The biggest financial frauds ever — from Sam Bankman-Fried to Bernie Madoff

One of the most recent instances of financial fraud is the FTX scandal, which shook the crypto market to its core and caused a bloodbath in the industry.

The crypto exchange was co-founded in 2019 by crypto icon Sam Bankman-Fried and soon became a savior for the crypto industry by offering financial help to crypto firms like BlockFi and Voyager, among others.

But it didn’t last long after it was revealed that the company was based on fraud and had poor financial health. After the exchange collapsed, other crypto companies associated with it also went under.

In late 2022, federal prosecutors charged Bankman-Fried and other top FTX executives with misappropriating $10 billion in customer deposits and fabricating false financial statements. Bankman-Fried will receive his prison sentence on Thursday.

Once one of Wall Street’s most influential figures, Bernard Lawrence “Bernie” Madoff ran one of the largest Ponzi schemes in history for almost two decades.

He pleaded guilty to 11 federal felonies, confessing that he had transformed his wealth management company into the world’s biggest Ponzi scheme. Madoff enriched himself, his family, and a few members of his inner circle. On April 14, 2021, he died in prison at the age of 82. He was serving a 150-year sentence for numerous felonies, including money laundering and securities fraud.

He was also the chair of Nasdaq in the early 1990s and played a key role in pioneering electronic trading. Netflix made a series on Bernie Madoff’s rise and fall, MADOFF: The Monster of Wall Street.

Enron was formed in 1985 through the merger of Houston Natural Gas and the Omaha, Nebraska-based InterNorth. Following the merger, Kenneth Lay, the CEO of Houston Natural Gas, became the CEO and chairman of Enron. Enron soon became a leading energy trader and supplier.

Enron was once called Wall Street’s darling and was named the most innovative corporation in America by Fortune magazine for six straight years between 1995 and 2000.

The success, however, was short-lived as the company was discovered to be hiding financial losses in its trading business. During Enron’s peak, its shares were worth $90.75 — but they fell to $0.26 before its bankruptcy in December 2001.

In 2002, the Department of Justice launched a criminal investigation against Enron. Soon after, Enron was suspended from the New York Stock Exchange. At $63.4 billion in assets, the Enron bankruptcy was the largest on record at the time. A number of Enron’s executives faced charges of conspiracy, insider trading, and securities fraud.

Founded in 1983, WorldCom was an American telecom company that was later found to have engaged in one of the largest accounting scandals in American history.

To gain market share, WorldCom aggressively acquired rival companies. During the dot-com bubble, its market capitalization reached $175 billion.

Executives wanted to show that the company was capable of handling acquisitions and had sufficient capital to do so. So the company inflated profits and concealed financial losses in its books.

Several auditors disclosed the fraud, including Cynthia Cooper, vice president of WorldCom’s internal audit department, who later became Time magazine’s Person of the Year. In 2002, the company filed for bankruptcy and was later acquired by Verizon.

In 2005, co-founder and CEO Bernard Ebbers was sentenced to 25 years in prison for securities fraud. After serving 14 years of his sentence, Ebbers was released early for health reasons in 2019. He died a year later. CFO Scott Sullivan was sentenced to five years after pleading guilty and testifying against Ebbers.

Founded in 2003 by then 19-year-old Elizabeth Holmes, the consumer healthcare tech startup Theranos once had a valuation of $10 billion. It claimed to revolutionize the blood testing process.

But Holmes and former company president Ramesh Balwani failed to provide any evidence to back up their claims.

Soon the truth came out, and the Securities and Exchange Commission charged both of them with massive fraud in 2018. In 2022, Holmes was found guilty of four out of 11 federal fraud and conspiracy charges. Balwani, who was also her boyfriend, was found guilty of fraud and conspiracy.