Find out how these Wall Street high-rollers landed themselves in hot water

Fact checked by Suzanne Kvilhaug
Reviewed by Samantha Silberstein

Over the years, Wall Street has had its share of scandals, many of which left despair and loss in their wakes. These include everything from insider trading to fraud that cost investors millions of dollars. To fully understand the impact these crooked individuals had on financial history, we must examine the people themselves, what they did and the legacy their misdeeds left behind.

While no two are alike, what these fraudsters share is the lasting effects of their crimes, which are still felt by Main Street many years later. This article will examine five of the most famous and unscrupulous Wall Streeters: Michael de Guzman, Richard Whitney, Ivan Boesky, Michael Milken, and Bernard Ebbers.

Key Takeaways

• The financial world has more than its share of high-profile criminals, some of them defrauding billions from retail investors.
• Michael Milken used junk bonds to finance mergers and leveraged buyouts.
• Richard Whitney was the president of the New York Stock Exchange and embezzled money from several funds under his control.
• Bernard Ebbers, CEO of WorldCom, famously used accounting fraud to finance mergers and acquisitions.
• Michael de Guzman committed fraud and Ivan Boesky was deemed a market manipulator.

The Canadian Miner: Michael de Guzman

Many believe Michael de Guzman was the perpetrator of the famous Bre-X debacle. Bre-X is a Canadian company, but de Guzman was Filipino. As the company’s chief geologist, de Guzman had access to core samples retrieved from a mine in Indonesia.

When the gold deposit numbers came in a little below average, de Guzman helped contribute to the biggest mining fraud in modern history by faking the samples to indicate a massive gold find. As time went on, the estimates were increased to as much as 200 million ounces. To get a handle on this number, the U.S. Treasury Department has about 250 million ounces of gold in its reserves.

This fraud was accomplished by inserting gold into the samples to make it look like there was much more gold in the Indonesian mine than there was. As a result, the 30-cent penny stock quickly climbed to as high as CAN $250 (adjusted for splits). For investors, this meant that a $200 investment would have ballooned to over $166,000.

However, independent geologists were suspicious of the mine’s supposed riches, and the Indonesian government started moving in. De Guzman eventually jumped to his death from a helicopter. Bre-X stock plummeted, costing its investors $3 billion.

The Unlucky Gambler: Richard Whitney

He was the president of the New York Stock Exchange (NYSE) from 1930 to 1935. On Oct. 24, 1929 (Black Thursday), acting as an agent for a pool of bankers, he bought shares in many companies, creating a dramatic turnaround in the market. This caused him to be falsely hailed as a hero to the market, but the inflated stocks inevitably crashed five days later.

Whitney was an unlucky gambler who played penny stocks and blue-chip stocks aggressively. To cover his losses, he would borrow money from friends, relatives, and business acquaintances. This allowed him to buy even more stock in a market that was collapsing, which made his problems even worse.

Despite his losses, he continued to live a lavish lifestyle. When he could no longer borrow any more money, he began to embezzle it from his customers as well as from an organization that helped widows and orphans. His fraud became more perverse when he looted the NYSE’s Gratuity Fund, which was supposed to pay $20,000 to each member’s estate upon death.

The crime was discovered through an audit and he was charged with two counts of embezzlement and sentenced to five to 10 years in prison. As a result of his misdeeds, the newly formed Securities and Exchange Commission (SEC) set caps on how much debt firms can have and separated customer accounts from the property of brokerage companies.

Important

To prevent financial fraud, the SEC has strict rules on how companies may handle client assets in their custody.

The Market Manipulator: Ivan Boesky

His career on Wall Street began in 1966 as a stock analyst. In 1975, he started an arbitrage firm, and by the 1980s, his net worth was estimated to be in the hundreds of millions. Boesky looked for companies that were takeover targets. He would then buy a stake in those companies on speculation that news of a takeover was going to be announced, then sell the shares after the announcement for a profit.

Throughout the 1980s, corporate mergers and takeovers were enormously popular. According to a 1986, article in Time Magazine, there were almost 3,000 mergers worth $130 billion in that year alone.

Boesky’s alarming success in this strategy was not all instinct: Before the deals were announced, the prices of the stocks would rise as a result of someone acting on inside information that a takeover or leveraged buyout (LBO) was going to be announced. This is a sign of illegal insider trading, and Boesky’s involvement in this illegal activity was discovered in 1986 when Maxxam Group offered to purchase Pacific Lumber. Three days before the deal was announced, Boesky had purchased 10,000 shares.

Boesky was charged with stock manipulation based on inside information on Nov. 14, 1986. He agreed to pay a $100 million fine and serve time in prison. He was also banned from trading stock professionally for life. He cooperated with the SEC, taping his conversations with junk bond firms and takeover artists. This led to both investment bank Drexel Burnham Lambert and its highest-profile executive, Michael Milken, being charged with securities fraud.

As a result of Boesky’s actions, Congress passed the Insider Trading Act of 1988. The act increased penalties for insider trading, provided cash rewards to whistle-blowers, and allowed individuals to sue for damages caused by insider trading violations.

The Junk Bond King: Michael Milken

In the 1980s, Michael Milken was known as the junk bond king. A junk bond (also called a high-yield bond) is nothing more than a debt investment in a corporation that has a high probability of default but provides a high rate of return if it does pay the money back. If you wanted to raise money through these bonds, Milken was the person to call. He used them to finance mergers and acquisitions (M&As) as well as LBOs for corporate raiders. Despite their reputation, junk bonds may reduce risk in your portfolio.

But what he was doing was nothing more than creating a complex pyramid scheme. When one company would default, he would then refinance some more debt. Both Milken and Drexel Burnham Lambert would continue to make their fees as a result of this behavior. The company made at least half of its profits from the work of Milken.

Milken also started purchasing stock in companies that he knew would become potential takeover targets. Boesky, when charged with insider trading in 1986, helped implicate both the firm and Milken in several insider trading scandals. This led to criminal charges against the firm and nearly a hundred charges against Milken, who pleaded guilty, was sentenced to 10 years in prison, and paid $600 million in fines.

It is argued that the savings and loan crisis (S&L) in the late 1980s and early 1990s occurred because so many institutions held large amounts of Milken junk bonds. After he was released from prison, Milken focused his attention on his foundation, which supports cancer research.

Note

Although he was sentenced to ten years in prison, Milken only served two years. He was later pardoned by President Donald Trump in 2020.

The Financial Statement Fraudster: Bernard Ebbers

Bernard “Bernie” Ebbers was the chief executive officer (CEO) of a long-distance telecommunications company called WorldCom. In less than two decades, he took the company to a position of dominance in the telecommunications industry, but shortly thereafter, in 2002, the company filed for the largest bankruptcy in U.S. history.

Under Ebbers’ leadership, the company made 70 acquisitions, the largest of which was MCI in 1997. All of these acquisitions created problems for the company because it was difficult to integrate the old company with each new one. The acquisitions also threw massive amounts of debt on the company’s balance sheet. To keep earnings growing, the company would write off millions of dollars in losses it acquired in the current quarter and then move smaller losses going forward to create the perception that the company was making more money than it was. This gave WorldCom the ability to take small charges against its earnings every year and spread the large losses over the decades.

This scheme worked until the U.S. Justice Department denied the company’s acquisition of Sprint in 2000, fearing that the combined companies would dominate the nation’s telecommunications industry. This forced WorldCom to make the previous mergers work for them and meant that it would only be a matter of time before all the losses that they were taking from other acquisitions would affect the company’s growth.

When WorldCom filed for bankruptcy, it admitted that it inappropriately booked the losses from its acquisitions from 1999 to 2002. Ebbers also took personal loans from the company. He resigned as CEO in April 2002 and was later convicted of fraud, conspiracy, and filing false documents with the SEC. He was sentenced to 25 years in prison.

Ebbers’ legacy led to tighter reporting standards with the creation of the Sarbanes-Oxley Act of 2002, as well as the forbidding of personal loans to company officers and stiffer penalties for financial crimes.

What Was the Original Ponzi Scheme?

Charles Ponzi was an Italian swindler who is now famous for the financial fraud that bears his name. The original scheme used postage coupons, which were cheaper in other countries than in the United States. By buying coupons abroad, Ponzi could make a profit by selling them in the United States.
However, that’s not what made him famous. Rather than simply arbitraging the postage coupons, Ponzi found an even faster way to make money: he would attract investors with promises of outlandish profits, while actually using their money to repay old investors. The scheme worked until he ran out of gullible investors, and Ponzi was ultimately convicted of mail fraud.

What Was the Crime in Wolf of Wall Street?

Jordan Belfort, the stockbroker depicted in The Wolf of Wall Street, ran a boiler room to pump the value of penny stocks. Belfort’s traders would pressure unsophisticated retail traders to buy shares of companies that Belfort owned, thereby artificially inflating the stock prices and allowing Belfort to sell his shares at a high profit.

What Was the Crime in Wall Street?

The main financial crime in the original Wall Street (1987) was insider trading. Gordon Gekko (Michael Douglas) is depicted as an unscrupulous corporate raider, and Bud Fox (Charlie Sheen) is a novice stockbroker. In order to gain an edge for Gekko’s stock trades, Bud Fox spies on the executives of other companies to gain inside information. Because it is illegal to trade on inside information, this attracts the interest of the SEC, which arrests Fox at the conclusion of the movie.

The Bottom Line

Since Wall Street’s earliest days, there have been criminals who have tried to disguise themselves as honest business people. Many of these crooks rose quickly to power only to have a hard crash landing in the end. This was exactly the case with Michael de Guzman, Ivan Boesky, Michael Milken, Bernard Ebbers, and Richard Whitney. What their examples show is that in spite of regulations, people will still try to find ways around the laws or simply disregard them for one purpose: greed at all costs.

Reviewed by Thomas J. Catalano
Fact checked by Michael Rosenston

Patagonia, a manufacturer of upscale outdoor clothing, is known for its various environmental sustainability efforts. The privately held company has been known to promote used wear and ask consumers to think twice before buying its products.

In spite of what looks like an anti-marketing effort, the company has seen its revenues grow in the face of a challenging environment for traditional retailers and is valued at about $3 billion. How has Patagonia managed to pull this off?

Key Takeaways

• Patagonia is an apparel retailer known for its upscale outdoor clothing and various environmental sustainability efforts.
• The company continues to grow by offering products that are designed to last.
• Patagonia announced in 2017 that it would give merchandise credits for used apparel.
• The company has been active on the environmental and political fronts, which resonates well with Patagonia’s loyal customer base.

‘Don’t Buy This Jacket’

With consumers becoming more frugal during the Great Recession and its aftermath, they were less inclined to buy on impulse and tended to shop more for value. Consumers were becoming more interested in goods that lasted long, and Patagonia saw an opportunity there to tout its own long-lasting wares.

The marketing strategy led to the company’s running an advertisement during the 2011 Thanksgiving season that read “Don’t Buy This Jacket.” The advertisement talked about the cost to the environment of one of the company’s best-selling fleece jackets, asked consumers to reconsider before buying the product, and instead, opt for a used Patagonia product. In spite of this, or because of this, the company saw its revenues grow about 30% to $543 million in 2012, followed by another 5% growth in 2013. By 2017, the company reached $1 billion in sales.

Walking the Walk

What resonates with Patagonia customers is that the company doesn’t just talk the environmental talk. Patagonia founder Yvon Chouinard, an accomplished rock climber, also backs up the company’s talk with its actions. The company donates a portion of its revenue to environmental causes and uses recycled, “Fair Trade” certified, and organic material in its clothing. It also uses solar energy at its company headquarters in Ventura, California, and is one of the founders of the Sustainable Apparel Coalition, a group of companies that has promised to reduce its environmental footprint.

Patagonia has also engaged in initiatives such as sending out an environmentally friendly truck on a trip across the country, in a bid to help consumers repair their outdoor gear and sell used Patagonia wares to them. Moreover, as a way to promote used Patagonia wear, the company has invested in Yerdle, a startup that aims to cut down on people’s purchases of new products. And another Patagonia advertising campaign in 2013 warned against the sort of development that used up the planet’s resources.

In 2017, the company said that certain Patagonia merchandise that is in good condition could be returned for credits. The used merchandise is cleaned, repaired, and sold on Patagonia’s “Worn Wear” website.

The company was active on the political front in 2017 as well. It organized a boycott of the Outdoor Retailer trade show in Salt Lake City after Utah passed a bill to cancel the Bears Ears National Monument. Later, Patagonia also sued the U.S. government and then-President Donald Trump in 2017 regarding proclamations to significantly reduce the size of the Grand Staircase-Escalante National Monument and reduce the size of the Bears Ears National Monument by 85%. Trump’s successor, Joe Biden, restored the original boundaries as president in 2021. Trump returned to office in 2025 and has not yet indicated whether he will reduce the monuments’ size again.

In 2022, Chouinard announced that he was donating Patagonia to fight climate change. He transferred 100% of Patagonia’s voting stock to the Patagonia Purpose Trust, “created to protect the company’s values.” Meanwhile, 100% of its nonvoting stock was moved to the Holdfast Collective, a nonprofit “dedicated to fighting the environmental crisis and defending nature.” About $100 million in annual profits are expected to go to this cause.

Resonates with Target Audience

It seems that the company’s message has resonated with the sort of environmentally conscious and upscale consumers that Patagonia sees as its target audience. These sorts of consumers like the idea of buying a product that is made by an environmentally friendly company in an environmentally friendly manner.

Beyond lasting a long time, the products can also be recycled for further use. As the company has tapped into more consumers in this target market, it has managed to expand its sales. And the company’s consumers could also have taken advantage of its efforts to facilitate the sale of used products and have used the money to buy new Patagonia products.

Of course, others who were not so environmentally conscious just bought the company’s products because they became trendy. Those customers tend to be less interested in recycling, used clothing, and the company’s environmental initiatives.

Note

In 2018, Patagonia donated $10 million that it received from then-President Trump’s 2017 tax cuts to groups committed to protecting the environment and finding solutions to the climate crisis.

As a result of its successful marketing and quality products, Patagonia has achieved a high degree of success with over 70 stores worldwide. The company also launched an environmentally friendly food business.

What Is Patagonia?

Patagonia is a privately held American outdoor apparel company known for its high-quality clothing and gear, with a strong focus on environmental sustainability and activism.

What Is a Target Market?

A target market is a group of people that have been identified as the most likely potential customers for a product because of their shared characteristics, such as age, income, and lifestyle. Patagonia’s target market is environmentally conscious and upscale consumers who like the idea of buying a product that is made by an environmentally friendly company in an environmentally friendly manner.

What Is the Status of Patagonia’s Monuments Lawsuit?

Patagonia sued the U.S. government and then-President Donald Trump in 2017 regarding proclamations to significantly reduce the size of the Grand Staircase-Escalante National Monument and reduce the size of the Bears Ears National Monument by 85%. For administrative purposes, a U.S. district court consolidated Patagonia’s lawsuit with four other lawsuits about the two monuments.

Joe Biden, who succeeded Trump as president, restored the original boundaries in 2021. In light of Biden’s action, the consolidated lawsuit was stayed (or paused) by a federal district court and remains in that status as of this writing.

Voters again elected Trump president in 2024, and it is not yet known in 2025 whether he will reduce the monuments’ size again now that he is back in office.

The Bottom Line

Even as Patagonia has led an effort to expand the useful life of its products, an effort that is at odds with the planned obsolescence approach of many manufacturers today, it has seen its sales rise. It seems the company’s environmentally friendly efforts have resonated with the sort of consumer it targets. More of these people are buying Patagonia products as they see the company’s long-lasting wares as a way to express their values.

Advertising and data licensing are the major sources of revenue

Fact checked by Kirsten Rohrs Schmitt
Reviewed by Margaret James

X (formerly Twitter), the social media company founded in 2006, is now ubiquitous via its posts—formerly called tweets—on the internet and all forms of media. It’s best known for news-breaking tweets from politicians and celebrities, but it provides a platform for millions of users to publish their thoughts, interact, share content, and read breaking news.

The platform itself is free to use for individuals and businesses alike, though many of the features that enhance user experiences (such as editing posts and user verification) are now locked behind a X Premium subscription with prices starting at $3 a month up to $32 a year.

X Premium (formerly Twitter Blue and X Blue) first launched in 2021 as a subscription service, offering enhanced features like undoing a tweet and saving bookmarks to folders. X owner Elon Musk relaunched the program in November 2022 and introduced major changes like a blue checkmark in the features for paying users.

Once a user has created an account, they can post messages of up to 280 characters and up to 2,400 times per day, which are automatically distributed to followers in a feed that is constantly refreshed.

X parent, X Corp. (formerly Twitter Inc.), divides its revenue into three categories: the sale of advertising services, the sale of data licensing and other services, and the Premium subscription. Although X has lost nearly half of its advertising revenue since Musk’s takeover, it still constitutes the vast majority of the company’s revenue.

X’s major competitors include other social media companies like Facebook parent Meta Platforms Inc. (META), Google and YouTube parent Alphabet Inc. (GOOG), Snap Inc. (SNAP), and others.

Key Takeaways

• X is a social media company providing a platform for users to interact in real time.
• On April 25, 2022, Twitter reported it would be acquired and taken private by Elon Musk in a $44-billion acquisition. After a rocky period, including Musk stating that he would no longer buy the company, the deal was completed on Oct. 27, 2022.
• Parent company Twitter Inc. changed its name to X Corp., with the social media platform continuing to be called Twitter for a while, until it also changed its name to X in July 2023.
• X generated $3.4 billion revenue in 2023, a 22% decline year-on-year.
• The company generated the vast majority of its revenue (75%) through advertising services in 2023.
• X generated $11 million via X Blue (now X Premium) in its first three months since it was relaunched in December 2022.

X’s Industry

Twitter Inc. was initially a social media company based in San Francisco, California. It operated the social networking service Twitter and previously the Vine app and Periscope livestreaming service. In 2023, Twitter Inc. ceased to be an independent company after merging with a newly formed shell firm called X Corp.

Instagram, TikTok, YouTube, Facebook, and WhatsApp are also leaders in the social media industry with monthly active users ranging from 3.03 billion (Facebook) to 1.59 billion (TikTok).

According to Grand View Research, the social networking app market was valued at $49.09 billion in 2022 and is expected to grow at a compound annual growth rate of 26.2% from 2023 to 2030. Key factors that are driving the social networking app market growth include the rising demand for 5G technology, the surge in adoption of personalized feed-based apps, and the growing demand for encrypted and self-destructive messaging-based social apps.

X operates worldwide as a microblogging service through a platform for putting out content in a fast way. X solved the problem of Facebook posts and popular blogs that provide articles that can be too long to read.

Note

As of 2025, X has an estimated 206 million monthly active users worldwide.

X’s Financials

X generated $3.4 billion revenue in 2023, a 22% decline from 2022 ($4.4 billion).

Revenue was expected to decrease in 2023 due to a loss of advertising, and in fact, the company has lost almost half of its advertising revenue since Musk’s acquisition in October 2022. Many global advertisers left the company after changes to X’s service and content moderation rules. Agency executives who have worked with X said their clients continued to limit spending on the platform due to “inconsistent support from Twitter and concerns about the persistent presence of misleading and toxic content.”

Musk declared that the company hasn’t seen yet an increase in sales and confirmed cash flow remains negative and the company is struggling with heavy debt. Still, X generates the majority of its revenue through advertising (75%, or $2.5 billion in 2023). It also generated about $900 million from data licensing (about 26% of total revenue) in 2023.

The loss of advertising demand has fueled the need to find alternative revenue streams and rebuild the company’s revenue model. X Premium is part of this strategy: a subscription service that allows users to access premium features and benefits on the app and that is available for $11 per month (or the local equivalent and $114.99 a year) on iOS and Android, and $8 ($84 a year) on the web.

X Premium was originally called X Blue, and it made just $11 million on mobile in its first three months since it was relaunched on Nov. 4, 2022. Although the $11 million seems small when compared to the two other revenue streams, this figure doesn’t cover web-based subscriptions. It’s still uncertain how this revenue stream will evolve, in part because the $11 million figure doesn’t specify how much comes from monthly subscriptions vs. annual subscriptions.

X’s History, Leadership, and Developments

Important

In July 2023, Twitter officially changed its name to X. The rebrand was yet another step in the transformation of the social media company, which changed the blue bird icon to the new black and white X logo. X debuted the new logo on its desktop version, and a sign reflecting the company’s new name appeared on its San Francisco headquarters.

Twitter was created by former Odeo employees Jack Dorsey, Noah Glass, Evan Williams, and Biz Stone, and publicly launched in July 2006. Originally, the site used SMS to send tweets onto the network and its defining features were the tight limits placed on each post or “tweet” (140 characters, doubled to 280 in 2017).

On April 25, 2022, Twitter announced that Elon Musk, founder and chief executive officer (CEO) of Tesla Inc., would acquire the company for $44 billion. Upon closing, the company would become privately held with all shareholders receiving $54.20 in cash for each share of the company owned.

The road to sealing the deal was rocky, but Musk completed his acquisition of Twitter on Oct. 27, 2022. Musk acted as CEO of Twitter until he stepped down in June 2023 and was replaced by Linda Yaccarino, who previously was the chair of advertising sales for NBCUniversal.

Soon, Musk began making changes to the company and introduced a series of reforms and management changes, raising concerns about the company’s ability to maintain its platform. Its workforce was drastically reduced by laying off half of the employees on Nov. 4, 2022, in order to cut costs (a measure taken to compensate for the drop in the company’s revenue). In total, about 80% of X’s staff has been laid off since Musk took over the company, or more than 6,000 people. As of 2023, the social media platform has only 1,500 employees, down from under 8,000 who were employed at the time of the acquisition.

On Nov. 20, 2022, Musk also reinstated Donald Trump’s account (the then-former U.S. president was banned from the platform for inciting violence at the Capitol riots in 2021), causing advertisers to pull off due to what was seen as relaxed content moderation policies. More than half of Twitter’s top 1,000 advertisers in September 2022 (including major brands such as Coca-Cola, Unilever, Jeep, and Wells Fargo) were no longer spending on the platform as of January 2023.

(Musk’s ties to Trump grew closer in 2024, with the X owner donating to and campaigning for Trump’s election. After Trump was elected president in November 2024, he tapped Musk and Vivek Ramaswamy to head what he called the Department of Government Efficiency (DOGE) to focus on regulating government spending. Following Trump’s inauguration on Jan. 20, 2025, he signed an executive order officially creating DOGE.)

Also in December 2022, the Twitter Blue (now X Premium) subscription service was relaunched as a way to generate revenue. In 2023, Twitter Inc. ceased to be an independent company after merging with a newly formed shell X Corp., a privately owned company operating within the X Holding Co.

What Is the Financial Status of X?

On July 15, 2023, Elon Musk declared in a post that his company is having a negative cash flow due to a “50% drop in advertising revenue plus heavy debt load.” Eighteen months later, on Jan. 24, 2025, Musk said “user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”

What Is X Premium?

X Premium is a paid subscription service intended to “elevate quality conversations on the platform.” The additional features designed to improve user experience and promote higher quality allow users to expand their reach, see fewer ads, and customize their experience on the platform.

X Premium has two different costs: If you purchase it in your web browser, it costs $8/month or $84/year. If you sign up through the iOS or Android app, X Premium costs $11/month or $114.99/year.

Which Social Media Generates the Most Revenue?

Facebook and Instagram (both owned by Meta Platforms) generate the most revenue. Combined, they are responsible for around half of all revenue generated by social networking apps. As of Q3 2024, Facebook generated $22.44 billion, and Instagram $16.64 billion.

The Bottom Line

X generated $3.4 billion revenue in 2023, a 22% decline on 2022 figures. Revenue was expected to be worse in 2023 due to a loss of advertising revenue. Still, 75% of X’s revenue came from advertising in 2023. X Premium, a paid subscription service, was launched as a way to generate non-advertising-based revenue, but the question of how much subscriptions will bring remains uncertain.