Sadly, there are many examples of embezzlement on a huge scale, and often, it’s innocent customers or investors who lose out, even after the criminal is caught and prosecuted.
Embezzlement scams can run for years or even decades before being found and shut down, and the money that can be stolen over the timeframe can be enormous. When you hear about these crimes, it’s hard to understand how they ran for so long before being found out. Embezzlement scams can involve companies of any size, and many times, the criminal is one of the company heads. Here, we list 15 cases of embezzlement that shocked the world.
According to Cornell Law School, embezzlement is the fraudulent taking of personal property by someone to whom it was entrusted, and it’s most often associated with the misappropriation of funds.
Charles Ponzi
Almost everyone has heard the term Ponzi Scheme, and this was the first one. In 1920, Charles Ponzi started buying postal vouchers in one country and shipping them to another for a profit. It didn’t take long for him to bring in investors, promising a 50% return on their investment (which was paid for by new investors). When he was discovered, he fled the country, but it’s believed he embezzled about $10 million over the years.
Enron
Enron was an enormous company, the 7th largest in the world. But company executives, with ties to several political figures, embezzled the retirement funds of employees. They also faked energy crises and made many misrepresentations in their earnings reports. Unfortunately, the shareholders of Enron lost a whopping $74 billion.
The Girl Scouts Organization
You wouldn’t expect the Girl Scouts organization to be involved in any type of crime, and perhaps that’s why this one is so shocking. In fact, The Girl Scouts of America didn’t deal with one embezzlement case, it dealt with many. Former Girl Scout financial director Yaasmin Hooey embezzled about $310,000 from the organization. Channing Smack, a senior property manager, embezzled about $370,000, and there have been many cases of Girl Scout troop leaders, treasurers, and volunteers embezzling smaller amounts from their troops.
OSGold and OSOpps
OSGold was an online bank started by David Reed. All funds were supposed to be backed by gold bullion reserves stored in an off-shore location. At first, the company ran legitimately, but it wasn’t long before Reed started offering customers up to 45% returns on investments if they didn’t touch the funds for a year. He claimed the money was being traded on the foreign exchange, but in fact, he was using the money for his personal expenses. It’s claimed Reed embezzled almost $13 million before he was arrested.
Woodruff Arts Center
Ralph Clark, an employee of the community arts center, embezzled over $1.4 million from the Woodruff Arts Center by submitting false invoices. His wife created a fake cleaning company to help him with this criminal act.
Koss Inc
Sujata Sachdeva, an executive at the Koss Corporation, was well liked and trusted. Until the company found she’d embezzled over $30 million from them. Her crime was only discovered when an American Express flagged one of her credit cards.
First National Bank of Chicago
This is a case of near-embezzlement, as the FBI caught the criminals and filed charges quickly. Four employees of the First National Bank of Chicago were planning to transfer $70 million to dummy accounts. But, when Merrill Lynch discovered they were missing $20 million, they filed a report, and the FBI shut the scheme down.
NYC Laborers Sandhogs Union Local
NYC Sandhogs Local Union administrator Melissa King funded her luxurious lifestyle by stealing more than $42 million from union members’ retirement accounts. Before she was caught, King enjoyed private jets and expensive jewelry while her victims were left penniless.
Fry’s Electronics
Fry’s Electronics VP for merchandising, Omino Siddiqui, embezzled over $87 million from the company. He inflated commissions he received from vendors and offered kickbacks to steal the funds. Most of the money he stole paid for casino debts.
Tenens Corporation
COO of the Tenens Corporation stole $20 million from the company’s bank accounts and used the funds for personal purposes. He spent stolen funds on houses, cars, private jets and paying for mistresses.
Day-Lee Farms
CFO of Day-Lee Foods, Yasuyoshi Kato, embezzled a record-breaking $100 + million from his employer. He was the only employee with access to the company’s bank accounts and wrote small checks to himself for many years before being caught.
Stanford Financial Group
Allen Stanford, a leading financier and CEO of Stanford Financial Group, shocked the world when he was convicted of 13 counts of financial fraud. He embezzled over $7 billion through a Ponzi scheme that involved a bank in Antigua.
Bernie Madoff
Former chairman of the NASDAQ stock exchange and respected Wall Street financial advisor Bernie Madoff embezzled billions from his clients. He claimed he was making money with “split-strike conversion”, but in reality, he was running a Ponzi scheme and putting client funds into an account to pay other clients.
Peregrine Financial
CEO of Peregrine Financial, Russell Wasendorf, embezzled over $200 million in clients’ funds before being caught. He was convicted of embezzling customer funds, mail fraud and making false statements to the Commodity Futures Trading Commission. He said he stole money by taking it out of a segregated bank account, then leaving withdrawals and boosting balances on fake bank statements.
First Security Bank of Malta
VP of Operations Rhonda Lee embezzled nearly $4 million over 10 years by creating fraudulent credit cards and complex transactions. It was one of the largest bank fraud cases Montana has ever seen.
