The Mastermind
He used to run NASDAQ, one of the biggest stock exchanges in America. He was one of the most trusted people on Wall Street. He promised investors steady returns of 10 to 12 percent every year, without ever losing money.
Bernie Madoff
Madoff ran two businesses in the same building. One was a real, legitimate trading company that helped give him his great reputation. The other was a secret fake division. What did the fake business actually do with the investors' money it received?
Nothing.
The money went into one bank account. Madoff used money from new investors to pay fake profits to older investors. He never bought any stocks at all. This is called a Ponzi scheme.
This government agency is the main watchdog for investments in the United States. They investigated Madoff four separate times over many years and never caught the fraud. After Madoff was arrested, they completely changed how they handle tips from the public.
The SEC — the Securities and Exchange Commission.
This was Bernie Madoff's prison sentence — the longest sentence allowed by law for his crimes.
150 years in federal prison. He died in prison in April 2021 at age 82.
She dropped out of college at 19 and started a medical company. She said her machine could run hundreds of blood tests from just one small drop of blood. Her company was valued at 9 billion dollars. The technology never worked.
Elizabeth Holmes — and her company was called Theranos.
Volkswagen's cars passed every government emissions test. But they behaved very differently when driving on real roads. What was the software that made this possible called, and what did it actually do?
It was called a defeat device.
The software detected when the car was being tested and switched to a clean mode. On actual roads, the cars produced up to 40 times the legal limit of harmful pollution.
A financial expert named Harry Markopolos proved mathematically that Madoff's investment returns were impossible. How many times did he warn the SEC that the math was inaccurate?
3 times - He warned the SEC in 1999, 2001, and 2005. The SEC ignored him all three times. He later testified to Congress about how badly the government failed to protect investors.
The Volkswagen defeat device was hidden in 11 million vehicles across more than 50 countries.. The total amount Volkswagen paid in fines and settlements worldwide was more than this dollar amount.
More than 33 billion dollars in total fines and settlements worldwide.
He sold tickets to a luxury music festival in the Bahamas for up to $12,000 each. He used Instagram posts from supermodels to advertise it. When people arrived, they found disaster relief tents and cheese sandwiches.
Billy McFarland — the festival was called Fyre Festival.
Fyre Festival promised three specific things that did not exist when ticket buyers arrived. Name any of the three things people were promised versus what they actually got.
Promised: luxury private island villas, gourmet meals, famous music acts performing live.
Got: FEMA disaster relief tents, prepackaged cheese sandwiches, most musicians cancelled. The event was shut down on Day 1.
Two federal agencies took action against Theranos before Elizabeth Holmes went to criminal court.
The CMS — Centers for Medicare and Medicaid Services — found the lab was an immediate danger to patients and took away its certification. Another said the blood-testing machine was not approved. Which agency said the blood testing machine was dangerous?
The FDA — the Food and Drug Administration — said the Edison machine was never approved as a medical device and required all testing to stop.
Theranos raised hundreds of millions from investors. Elizabeth Holmes was convicted and sentenced to prison. Holmes was sentenced to 11 years and 3 months in federal prison. What was the approximate amount investors actually lost.
Investors lost approximately $700 million to $900 million in real money.
These two people created a supplement company in Nevada. They sold protein shakes and gummies to parents, saying the products were clinically proven to help kids grow taller. The Federal Trade Commission charged them in April 2026.
Eden Stelmach and Justin Rapoport — their brand was TruHeight.
TruHeight used four different methods to make its products look trustworthy and popular. Name TWO of the four.
1. Made a false claim that the supplements were clinically proven to increase height, with no real science to back it up.
2. Had company employees write thousands of fake five-star reviews on the website.
3. Paid real customers to leave five-star reviews without telling them to disclose it.
4. Used automated fake social media accounts called bots to post positive comments.
Fyre Ticket buyers posted real photos and videos on social media the moment they arrived. The gap between the promotional images and the reality went viral in hours. Billy McFarland was arrested. What was he found guilty of.
He pleaded guilty to two counts of wire fraud.
TruHeight's case ended with two dollar amounts: The total judgment was $4 million. but there was a smaller amount the founders will actually pay. How much will the founders actually pay?
The founders will actually pay $750,000.
The rest is suspended because the founders showed they cannot afford to pay the full amount. If they are ever found to have lied about their finances, the full $4 million becomes due immediately.
This German car company programmed secret software into 11 million cars. The software made the cars behave cleanly during pollution tests, but on real roads the same cars put out up to 40 times more pollution than the law allowed.
Volkswagen — the CEO Martin Winterkorn resigned when the scandal broke.
Theranos's Edison machine did not work as advertised. But Elizabeth Holmes raised more than $700 million from investors anyway. Explain two specific ways Holmes kept investors from finding out the truth.
She refused to show anyone how the technology worked, calling it a trade secret.
Her board of directors had no doctors or scientists, so no one could evaluate the claims.
She falsely told investors the company made $100 million in revenue when the real number was around $100,000.
Volkswagen was not caught by government regulators doing their normal job. It was caught by researchers who did something different. Who caught them?
Researchers at West Virginia University tested the cars on real roads, not in a lab. They found a huge gap between the test results and real-world pollution.
The EPA — the Environmental Protection Agency — issued a formal notice of violation.
The DOJ — the Department of Justice — prosecuted Volkswagen criminally. VW pleaded guilty and paid a $4.3 billion criminal penalty.
In 2017, Billy McFarland's Fyre Festival was selling tickets between $500 and $12,000. After he was found guilty of fraud, how much was he ordered to pay back to his victims.
McFarland was ordered to pay back $26 million to his victims.