Ponzi scheme - Morningbull

1980s
1990s
• Before Ponzi, in 1899 William "520 Percent" Miller opened for business as the
"Franklin Syndicate" in Brooklyn, New York. Miller promised 10% a week interest
and exploited some of the main themes of Ponzi schemes such as customers
reinvesting the interest they made. He defrauded buyers out of $1 million and was
sentenced to jail for 10 years. After he was pardoned, he opened a grocery store on
Long Island. During the Ponzi investigation, Miller was interviewed by the Boston
Post to compare his scheme to Ponzi's — the interviewer found them remarkably
similar, but Ponzi's became more famous for taking in seven times as much money. [2]
• Between 1970 and 1984 in Portugal, a woman known as Dona Branca maintained a
scheme that paid 10% monthly interest. In 1988 she was sentenced to 10 years in
prison. She always claimed that she was only trying to help the poor, but in her trial it
was proven that she had received the equivalent of 85 million euros. [3][4]
• In January 1984 Adriaan Nieuwoudt started a scheme with an apparent product in
South Africa. Subscribers to the scheme were sent an "activator", that was used to
grow "cultures" in milk, which was then sent back to the Kubus Kwekery for about
30% return on the money paid for the "activator". The Cape Supreme Court held that
the kubus scheme was an illegal lottery. [5]
• Sixteen hundred investors in Diamond Mortgage Company and A.J. Obie, two firms
with the same managers, lost approximately $50 million in what the Michigan Court
of Appeals described as "the largest reported 'Ponzi' scheme in the history of the
state." It led to the passage in 1987 of the MBLSA (Mortgage Brokers, Lenders, and
Servicers Act)." [6][7]
• In the 1980s in San Diego, California, J. David & Company, an alleged currency and
commodity trading and investing operation named after its founder, J. David
Dominelli, a withdrawn and shy (and thus, presumably, "genius") currency and
commodity trader, was revealed to be a Ponzi scheme which took in $200 million and
returned $120 million to investors, leaving a net loss of $80 million. The scheme
touched all levels of upper class business and professional life in San Diego and
environs, and involved the Mayor of Del Mar, California, a cozy upscale beach town
just north of La Jolla, who was J. David's assistant and live-in companion, and others,
including the prominent New York law firm Rogers & Wells (now Clifford Chance),
which had advised J. David (through a rogue partner) and others. [8][9][10][11][12] When
the fall came, J. David briefly escaped to Montserrat in the Caribbean, but was
returned ultimately to plead guilty to federal charges and receive 20 years' federal
imprisonment. [13]
• In Romania, between 1991 and 1994, the Caritas scheme run by the "Caritas"
company of Cluj-Napoca, owned by Ioan Stoica promised eight times the money
invested in six months. It attracted 400,000 depositors from all over the country who
invested 1,257 billion lei (about a billion USD) before it finally went bankrupt on 14
August 1994, having a debt of 450 million USD. The owner, Ioan Stoica was
sentenced in 1995 by the Cluj Court to a total of seven years in prison for fraud, but he
appealed and it was reduced to two years; then he went on to the Supreme Court of
Justice and the sentence was finally reduced to one year and a half.