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The 5 Most Notorious Financial Scams in Recent US History

Losses due to scams in the US reached an epic level in 2023, crossing $10 billion. But this includes only the reported incidents. What goes unspoken of could add up to much more than the latest estimates. US history is marred by some of the biggest financial scams ever seen in the world. The impact of these has been felt by millions of people, sometimes years after the incident.

The 5 Most Notorious Financial Scams in Recent US History

So, which financial scandals created some of the biggest headlines?

1. FTX

FTX was a thriving cryptocurrency exchange that started to see cracks in its seemingly perfect facade following a damning 2022 news story published by CoinDesk.

The report led to customers pulling out their money from the exchange, which eventually resulted in FTX declaring bankruptcy. However, further investigations shed light on massive-scale frauds, money laundering activities, and accounting malpractices, which also involved Alameda Research, a sister company of FTX.

In the end, Sam Bankman-Fried, the company’s CEO, was sentenced to 25 years in prison and ordered to pay back $11 billion. The entire scandal shocked many crypto enthusiasts and served as a case study of the often unseen risks of digital currency trading.

2. Enron

This infamous scam is still talked about, not just in the US but across the world. Enron was an energy and commodities business that became the focus of countless legal suits for fraudulent reporting practices that inflated accounts.

It all started to unravel in 2001 when the SEC launched an investigation into the once-thriving company, at least on the books. The probing exposed the scale of the fraud that has been ongoing for several years, deceiving investors, creditors, and other stakeholders.

Enron’s senior executives were arrested and convicted on multiple accounts of wire and securities fraud, conspiracy, insider trading, and bank fraud, among other charges.

3. Bernie Madoff

When it comes to Ponzi schemes, there is no better case than the Bernie Madoff scandal to illustrate the elaborate nature of financial fraud and the risks involved. Madoff, a former chairman of Nasdaq, was a financier who commanded the respect of Wall Street. However, for years, his investment firm had defrauded investors out of billions of dollars, promising lucrative returns for their money.

What turned out to be one of the biggest Ponzi schemes in US history only came to light when Madoff confessed his doings to his sons in 2008. The following year, he was slapped with a 150-year prison sentence and a $170 billion forfeiture for the crimes he committed.

4. Theranos

This headline-grabbing investment scam began to unfold in 2015 following media speculation on some of the company’s questionable practices.

Founded by Elizabeth Holmes, Theranos was a health tech startup that achieved a $10 billion valuation for its revolutionizing blood-testing technology. But… further probes revealed its technology was a sham and that Theranos and its senior executives had been misleading investors, business partners, and customers.

5. Wells Fargo

Wells Fargo found itself at the center of media attention and public disapproval when it was fined $185 million for deceptive cross-selling practices in 2016. News about how the company had opened savings and checking accounts and issued credit cards and insurance policies without customer approval took the media by storm, shattering Wells Fargo’s credibility.

Authorities were alerted to these deceptive acts by employees as well as customers who encountered sudden fees and charges for services they never requested.

Investigations found that during 2011 and 2016, Wells Fargo had opened 1,534,280 deposit accounts and 565,433 credit card accounts without its customers’ knowledge or consent. Researchers estimate that the total numbers are much more and likely surpass 3.5 million.

Is It Possible to Avoid Financial Fraud?

The simplest answer is yes, at least in most cases. Certain measures can help minimize your exposure to financial fraud and prevent criminals from targeting you for their swindles. Here are our top tips for protecting yourself against prevalent deceptive schemes.

Remain Alert

If you pay close attention, the red flags of fraud are often hard to miss. For instance, you could easily identify an imposter email by cross-checking its address with the ones used by the relevant individual or organization. Excessive typos and grammatical errors atypical of a reputed business are another giveaway.

Avoid Hasty Decisions

Taking the time to assess all details is critical for evading any type of trouble, financial fraud or otherwise. Remember, a false sense of urgency is a common trick scammers use to prevent their victims from making informed decisions. For example, they could provide a limited window for you to decide on an investment opportunity.

Even if you are presented with a legitimate offer, it is important to take your time to verify information in such instances instead of caving to pressure tactics or following fads. You can ensure you are dealing with a credible organization or individual by researching them online. If they have provided you with an email address or contact number, reverse search it to learn more about them.

Keep Track of Your Finances

Review your bank statements regularly. If you notice discrepancies, immediately raise it with your financial service provider. Checking your credit report can also help you identify unusual activities, such as new accounts opened and loans obtained. In addition, keep your financial documents locked away in a safe. When you need to dispose of them, use a shredder first to destroy identifiable information.

Strengthen Digital Security

Nowadays, financial scams encountered in cyberspace are relatively common.

Therefore,

  • Secure your online accounts, files, and devices with unique passwords. Also, apply multi-factor authentication and biometric identifiers.
  • Use malware protection to detect and prevent malicious codes that could threaten your financial data.
  • Keep all your software up-to-date by enabling automatic updates.
  • Use a VPN when connecting to the internet.
  • Prevent websites and browsers from collecting data by deleting cookies and your search history. Turning off the auto-suggest feature is also important.

Summing Up

When looking at some of the notorious financial scams America has witnessed, one thing becomes clear—it is not just regular people who fall for fraud. Even experienced and well-connected investors could easily lose their money thanks to the deceitful practices of a few. So, taking adequate measures to identify and avoid fraudulent schemes is critical for safeguarding your wealth.

If you ever encounter a financial scam, no matter its scale, ensure you report it without keeping silent. Notify the FTC and the local law enforcement officials, and inform the relevant financial institutions to mitigate the damage.

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