5 biggest scams in history

five biggest scams in history

The internet has paved the way for well-known scams such as the “Nigerian prince” or the “wealthy widow benefactor,” as well as the recently trending Venmo and PayPal scams, and dating-app crypto scams. But people looking for creative methods of fraud had been a staple of society well before computers were even a thing.

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Here are our five favorite historical scam stories around the world:

5. The Baker Estate scam

This scam, which took place over 70 years before coming to an end in 1936, involved 28 swindlers who convinced people all across America that a wealthy individual named Jacob Baker of Philadelphia had died, leaving his estate behind with no heirs.

The fraudsters contacted people named Baker, saying that they represented the estate and would stake a claim to the property in exchange for a small fee. Approximately 3,000 people responded to the mail, handing over nearly 3 million USD to the scammers.

The cheats were eventually caught, charged, and found guilty in a court of law.

4. Charles Ponzi, whose scheme inspired countless others

Charles Ponzi, the creator of the original pyramid scheme, was born in Italy and first arrived in Boston in 1903, bearing 2.50 USD to his name. His initial hustles were restricted to forging checks and assisting illegal migrants, serving a five-year term in U.S. prison for his troubles.

In 1920, Ponzi discovered arbitrage in the form of international postal reply coupons, each worth 5 cents. Coupons purchased in Spain at a pre-set exchange rate could be redeemed for a nickel back in the U.S., and the falling value of the peso meant there was an opportunity to make money.

He did just that, first recruiting people from the poorer economies in Europe to send him postage coupons, which he then sold in the U.S. for a profit.

But Ponzi wasn’t satisfied with simply fleecing the government. He had grander ambitions and started to recruit ordinary people, promising them anywhere between 50% to 100% returns on their investment. Thousands of people were attracted by Ponzi’s claims and entrusted him with their money. Ponzi used the incoming cash flow from new investors to pay off old ones, and many people simply reinvested their returns with him anyway.

These kinds of outsized returns started to attract scrutiny, and an investigation by The Boston Post revealed that the business was a scam. It was ascertained that Ponzi had swiped up to 20 million USD from investors, which earned him another jail sentence.

He was later deported back to Italy.

3. William Thompson: The original con man

William Thompson lived in the mid-19th century in New York City and was likely the first person to become widely known as a “confidence man”—a type of fraudster that became hugely popular in the buzzing metropolises of the late industrial revolution.

As a con man, Thompson would exploit the naivete of people he met in the streets, bars, or events with a type of social engineering scheme dubbed a “confidence trick.”

Thompson would walk up to people in a friendly way, greet them and give the impression the two had met before. After gaining the trust of a stranger, Thompson would simply ask:

“Have you confidence in me to trust me with your watch until tomorrow?”

Unbelievably, this worked. Thompson managed to repeat the trick on various people before authorities caught up with him.

Somehow, the “you can trust me, give me your watch” trick became so popular it inspired a whole generation of confidence artists. One woman, Bertha Heyman, even continued to find victims while locked up in jail. Bertha’s scheme was more elaborate than Thompson’s and quite similar to today’s “419 Fraud” (aka the Nigerian letter scam). Heyman would claim to have lost access to her enormous fortune, and needed a bit of financial help to get it back.

William Thompson’s exploits as a “confidence man” eventually led to the term “con man”, or a swindler who sweet talks their way into robbing people.

2. Victor Lustig tried to sell the Eiffel Tower, twice

The Eiffel Tower was constructed for the 1889 World’s Fair, coinciding with the 100-year anniversary of the French Revolution. At the time, it was the tallest structure built by humans and kept that title for 41 years (until the Chrysler Building in New York surpassed it).

In 1925, when Victor Lustig was 35 years old, he learned how expensive the tower had become to maintain. He subsequently came up with the idea to sell the Eiffel Tower to a scrap metal dealer.

Lustig presumably found the most gullible scrap metal dealer in France to give a quote and even managed to have a sizable bribe added in. He got away with it, too; the scrap metal dealer was so ashamed of being tricked that he didn’t go to the police.

After the scam, Lustig moved to Vienna in a train with suitcases full of cash. He considered the fraud so successful that he moved back to Paris the next month to do it again with a different scrap metal dealer. Although he did not succeed a second time, he was still able to evade arrest.

In the United States, George C. Parker carried out a similar con around the same time when he sold the Brooklyn Bridge. Several times. “Buyers” attempted to set up toll booths, which had to be removed by police.

In India, a man named Natwarlal became famous for having sold the Taj Mahal, the Red Fort, and the Parliament House.

1. Alves dos Reis printed himself real money

Alves dos Reis was born in Lisbon in 1896. And when he was 28 years old he printed himself so much money that he caused an economic crisis that led to a nationalist military coup d’etat.

Reis forged a contract with the Bank of Portugal that authorized him to print a new set of banknotes and approached the company that previously printed Bank of Portugal notes, Waterlow and Sons, to make all the new cash.

As the printers used legit, original plates to print the banknotes, the forgeries were perfect.

Reis had 200,000 bank notes printed, worth almost 1% of Portugal’s entire GDP, comparable to publishing about 2 billion USD in currency today. At one point, nearly half of the 500 escudos notes were fake.

In fact, Reis had so much money, the businesses, real estate, and luxury goods he bought created a boom in the economy.

Reis used a bank he acquired in Angola, a Portuguese colony at the time, to launder the money before, brilliantly, he attempted to buy himself a stake in the Bank of Portugal to retroactively approve his unauthorized notes.

Eventually, Reis was found out by journalists of O Século, a newspaper owned by tycoon Alfredo de Silva, who saw Reis as a competitor.

The extent of Reis’ conspiracy was so large that few believed it could have been carried out by a single person. The government and the courts suspected that not only corrupt employees of the National Bank could have helped Reis, but that he also had support from the German government in an attempt to take over control of Angola.

Reis received a 20-year prison sentence, of which he only served 15. He died of a heart attack in 1955.

Stay safe from scams

Fraudsters are out there—and online. Knowledge is power, so read up on some of the biggest scams right now and learn how to identify a scam:

What is a phishing attack?
Venmo, Cash App, and PayPal scams: How to stay safe
Here’s what Covid-19 vaccine scams look like
When catfish meets crypto scam on dating apps
Is that a crypto wallet app—or a scam?
New AI tech bodes ill for identity theft, scams, and propaganda

Lexie is the blog's resident tech expert and gets excited about empowerment through technology, space travel, and pancakes with blueberries.