Great frauds in history: John Sadleir

John Sadleir’s multiple deceptions destroyed the Tipperary Joint Stock Bank, ruining its shareholders and forcing many into bankruptcy.

John Sadleir, the son of a wealthy Irish farmer, was born in 1813, followed by his brother James two years later. John initially pursued a legal career, but the brothers went on to set up the Tipperary Joint Stock Bank in 1846, which was run by James. The brothers were also politically active John entered parliament in 1847; James in 1852. John was a leading figure in the Independent Irish Party, which pledged not to serve in office. He was elected and accepted a place in a coalition government from 1852 through 1854. His decision to hold office despite being elected on a pledge not to caused outrage.

What was the scam?

The Tipperary Joint Stock Bank was successful in the beginning, but John's greed started to get the better of him and he began stealing from customers to fund private speculation in land, railway shares and later in the commodity markets. To fund his losses, which eventually totalled £1.5m (£137m in today's money), he mortgaged his property to multiple creditors, including a £247,000 (£22.7m) overdraft with the Tipperary Joint Stock Bank, which also guaranteed many of his other loans. He also began selling forged shares in the Royal Swedish Railway Company, which he was a director of, as well as arranging for the Tipperary Joint Stock Bank to issue additional shares to English investors using a fraudulent balance sheet.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

What happened next?

By the start of 1856, the credibility of both Sadleir's empire and the Tipperary Joint Stock Bank were crumbling. With creditors demanding repayment, and newspapers publishing allegations of forgery, John committed suicide on Hampstead Heath on 17 February 1856. Although he left a letter absolving his brother of any blame, it quickly became obvious that James had been fully aware of what had been going on, and he decided to flee the country, spending the rest of his life in exile in Switzerland. He died in 1881.

Lessons for investors

John Sadleir's multiple deceptions eventually destroyed the Tipperary Joint Stock Bank, which quickly folded with liabilities of more than £380,000 (£32.8m) in excess of its assets. Because limited liability had not then been widely introduced, the bank's shareholders, including the 70 English shareholders who had bought shares based on the fraudulent accounts, not only lost their money, but were also liable for the bank's debt. Many were either ruined or forced into bankruptcy. Generally, the lesson to take home is that it's not a good idea to buy into a bank when the largest creditor is the brother of the managing director.



Investment strategy

Income investors beware: dividends are set for the chop

The rush of firms suspending payouts is a reminder why solid income portfolios need more than high yields.
3 Apr 2020
Investment strategy

Dividend yield

The dividend per share (total dividends paid out divided by total number of shares) expressed as a percentage is referred to as the dividend yield.
3 Apr 2020

Has the stockmarket hit rock bottom yet?

The world's stockmarkets continue on their wild and disorientating rollercoaster ride. Investors are still gripped by fear. So, asks John Stepek, have…
2 Apr 2020
Investment strategy

Great frauds in history: Jack Clark’s nursing homes

Jack Clark invented sales, inflated profits and produced fraudulent accounts at his chain of nursing homes to swindle investors out of hundreds of mil…
31 Mar 2020

Most Popular


Three things matter for the UK housing market now – and “location” isn’t one of them

The UK housing market is frozen. And when it does eventually thaw out, the traditional factors that drive prices will no longer apply. The day of reck…
1 Apr 2020

What does the coronavirus crisis mean for UK house prices?

With the whole country in lockdown, the UK property market is closed for business. John Stepek looks at what that means for UK house prices, housebuil…
27 Mar 2020

Oil shoots higher – have we seen the bottom for the big oil companies?

Just a few days ago everyone was worried about negative oil prices. Now, the market has turned upwards. John Stepek explains what’s behind the rise an…
3 Apr 2020
UK Economy

How the coronavirus pandemic is killing cash

Covid-19 is making a huge difference to the way we live, work and do business. One of its less obvious effects, says Merryn Somerset Webb, is to accel…
31 Mar 2020