Pioneering Fraudsters


Fraud: the art of the charlatan. It is the means through which the very best of thieves indicate their genius and a practice that goes back thousands of years. Here are the accounts of two of history’s memorable fraudsters.


Our history begins in ancient Greece, 300B.C. and a merchant named Hegestratos. A proud owner of his own insurance policy, regarded as the bottomry, Hegestratos made his money by receiving money or commodities off merchants and then paying it back with usury when the goods were delivered. The lender then held the right to take the boat and its goods in the advent of the loan not being paid back.

Hegestratos however, must have not been making as much money as he would have liked; as he soon attempted to boldly sink his own boat – without the corn inside of course – sell the corn and keep the loan.

His recompense was being caught and subsequently drowning in his attempt, however he still goes down in record books as the first historically recorded pioneer of fraud.


Some two thousand years later, the first insider trading scandal occurred in newly formed America. Now the American bonds system of the time was rather premature. They in fact fluctuated in worth in correlation to any piece of news concerning the issuing colonies. Therefore the knack of knowing which bonds were likely to increase or decrease in value was the key behind prospering in that market.

The secretary of the Treasury at the time, Alexander Hamilton, sought to replace outstanding bonds from different colonies with United States bonds from the national bank. This led major bond investors to seek information on which bonds were set to be exchanged by Hamilton.

The assistant secretary of the Treasury, Duer, saw the opportunity to make some serious money; through tipping off those in his inner circle on what Hamilton’s next moves were. On top of this, the clever Duer would also purposely work to control the movement of bond prices through leaking selective information to the public.

Duer borrowed heavily as a means of leveraging bond debts and continue to pile more of his and other investors’ money into the stock market. A superfluity of speculation however, turned things sour. Duer was left with too many debts to be able to pay back and a bunch of investments that were worth nothing.

He ended up in debt prison, where he died in 1799.


Nowadays, things are a lot less straightforward – one need just compare credit cards and the complexities behind protecting the system to understand this point.

Perhaps the protections behind all of our financial systems in order to prevent fraud are a consequence of technology and its capabilities. It is also likely that the successes and even failures of con artists such as Hegestratos and Duer that led to the more protective measures we’ve now introduced. If it was the latter, then the very best of fraudsters were pioneering teachers, exposing what was inherently wrong in our economic systems.

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