Top Financial Fraud Cases That Affected The World Economy


As businesses are great to earn from but one of the realities of businesses and investing procedures is being attacked by financial scandals and frauds. Investors before investing should always be concerned about the unethical companies and people running them. Financial scandals can make all the efforts go worthless in your investments that you have put, in to grow your business.

In this article, we will be covering financial scandals that are the biggest in history so that people can defraud investors to enhance themselves.

  1. WorldCom.
  2. Charles Ponzi’s Ponzi Scheme.
  3. 2008 Financial Crisis.
  4. Wirecard.
  5. Bernie Madoff.
  6. Enron.
Financial Fraud Cases
Financial Fraud Cases


In the 1990’s WorldCom held the second place to be the largest telecommunications company in the US.

IN 2002 the company collapsed after an accounting Fraud was uncovered. Investors believed that the stock remained a good investment therefore the company was valued at 180 billion dollars. As soon as the auditors found out the revenues and profits had been overstated by 7 billion dollars the stock fell from 60 dollars to 1 dollar. And that led to thousands of employees losing their jobs.

The company then filed for bankruptcy protection and later came out as MCI. In the year of 2006 the CEO of WorldCom, Bernherd Ebbars was sentenced to prison for 25 years. He is dead, after serving for 15 years.

Charles Ponzi’s Ponzi Scheme

The Ponzi’s scheme was not the first nor that big. Ponzi was known as a con artist before getting famous with his scheme. The reason this incident is under the top 7 fraudulent loan schemes, is because it was a big deal at that time. Even some Pyramids are called Ponzi’s Pyramids.

Ponzi’s mastermind came up with a plan of trading international reply coupons (iRC’s). These coupons can be exchanged with postage stamps. He thought hard about the opportunity to buy discounted IRCs in Europe and then exchange them with the help of face value in the USA. Therefore he promised all investors to return the money back in 90 days.

The scheme went well and he started to raise more capital. He was getting a million dollars a day. Like everything has an end, this scheme became very feasible, but Ponzi thought he would be able to pay his previous inventors by having money from the new ones. The scheme then suddenly collapsed before a finished year, when the newspapers were printing the demands of the investors who wanted their money back.

Ponzi is in prison now. Good for us.

2008 Financial Crisis

The GFC of 2008 is considered a financial crisis and not a financial scandal. There are many causes that have led to a financial crisis including conflicts of interest, unethical behaviour and corporate fraud. The rating agencies were paid by the issuers to give grade credit ratings,which was quite risky. This started a conflict of interest as the rating agencies overlooked a financial incentive.

The mortgage originators pushed home buyers to overstate their assets as well as incomes to to make sure that mortgage applications were approved. They also try out aggressive sales tips to sell them. Later, when banks were found to foreclose properties illegally, they sold securities to the investors.


A recent fraud at wirecard happens to be the biggest European financial scandal. Wirecard, Germany’s leading stock index and also finetech stocks in the world , collapsed this year. The fraud was pretty simple though in Wirecard.  Wirecard was known to make payments on behalf of merchants. In some countries wirecard used companies to make the payment for them. Check bhp 100 billion dollars stock fraud.

When the journalists and investors asked about the flow of money from the subsidiaries, Wirecard replied that the cash was in escrow accounts. It means the cash stayed in the same account form where the payments were processed and is hard to dispute. When the media pointed out that there is no such revenue, wirecard accused them of manipulating the share price.

Bernie Madoff

This story is also very unique like the Ponzi scheme. But this scandal was not done by ordinary people but by wealthy investors with the help of fund managers, who later suffered losses. To be an impressive con, Madoff posted fictitious returns to his hedge funds. Rumours have it that he was investing in blue chip shares. Later he got engaged in portfolio hedging which he bought on the S&P 500. Check Bhp 100 billion dollars class action lawsuit.

He generated steady returns which meant he had a steady flow of capital in them.there were few investors who never withdrew their money therefore giving him the right to go on with the illusion for a long time. In 2008 it came out clear that charade is finally going to collapse. Bernie’s own son reported him to the SEC. investors lost 64 billion dollars, the funny thing is the money never excited. Madoff was sentenced to 150 years in prison.


The Enron scandal is the most popular of Wall Street’s financial scandals.  Enron was a high-flying energy service company and had a reputation in the stock market in the 1990s. When the collapse time came shareholders had to let go of 74 billion dollars. The CEO, Jeff Skilling as well as the CFO, Andrew Fastow, made use of a n array of accounting practices to escalate revenues and hide his debts. The healthy appearance had made Enron raise more capital.

Most of the frauds were from the year 1998 to 2001, which resulted in the stock price trading as 90.56 dollars. Dutoing this situation the CEO Ken Lay gave Skilling higher authority, with which he used to manipulate the company’s accounts. The company later could exaggerate values and revenues to change market-to-prices policy. The fraud got accelerated when Skilling took the CEO chair form Lay and made it his own.

Wrapping It All Up

Here you go with top fraud cases that have affected the world economy. We have named those fraud cases which are famous and the media has covered their news on demand.

Con artists are also artists, and they just do it the way you are doing your work right.

They are legends as well.