4 – Gregor MacGregor – The Fake Prince
Long before Nigerian ‘princes’ were conning people out of money in email scams, Gregor MacGregor was busy making cash by pretending to rule a non-existent country. That’s right; this audacious con man invented a fake country to swindle money from gullible fools. During his career, MacGregor made over £1.3 million from various frauds (equivalent to £3.6 billion today) with his fake country con netting him approximately £200,000 in the early 19th century.
MacGregor was born in Scotland in 1786 and served in the British Army from 1803 to 1810. He then fought in the Venezuelan War of Independence in 1812 before returning to Britain in 1821. Upon his return, he found a financial climate that was ideal for any self-respecting conman. Wages were rising, living costs were declining, and British investors were seeking something more lucrative and exciting than government debt.
The ambitious Scotsman appeared to answer their prayers when he arrived on the scene in 1822 and claimed he was the prince of a land called ‘Poyais’ that was located along the Black River in Honduras. He said the country consisted of approximately 8 million acres of fertile land (larger than the whole of Wales), but he needed development to take advantage of the immense natural resources. After an aggressive advertising campaign, MacGregor persuaded investors to part with their savings in the bonds of a country that did not exist.
He offered investors a Poyais Bond for £200,000 and claimed they would receive a return on investment of 6%, a similar rate offered by real countries such as Peru and Chile. Although Poyais had no record of collecting taxes, MacGregor claimed his country had so many natural resources that export tax revenue would comfortably cover any interest payments on the debt. He was incredibly confident in his conning abilities because MacGregor was interviewed in national newspapers and he even wrote a book about Poyais under an assumed name.
Had investors bothered to look closely at MacGregor’s claims, they would have spotted a number of flaws in his tale. He said the natives were friendly and loved the British; the soil could produce three maize harvests a year, the water was clean, fresh and abundant and there were chunks of gold in the country’s streams. In other words, it was Utopia and too good to be true.
Eventually, MacGregor filled a total of seven ships; two ships containing 250 passengers set out before the rest in September 1822 and January 1823 respectively. Various concerns over the legitimacy of Latin American governments caused shares in Poyais to plummet within months, and the settlers soon learned that they were sold a lie. The thing is, MacGregor did have 8 million acres of land; it was signed over to him by the leader of the Mosquito people in 1820 in exchange for rum and jewelry. The problem was, the land was uninhabitable, and while it looked nice, it was unable to sustain any cultivation.
When the settlers arrived, they found a location with no roads, port or town. The natives were not hostile but did not provide any assistance, and the travelers had to stay and settle because their journey was one way. A ship arrived several months later, and the settlers gratefully hitched a ride to Belize, but two-thirds of them died from fever, malaria or malnutrition. Word was sent to the other five ships to ensure they turned back.
News of the Poyais scam reached London in October 1823 and MacGregor fled to France. He somehow managed to convince another 60 people to invest in Poyais but the Parisian authorities wanted proof of the nation’s existence, and after an official investigation, MacGregor was arrested and imprisoned. Although he managed to get out, his Poyais scam had unraveled and when investors tracked him down in Edinburgh in 1838, he fled to Venezuela, where he died in 1845.