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October 20, 2021 - Eduardo Guraieb

Infamous Fraud Cases and Their Implications for Modern Fraud Experts

When it comes to fraud prevention, many finance companies focus on the here and now: what are criminals currently doing to misappropriate funds, misrepresent financial activities, or exploit businesses for gains? 

While we often think of fraud as being a modern crime, acts of fraud have been occurring for thousands of years. As fraud has continued to mount, so have our fraud detection and defenses to combat it. Though the tactics have shifted, we can learn a lot about the motives behind fraud simply by looking at historical fraud trends.

Here’s a closer look at a few infamous fraud cases and some insights about why, for as long as money exists, we will continue to contend with fraudsters.

300 BC: The First Known Act of Fraud

The first documented case of fraud dates all the way to 300 BC, when the Greek sea merchant Hegestratos attempted to commit insurance fraud. Hegestratos took out an early form of an insurance policy on his ship and his cargo with the intention of sinking the ship, hiding the cargo, and collecting on the money. His crew caught him in the act and Hegestratos drowned trying to escape.

It was true then and it still is now: Bad actors will always look for ways to unduly exploit new financial products and services. From the dawn of insurance in ancient Greece to the forefront of fintech in 2021, finance professionals have had to stay a step ahead of fraudsters seeking to game the system.

1920: The Birth of Ponzi Schemes

The term “Ponzi scheme” is a popular buzzword in modern fraud, but the practice dates back to at least 100 years ago. It’s an unsustainable investment fraud scheme where earlier investors are paid with funds from more recent investors until funds run dry and the scheme bottoms out. 

In 1920, Charles Ponzi structured the first Ponzi scheme when he found he could purchase postal vouchers in his home country and sell them abroad to make a 5% profit. However, he promised investors a 50% ROI to generate immediate and massive interest in his scheme and relied on continuously incoming funds to pay his early investors. By the time investors caught on, Ponzi had collected $10 million and left the country.

It was true then and it still is now: Once criminals come up with fraud tactics, the latter become very hard to eradicate and tend to far outlive their creators. Even while Ponzi schemes have been known for many many decades, authorities all over the world still spend a lot of resources persecuting criminals who, with a few tweaks at most, continue to use the same modi operandi

1995: The Roselli Brothers Casino Scams

In what is certainly not the first identity fraud scam, but perhaps is one of the most lucrative and well-planned ones, two men made many millions of dollars at the expense of casinos and were never caught. 

Between 1995 and 2000, two subjects who called themselves the Roselli Brothers acquired stolen identities belonging to people with perfect credit scores and used them to open credit lines at different casinos in the US. First, they deposited large amounts of money (at least $50k according to some sources) at the casinos. Then, they waited for several months to build credibility for their accounts and only after that did they withdraw their funds. When they did so, they also requested big loans that the casinos granted thinking that they would be used to gamble like many others requested by their “high profile” clientele. The brothers would then vanish leaving no trace.

After five years and thousands of loans that exceeded a million dollars each at the end of their criminal spree, the two men disappeared and were never seen again nor tried for their crimes. To nobody’s surprise, it was later revealed that their last name wasn’t even Roselli to begin with. 

It was true then and it still is now: Fraud knows no industry limits. Banks and insurance companies are far from the only targets and essentially every business out there needs to be on the lookout for scam attempts. What’s worse, common unsuspecting people, like the owners of the identities stolen by the Roselli Brothers, are often the most affected by financial crime. 

Did this make you curious about fraud trends? We can show you the other side of the coin in this report about how fraud is committed in 2021.


Photo of Eduardo Guraieb
about Eduardo Guraieb
Eduardo is a Product Marketing Manager at DataVisor with experience working with fintech startups and top-tier international financial institutions. Eduardo is passionate about marketing, financial inclusion, coffee, and bicycles. He holds a law degree from the Technological Institute of Mexico (ITAM) and an MBA from Berkeley Haas.
Photo of Eduardo Guraieb
about Eduardo Guraieb
Eduardo is a Product Marketing Manager at DataVisor with experience working with fintech startups and top-tier international financial institutions. Eduardo is passionate about marketing, financial inclusion, coffee, and bicycles. He holds a law degree from the Technological Institute of Mexico (ITAM) and an MBA from Berkeley Haas.