Epic Fraud: From Sam Bankman-Fried To Bernie Madoff, 10 Billionaires Who Took The World By Storm

Rise and Disgraceful Fall Of These Billionaires

While factors like economic downturns and bad investments have led to the fall of the rich, massive frauds have been the end of several billionaires. The recent FTX fraud is still being uncovered, with new details emerging every day. Only a few billionaires have had it as bad as the FTX leader Sam Bankman-Fried in the past two decades. Here’s a look at 10 billionaires who fell from the top due to colossal frauds.

1. Nirav Modi

Nirav Modi was a famous Indian jeweler whose high-priced pieces were worn by celebrities, including Kate Winslet, Dakota Johnson and Priyanka Chopra-Jonas. Modi was accused of defrauding the state-owned Punjab National Bank of $1.8 billion. He fled India in 2018 before the scandal broke and was arrested a couple of years later in London. While Indian authorities are still trying to recover their money by seizing and selling his assets, he is currently in the Wandsworth Prison in southwest London fighting his extradition to India, per Forbes.

2. Elizabeth Holmes

Theranos co-founder Elizabeth Holmes claimed that her company had developed a device that could perform blood testing by using just a drop or two of blood from a person’s fingertip. However, her claims turned out to be false as several federal agencies investigated the company. It was found that Theranos had fooled the investors and they were far from developing such a device. In 2018, Holmes was indicted for wire fraud and was later convicted on four charges of defrauding investors in January 2022. She was sentenced to over 11 years in prison while her ex-boyfriend and former president and chief operating officer of Theranos Ramesh “Sunny” Balwani was found guilty and sentenced to 13 years in prison, as per BBC.

3. John Kapoor

John Kapoor was the founder, CEO, and chairman of Insys Therapeutics, an opioid manufacturer. Kapoor was arrested and charged with conspiring to bribe doctors to prescribe the company’s products. It was found that Kapoor paid bribes to get his company’s fentanyl spray ‘Subsys’, designed to ease cancer-related pain, prescribed to patients who didn’t need it. Following his arrest, Insys declared bankruptcy and shut down its operations. Kapoor received a five-and-a-half year prison sentence in 2020 after he was found guilty of a racketeering conspiracy along with four other Insys executives. Kapoor is due to be released in August 2024, as per the Federal Bureau of Prisons, Forbes reported.

4. Eike Batista

Brazilian oil and gas entrepreneur Eike Batista was worth an estimated $30 billion in 2012, as per Forbes. Batista, founder of the EBX Group, operated several publicly traded energy companies in Brazil. However, as the companies failed to meet production and financial targets, his energy empire began to crumble. Later, it was discovered that his flagship oil company OGX had vastly overstated its oil reserves and after defaulting on a $45 billion bond payment in 2013, the company filed for bankruptcy. Batista was sentenced to 30 years in prison in 2018 for bribing former Governor of Rio De Janeiro, $16.5 million in exchange for state contracts.

5. Vijay Mallya

Vijay Mallya, also known as the "King of Good Times”, ran United Spirits, one of India’s largest liquor firms. He also ventured into the aviation space in 2005 with the now-defunct Kingfisher Airlines. As per Forbes, Mallya took over $1 billion from various Indian banks to keep his struggling Kingfisher Airlines afloat. While Mallya continued to throw extravagant parties, Kingfisher Airlines struggled to survive with pilots and cabin staff going unpaid for months. Eventually, the company became insolvent and shut down in 2012. Mallya defaulted on the loans and fled to the UK in 2016. Amid a legal battle for his extradition, Mallya was declared bankrupt by a British court.

6. Allen Stanford

Allen Stanford, who founded the Stanford Financial Group, ran a Ponzi scheme that stands toe to toe to that of Bernie Madoff. The former billionaire sold fraudulent high-yielding certificates of deposit through his Stanford International Bank and then used the funds for dubious investments and to fund his lavish lifestyle, as per prosecutors, Forbes reported. He was sentenced to 110 years in prison, and he is currently in a high-security prison in Coleman, Florida. While the scam was worth much more, only $1 billion has been recovered to return to defrauded investors, as per Forbes.

7. Rishi Shah

Entrepreneur and founder of healthcare media start-up Outcome Health, Rishi Shah’s descent was striking and rapid. His company raised $600 million at a $5.6 billion valuation in 2017. However, within two years of entering the billionaire ranks, Shah and two top executives of the company were charged with fraud for allegedly stealing about $1 billion from clients, lenders, and investors. It was found that the company had misrepresented the company’s financial performance and the success of its products. The three accused were charged in 2019, and in 2023, a federal jury convicted them with counts carrying up to 30 years in prison, as per the Department of Justice.

8. Bernie Madoff

Bernie Madoff pulled off the biggest ponzi scheme in history and was sentenced to 150 years in prison. His ponzi scheme ran over 17 years and was worth $65 billion, as per CNBC. He defrauded high-profile investors by convining them to invest in the scheme through his firm Penny Stock Brokerage. Madoff confessed the whole matter to two of his sons who revealed the story to the FBI. Madoff was arrested and punished with forfeiture of $170 billion and sentenced to 150 years in prison. While some amount was recovered to pay the investors back, many of his investors ended up killing themselves.

9. Sam Bankman-Fried

Sam Bankman-Fried has been hogging the headlines the last couple of years for his rise and rapid fall. The young founder and former CEO of cryptocurrency exchange FTX went from being one of the 50 richest people to becoming the face of the biggest crypto collapse in history. When it was found that FTX’s sister company Alameda Research’s assets worth $ 5.8 billion were tied to FTX’s native token FTT, investors frantically withdrew funds from the exchange leading to its collapse. Later, Alameda Research was accused of using $10 billion of customer funds from FTX to make bets, in an illegal move. Bankman-Fried also admitted to trading using FTX customer assets. As per Forbes, his estimated fortune went from $17 billion to less than $1 billion in days. Both Alameda Research, FTX, and FTX US filed for bankruptcy as Bankman-Fried stepped down as CEO. He is currently under trial facing seven federal charges, including wire fraud, money laundering and securities fraud, as per Reuters.

10. Ramalinga Raju

The former chairman and CEO of Satyam Computers, Ramalinga Raju, admitted to embezzlement and fraud, which led to the collapse of the company in 2015. Back in the '90s, Satyam Computers was a highly successful IT firm in India. Raju in his confession admitted to an accounting fraud of over Rs 7,000 crore or $1.5 billion and resigned from the Satyam board on January 7, 2009, as per the Economic Times. He admitted to falsifying revenues, and margins and reporting a cash holding of approximately $1.04 billion that simply did not exist, as per SCIRP.org. In 2015, Raju and a few others were found guilty and sentenced to seven years in jail and ordered to pay a fine.