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Great frauds in history: Horatio Bottomley
Horatio Bottomley – twice elected to Parliament and once considered for a cabinet post – was also a swindler and an embezzler.
Born in 1860, Horatio Bottomley lost both his parents by 1865 and spent five years in an orphanage in Birmingham. He became an office boy in a firm of solicitors, and by the age of 23 was a partner in a transcription firm. Over a career spanning four decades he would find fame (and notoriety) as a company promoter and proprietor of the ultra-nationalistic magazine John Bull. Despite several bankruptcies, his skills as an orator saw him elected to Parliament twice and he was considered for a cabinet post.
What was the scam?
Bottomley was involved in several failed companies, and narrowly escaped being convicted of fraud at trials in both 1893 and 1908. The swindle that finally brought him down involved the Victory Bonds Club, which was set up in 1919. Bottomley claimed that for a minimum investment of £1 (compared with £5 for the underlying bonds), subscribers would get the chance to win prizes from a lottery funded by the interest payments. Bottomley used the money in a bid to rebuild his media empire, as well as to fund an extravagant lifestyle.
What happened next?
Bad investments, poor administration, and the high level of expenses meant that the club could only survive if it could find new investors (turning it into a de-facto Ponzi scheme). Unfortunately for Bottomley, investors started to lose confidence in the scheme, pulling their money out. In 1921 Reuben Bigland, Bottomley's former business partner, published a pamphlet attacking him and the club. After Bottomley lost a libel case against Bigland, he was arrested by the police, convicted of embezzling £170,000, expelled from Parliament, and served five years in prison.
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Some club members who withdrew their money ended up being overpaid due to slipshod records, but those who stuck with the scheme only received back a fraction of their original investment. Always be sceptical about charismatic or charming company owners or fund managers. Bottomley was adept at getting people he had conned to invest additional money in other schemes in the promise that this would help them recover their losses never a good
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
