Investors Lose $1 Billion In Rare Book Ponzi Scheme
Lhéritier founded a company called Aristophil, which was focused on buying rare books and other rare documents. The rare documents accrued by the company was vast, including manuscripts of memoirs from survivors of the Titanic to a hand-written speech written by President John F. Kennedy. At one point it is estimated that the company owned about 5% of all rare books and rare documents that were on sale. The collection had 136,000 pieces.
The Ponzi scheme was initiated once Aristophil started getting over inflated appraisals of the bought items. The company would buy a document at one price and get it appraised at a much higher value. Afterwards, Aristophil would offer investors the opportunity to own a piece of these manuscripts, much like stocks in a company. The number of stocks per manuscript and the value of the stocks themselves were based on the inflated appraisal of the document. It is estimated that 18,000 individuals invested a total of $1 billion.
Aristophil mislead investors by implying that there would be a 40% return on every dollar invested into a document. However, when the entire collection is sold off, it is expected that investors will receive only 10 cents on the dollar for their investments.