Sep 2015 | Financial Crime | Fraud detection | Fraud Prevention
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The fight against fraud is an on-going battle, but it is not one faced exclusively by our generation. For as long as currency has existed, so has fraud.
Here we list 5 of the most remarkable instances in the history of fraud.
300 B.C – The earliest recorded attempt
To chart the history of fraud, you have to start in the year 300 BC. Hegestratos, a Greek sea merchant, took out an insurance policy against his ship and its cargo, the policy was known then as a bottomry. The merchant borrows money on the basis then when the ship arrives at its destination and the cargo, in this case, corn, is delivered, the loan is paid back with interest. If the loan is not repaid, the boat and its cargo or goods to the value of its cargo, are repossessed. However, in what is possibly the earliest recorded attempt of first party fraud, Hegestratos planned to sink his empty ship, shell the corn and keep the loan. Although ultimately, his plan backfired. After being caught in the act of sinking his ship by his crew, Hegestratos was chased off the ship and drowned trying to escape them.
193 A.D – The year of the five emperors
Jump forward around 500 years and we arrive in the Roman Empire. The Praetorian Guard – a special group of soldiers supposedly loyal to the emperor Pertinax – assassinated the afore mentioned emperor and held an auction to sell the Roman Empire to the highest bidder. That man was Julianus, with an astronomical bid of 250 pieces of gold for every soldier in the army, the equivalent of around £1billion today. The guards had sold something that wasn’t theirs, effectively amounting tofinancial fraud. Julianus was never recognised as emperor and was quickly deposed, leading to a period of civil war in the empire and a period of time known as the year of the five emperors.
1821 – The imaginary prince
Gregor Mcgregor was a Scottish General in the army. He could boast some legitimate and impressive war achievements, but what he also boasted was the fact that he had conquered a small island and became it’s “Cazique” or Prince. The land in question was called Poyais and was completely made up. He promised to build lavish homes for his investors and on the promise of a life in paradise, people flocked to him, with many buying houses that didn’t exist and some even exchanging their Sterling for his own fabricated currency.
1911 – Louvre at first sight
In 1911, Argentinian Eduardo de Valfierno paid an anonymous Lourve employee to steal the world’s most famous painting, Leonardo Da Vinci’s MonaLisa. Eduardo had no use for the real painting and never wanted it.He just needed people to know it was missing to be able to sell his fakesto underground collectors, and it worked.
1920 – Ponzi
There have been countless Ponzi schemes over the years and the original happened in 1920. American Charles Ponzi discovered he could purchasepostal vouchers in his home country, ship them abroad and make a modest 5% profit. He somewhat over exaggerated his margin when selling to investors, promising a 50% profit return. Investors threw their money at him, with early investors paid back with the money from more recent ones. When he was finally found out, he had made $10million dollars and had fled the country.
