Great frauds in history... John Factor’s penny-stock scams

John Factor sold worthless penny stocks through a boiler room operation, ramping the price via his financial newsletters. But he was never held to account.

Fraudster John Factor © Francis Miller/The LIFE Picture Collection via Getty Images
(Image credit: © Francis Miller/The LIFE Picture Collection via Getty Images)

John Factor (born Iakov Faktorowicz) claimed to have been born in Hull in 1892 (although his family stated that he was born in Lodz in Poland four years earlier). In 1904, he emigrated to the United States with his family, and grew up in St Louis and then New York. Initially Factor worked as a barber before becoming involved with organised crime, meeting the mobster Arnold Rothstein. Although indicted multiple times for stock and land fraud for various schemes in the United States, he was never charged. By 1923 was living in a 14-room flat.

How did the scam work?

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri