Great frauds in history: Jean-Pierre van Rossem's money-making machine

Jean-Pierre van Rossem told investors he had a supercomputer able to make money by predicting market movements. He didn't.

Jean-Pierre Van Rossem © Gie Knaeps/Getty Images
© Getty
(Image credit: Jean-Pierre Van Rossem © Gie Knaeps/Getty Images)

Belgian Jean-Pierre van Rossem (born 1945) was a star economics student at the University of Ghent, making money on the side writing other students’ dissertations. He became a Marxist, then won a scholarship to study under Lawrence Klein, a Nobel Prize-winner who pioneered the use of computers to predict market fluctuations. Van Rossem later started his own company in the US, but went bankrupt financing a heroin habit and served time for fraud.

What was the scam?

Upon release he returned to Europe, later claiming he intended to join the Baader-Meinhof gang of far-left militants, but running off instead with the wife of a rich industrialist (“I decided to punish capitalism by taking his wife”). To finance her shopping habit, as he put it, he then set up in business as a stockmarket guru, founding MoneyTron, an investment firm that had a supercomputer able to predict market movements.

Where did he get that?

It’s a mystery as nobody ever got to see the machine, which was kept behind a locked door. Van Rossem still attracted large sums from wealthy investors, including members of the Belgian royal family, by the simple expedient of appearing to be wealthy and successful. By 1989 he claimed the firm was managing $7bn in assets. In reality, he was running a Ponzi scheme, taking money from new investors to pay older ones and bankroll his own extravagant lifestyle. At one point he owned the Formula 1 racing team Onyx, a $4m yacht, two aircraft and 108 Ferraris.

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What happened next?

Van Rossem’s empire collapsed in 1990 after a $50m cheque to a French businessman bounced. He was later convicted of fraud and sentenced to five years in jail. “The good news is that there will be one capitalist less in the world, the bad news is that he is me,” he said. Parliamentary immunity delayed his sentence until 1995, however: he was elected to parliament as a libertarian dedicated to making everyone rich and abolishing marriage and the monarchy.

Lessons for investors

As Van Rossem himself said: “If you show a million returns to millionaires, they no longer ask questions.” Swindlers down the ages have known this truth. Be sceptical.

Dr Matthew Partridge

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