Ponzi Schemes: The Stats
Recently, Ponzitracker.com compiled an extensive collection of statistics from Ponzi schemes during the six-year period from 2008 to 2013, and the results were staggering. For instance:
- Bernie Madoff’s scam was merely one of more than 500 Ponzi schemes of $1 million or more that collectively involved over $50 billion.
- Put another way, a Ponzi scheme was uncovered, on average, once every four days from 2008 to 2013. This included schemes from nearly every U.S. state — only eight states did not record a “hit” on our database.
- The $50 billion in Ponzi schemes uncovered from 2008 to 2013 would rank in the top 75 countries in the world in terms of gross domestic product. This equates to roughly $6.3 billion per year of investor wealth lost to Ponzi schemes — or nearly the annual GDP of Africa’s Republic of Niger.
- Of the roughly 510 schemes represented in the database, the average Ponzi scheme size was $98.3 million, while the median scheme size was $10 million. Even when excluding the three largest Ponzi schemes, the average scheme size was still $43.3 million.
- Five of these schemes have raised at least $1 billion from investors, and Bernie Madoff’s scheme is recognized as the worst Ponzi scheme in history.
Also interesting: The correlation of Ponzi schemes uncovered to the financial crisis is arguably strong. As the economy deteriorated, efforts by investors to withdraw money from their once-trusted financial advisers combined with the decrease in new investors collapsed many of the schemes.
Finally, the toll on the criminal justice system is also noteworthy. Perhaps unsurprisingly, the overwhelming majority of Ponzi scheme perpetrators were males — over 90%, to be exact. At least 385 of the perpetrators were sent to prison, with a total of nearly 5,000 years of cumulative prison sentences handed down.
Perhaps fittingly, Madoff’s 150-year sentence ranks as the longest Ponzi prison sentence.