Historically famous cons have two things in common: a significant number of duped individuals and a significant amount of financial damage, all from a false origin. The 1820s and 30s saw one of the greatest cons of all time from a Scottish Jack of all trades named Gregor MacGregor. Though the scheme barely broke 1 million British pounds in financial damage, MacGregor was successful in fabricating an entire country, an endeavor that incurred human fatalities.
Gregor MacGregor had many positions during his lifetime, from soldier to land speculator, but none was so famous as his role as cacique (a native chief or leader) of Poyais, a country MacGregor claimed to exist in Central America near the Panama Canal. Upon returning from his military duties in the early 1820s, MacGregor claimed that he had been named the leader of Poyais, a land rich with fertile crops, gold, and an amiable indigenous people.
MacGregor’s fake country was attractive to investors because the location and composition appeared to be ideal for colonization and trade. MacGregor hyperbolized his military achievements to set himself up as a worthy leader of the fictitious country and started selling bonds, loans, and land rights that equaled almost an entire month’s salary for the middle class. He opened up offices in Britain with political staff and distributed publications by non-existent authors that described the bountiful (and equally non-existent) land of Poyais. Macgregor even printed fake Poyais currency and exchanged it for British money.
Two years after the inception of Poyais, settlers who were promised land made the journey to Central America where MacGregor claimed the country existed. All they found were ruins and jungle and indifferent natives who were nothing like the helpful citizens that MacGregor described. These settlers used the resources they brought with them, and by the time they were extracted to Belize, two-third of them had died from disease, destruction, and suicide. Surprisingly, many of the settlers stood up for MacGregor, electing to blame his publishers for their misfortune.
MacGregor continued his scheme in France, where his con finally caught up with him, at least in the respect that people started to acknowledge that is was a con. As officials looked to prosecute those in line with the Poyais scheme, they found MacGregor in hiding and brought him to trial. Yet again, he escaped consequence and was acquitted of all charges. MacGregor attempted to capitalize on the “existence” of Poyais for almost two decades, but investors eventually died out and MacGregor moved to Venezuela where he died after gaining a military pension.
MacGregor’s wildly successful scheme (in the sheer numbers of people who believed him alone and their willingness to finance a country of which there was no evidence) provides a sound warning to investors that is still applicable today: ideal investments (and the individuals behind them) should undergo strict examination. Otherwise, the fallout from a good con is likely to supersede the financial realm.