Engraving of Mosquito Oast in the alleged territory of Poyais. Image from Wikipedia, public domain.

If you thought corruption scandals belonged to contemporary criminals and governments, this story is for you. Around the 1820s, Scottish General Gregor MacGregor, an army officer who served with distinction in the Venezuelan War of Independence, started calling himself the cacique of Poyais, a fake Central American country of his own invention that he used to conduct fraudulent business, including selling lands to other Scotsmen.

This is the summary of his big con, as told by the blog El hombre lobo (The Wolf Man):

MacGregor era un militar condecorado en los ejércitos Ingleses, Portugués y Venezolano. Tras varias acciones militares, llegó a una zona de las costa Nicaragüense dominada por los indios Poyais, con los que firmó un acuerdo de “colonización” […y sobre la] base a los supuestos recursos naturales del Poyais, comenzó a emitir bonos que daban intereses del 6%, garantizados por el Reino de Poyais.

MacGregor was a decorated army officer in the British, Portuguese and Venezuelan armies. After several military actions, he arrived to an area on the Nicaraguan coast dominated by the Poyais indigenous people, with whom he signed a “colonization” agreement […and] based on the supposed natural resources from the Poyais, he started to issue bonds with interest rates of 6%, guaranteed by the Kingdom of Poyais.

The blog's author also explained the context of the time and why so many people fell for the deceit:

Hay que situarse en el momento histórico en el que estamos. Hablamos de 1822, donde las ex-colonias Españolas estaban apareciendo en el panorama mundial como nuevos países con enorme potencial, donde muchos países con increíbles recursos necesitaban dinero para financiar sus infraestructuras y donde los rendimientos que ofrecían eran mucho mayores que los ofrecidos en Europa.

We have to place ourselves in that moment in history. It's 1822 we are talking about, when the former Spanish colonies were making their debut on the world stage as new countries with huge potential, when many countries with amazing resources needed money in order to fund their infrastructures and when the promised profits were way higher than what was offered in Europe.

Honduran news site El Heraldo picks up the story from there:

Alleged location of Poyais in Central America. Image from Wikipedia, edits by the author. Public domain.

En septiembre de 1822 un curioso fenómeno ocurría en el puerto de Londres: el barco Honduras Packet levaba anclas con 70 colonos, incluyendo doctores, abogados y un banquero, rumbo al Reino de Poyais […].
Pero cuando arribaron a la costa atlántica de Honduras lo que hallaron fue una selva inhóspita que ofrecía más enfermedades que oro, al reverso de cómo les había prometido Gregor McGregor, un timador brillante autotitulado cacique de Poyais y a quien el “rey” misquito Frederik Augustus le había cedido en 1820 inmensas áreas de tierra (12 500 millas cuadradas) para que fundara allí un vasto Estado monárquico que al fin acabó siendo la mayor estafa internacional del siglo XIX. De los 240 colonos llegados a Poyais murió la mitad, otros volvieron a Londres o radicaron en Belice.

In September 1822, something curious took place in the port of London: the ship Honduras Packet raised anchor with 70 would-be settlers, including doctors, lawyers and a banker, and headed to the Kingdom of Poyais […].

But when they arrived to the Atlantic coast of Honduras, what they found was an inhospitable jungle that offered more illnesses than gold, the very opposite of what Gregor McGregor [sic] had promised them. The brilliant swindler had declared himself the cacique of Poyais, after the Miskito “king” Frederik Augustus in 1820 had handed over to him immense swathes of land (12,500 square miles) so he could establish there a huge monarchical state, what actually ended up being the biggest international scam of the 19th century. Of the 240 settlers that arrived to Poyais, half of them died, others went back to London or settled down in Belize.

Studies and observation of the victims: Keys of a big business

Coat of arms of the Poyais. Image from Wikipedia. Public domain.

MacGregor's promises, such as that the natives were friendly, the land was incredibly fertile, and gold was abundant, seemed too good to be true, but he still managed to fool seasoned army officers, doctors and a banker. How did he manage it? The Economist magazine tried to find an answer:

Research from Tamar Frankel at Boston University might give some insight:

Frankel studied hundreds of financial cons, looking for recurring patterns. One set that pops up time and time again describes the traits of the victims. They tend to be excessively trusting, have a high risk tolerance, and—especially the more educated victims—have a need to feel exclusive, or part of a special group. […] Some feel envious of their economic neighbours, which can lead to greedy, risky investing.

The country invented by MacGregor had even its own legal currency. With this useless banknote, deals were closed, and those who wanted to find fortune on the other side of the ocean paid for it with British money.

Bank of Poyais one dollar banknote, used by McGregor for transactions in exchange for British currency. Image taken from Wikipedia. Public domain.

Almost two centuries later, people from around the globe still talk about Poyais. Media outlets now and then revisit the story.

@bbcmundo
Gregor MacGregor, “príncipe de Poyais”: héroe de la independencia y estafador https://t.co/2atA3SF8gs https://t.co/ytLWZIW4qM

— vivian murcia (@vivimur83) 8 de febrero de 2016

Gregor MacGregor, “prince of Poyais”: hero of the independence and conman.

History's most audacious scam #Poyais #Scam #Scotlandhttps://t.co/5wAPLUNaDe pic.twitter.com/zs3YHmOWc5

— Imran Ahsan Mirza (@imranahsanmirza) 2 de febrero de 2016

Some Web users evevn make connections between MacGregor and the present, such as this tweet about “JOH”, or Juan Orlando Hernández, incumbent president of Honduras:

Poyais debe ser la Honduras que JOH  anda vendiendo… seguro es descendiente de ese farsante escocés…. https://t.co/VEiZHEwrgU

— RMA (@galileo_rm) 15 de febrero de 2016

Poyais must be the Honduras that JOH goes on selling… for sure, he descends from that deceitful Scotsman.

MacGregor managed to escape punishment for his deception. He passed away in Caracas on 4 December 1845, and was buried with full military honours in Caracas Cathedral.