but left the country just before his sentencing. Officials arrested him in 2007 in Austria.
2 Agape World Mail Fraud
In 2009, the FBI charged Nicholas Cosmo in a mail fraud scheme that cost $370 million. Cosmo, president of Agape World in New York, told investors that he had allocated its money into merchant advances and bridge loans. In reality, Cosmo used the money for commodity futures trading, falsely represented returns and lost over $195 million of it, according to the FBI. In 2010, Cosmo pleaded guilty to wire and mail fraud and, in 2011, was sentenced to 25 years in prison.
1 BLM Investment Securities LLC (BLMIS)
In 2009, Bernard “Bernie” L. Madoff was sentenced to 150 years in prison following his 2008 arrest for charges that included securities fraud, wire and mail fraud, money laundering, theft and perjury—all acts that aided his $64 billion Ponzi scheme. The FBI reports that Madoff finally told his employees that his business was just a big scheme and that the company had not been able to pay its debts for several years. Madoff had gotten away with his antics for years by giving his investors false investment statements and trade confirmations that made him look like a money guru.