Return to blog

BIANCHI’S GHOST --- The Real Story of Mr. Ponzi

 
In the waning hours of the 19th century, a five-foot-two inch, 17-year old named Carlos Bianchi left his native Parma, Italy, arriving in the New World to change his name from Carlos to Charles and, a few years later, from Bianchi to Ponsi.

In 1907, as Charles Bianchi, he turned up in Montreal working as a clerk at the Banco Zarossi. Owned by a con man named Luigi Zarossi, the bank offered exceptionally high interest — actually double the going rate — to scam recent Italian immigrants to Canada. Because the bank’s investments couldn’t possibly earn enough to justify those rates, when Zarossi’s older clients wanted their money back, he paid them with whatever money came in from his newer clients. That made people think the bank was sound — which it wasn’t — just long enough for Zarossi to amass a large enough stake that he could live the good life as a fugitive in Mexico.

Robbing Peter to pay Paul was an old trick. One of the earliest sightings having been in 1899 in Brooklyn, when William “520 percent” Miller, kept anxious investors at arm’s length, offering 10% profits per week on insider-share dealings, then paying off the first investors with money from the latest investors. He and his cohorts accumulated $1.2 million before the scam collapsed and he was sentenced to 10 years.

Once Zarossi was gone, Bianchi found himself unemployed and needing money, so he helped himself to a former client’s blank check and forged the man’s signature. He hoped it would get him back to the States. Instead, it landed him in a Quebec jail for 20 months.

Released, and with no place to go, Bianchi heard that he could earn money helping to smuggle Italian immigrants into the US. He signed onto that scheme, got arrested by the American authorities and wound up doing two years in federal prison in Atlanta.

After bouncing around for the next several years, by 1919 he’d changed his name to Charles Ponsi — then altered the spelling to Ponzi — turned up in Boston, got married and looked around for a way to make a living. He failed in several businesses before he started working a petty scam selling ads for a proposed magazine.

He offered an ad deal to someone in Spain, who then wrote back that he wanted to see a copy of the magazine, and enclosed an international reply coupon.

Still in existence today in around 70 countries — including the US — international reply coupons are, if you will, the global answer to a self-addressed stamped envelope. Because the man in Spain couldn’t buy American stamps to pay for the return letter from Boston, he’d purchased one of these coupons from his local post office which Ponzi could then exchange at his local post office for postage to Europe.

Ever curious, Ponzi quickly discovered that these coupons were priced at fixed rates of exchange. But from his years working in the Canadian bank, he knew that actual currency rates fluctuated. The man in Spain had paid the equivalent of 1-cent for the coupon, for which Ponzi’s local post office was willing to hand him a 6-cent stamp.

Today, we call what he did, arbitrage.

“I wrote to parties in Italy, France and Spain,” he later said, “enclosing a dollar in each letter and told them to buy as many coupons as they could. It was done. Then I took them to the post office and found they could be exchanged. I reasoned it out that if five or ten or fifty coupons could be converted at a profit, millions could.”

On paper that was right. And there is no doubt that he promised the world he would do just that when he opened his Securities and Exchange Company — long before the initials SEC meant anything else — to buy and exchange these coupons.

Except he didn’t bother buying or exchanging anything.

Instead, he claimed that because he didn’t have any money, and couldn’t borrow any from a bank without disclosing his plan — he said he didn’t want to give the bank a chance to do the same thing — he put his hand out to the public.

“I approached one acquaintance and asked him if he thought I could raise the money,” he explained. “I got my first returns in February (1920) and from that time it grew and grew as people got their returns. Each one brought ten others.”

A dapper man with a walking stick, straw hat and boutonniere, Ponzi played the entrepreneur to the hilt. He first promised the public 50% profits in 45 days. Money came in. Then he upped it to 100% profit in 90 days. Now the floodgates opened. On good days, hundreds of thousands of dollars arrived at his SEC.

By that summer, Ponzi had accumulated enough money to buy a 12-room mansion in nearby fashionable Lexington — it’s said to have came complete with such novelties of the day as air conditioning and a heated swimming pool — and a controlling stake in the Hanover Trust Bank of Boston.

Just like Banco Zarossi, Hanover Trust also catered to a growing Italian immigrant population. Running it provided Ponzi with an heir of total respectability, which meant that, now, even more money poured in for his postal reply coupon scheme. But just like Luigi Zarossi’s high interest rates, Ponzi’s astronomical profits were nothing more than pie in the sky — in fact, he never actually bothered dealing in the coupons at all — and simply paid his first investors with money from those investors that followed.

What supposedly happened next was odd.

Towards the middle of 1920, the Boston Post newspaper ran a glowing article about him. But a furniture dealer who’d sold him chairs and tables, sideboards and armoires, and had never been paid, complained that Ponzi’s checks bounced. It doesn’t make a lot of sense, seeing as how Ponzi was running his own bank and, anyway, had enough coming in to pay his bills. What’s more, the furniture dealer is said to have sued and lost.

Whether that actually happened is immaterial, because once the claim was made that Ponzi wasn’t paying his bills, the Commonwealth authorities began asking questions, and the Boston Post took another look.

In those days, a domestic letter cost 2-cents, and an international letter 6-cents. The Post asked Clarence Barron, the financial analyst who published the still highly respected Barron’s newspaper, to do the math. Barron calculated that for Ponzi to be covering all his investments, he had to be dealing in no fewer than 160 million reply coupons. But the US Post Office was reporting that only about 27,000 coupons were actually circulating. And even if Ponzi had somehow cornered the entire issue of postal reply coupons throughout the world for the past six years — which he clearly hadn’t — even then, his profits would have been only around $500,000.

The Post now ran a story bursting Ponzi’s balloon, which caused a run on his SEC. Investors demanded their money back.

While still proclaiming the potential for massive profits — obviously hoping to draw in new investors — Ponzi paid out more than $2 million. At the same time, he did what conmen typically do when faced with the truth. He sued the messenger.

Ponzi filed a $5 million claim for damages from the Post and, in the next breath, announced a $100 million international investment syndicate.

In early August, the Post produced a great piece of checkbook journalism, paying Ponzi’s former public relations man to write a first person essay that exposed the scam with the claim that Ponzi was “hopelessly insolvent.”

The paper decided that if the interest was included on Ponzi’s outstanding notes, he was at least $4.5 million in debt.

Ponzi responded, because he dealt directly with foreign governments to purchase the vast quantities of coupons he needed, and because those governments profited from the coupons, too, he simply could not reveal any actual figures. But, he insisted, the money was there.

The Post responded with the headline, “0+0=$”.

The Feds raided Ponzi’s SEC offices and the Commonwealth of Massachusetts shut down Hanover Trust Bank. On August 12, 1920, the day he was arrested, Ponzi’s liabilities were put at $7 million.

Interestingly enough, the raid on his offices failed to find any postal reply coupons. In fact, the grand total of his actual arbitrage was said to be a mere $30. It meant that Ponzi never even bothered with his international postal reply coupon idea. Which would have worked. There’s no way he could have made millions, but had he actually done it, he definitely could have earned himself a modest income.

For its relentless reporting, the Boston Post — which by now had discovered Ponzi’s criminal past and published his mug shots from the Montreal — won a Pulitzer Prize for its efforts. But in little more than eight months, some 40,000 investors had handed Ponzi a reported $15 million.

In the end, tens of thousands of people had lost their life savings and half-a-dozen banks had crashed.

In September, 22 indictments were returned against him by the Commonwealth of Massachusetts, charging Ponzi with larceny. A month later, the US Government charged him in two indictments with a 86 counts of using the mails to defraud the public. He pleaded guilty to the first count of the federal charges, and was sentenced to five years.

At the same time, he argued that Massachusetts had no right to charge him as well. It was a question of jurisdiction rather than double jeopardy, because he wasn’t being tried twice on the same charges, even if both cases covered the same crimes. And that case went all the way to the US Supreme Court.

The decision was written by no less a jurist then the Chief Justice himself, the former 27th president of the United States, William Howard Taft. He came down against Ponzi.

So, as soon as he was released from the federal facility — where he served three and a half years — Massachusetts proceeded with their case. After two deadlocked trials, Ponzi was found guilty at the third trial and sentenced to seven-to-nine additional years.

He appealed and was released on bail, at which time he skipped to Jacksonville, Florida where, as Charles Borrelli, he set up a syndicate to sell swamp land. Indicted, tried and found guilty there, he appealed, was released on bail and skipped again. He tried to flee the country, but he got caught and was sent back to Massachusetts where he spent seven more years in jail.

Freed in 1934, the government promptly deported him to Italy. The New York Times reported that during those years, he attempted to swindle Stalin’s government out of $2 billion by promising to smuggle gold into the USSR, then helping the Communists deposit it in European banks. But the Russians wouldn’t fall for it. Eventually, he got a job with an Italian airline that took him to Brazil, but the airline folded at the beginning of WWII. Ponzi lived his last years there, teaching English. In 1948 he suffered a stroke and died in Rio de Janeiro a few months later at the age of 66, penniless.

His legacy, however, is the “Ponzi scheme.”

And his spirit blithely lives on.

*****

(c) Jeffrey Robinson, 2013

You Have Got Mail -- From Nigeria


 

October 19, 2012

An updated version of the Nigerian letter scam is making the rounds, and has already tricked 13,500 U.S. victims out of as much as $40.5 million.

 

IF YOU’RE FEELING LEFT OUT BECAUSE YOU HAVEN’T been victimized by any of the recent swindles, take heart: An updated version of Nigerian letter scams is targeting you.

It started with snail-mail and quickly became e-mail, supposedly from the Nigerian Central Bank or the National Petroleum Corporation, claiming that $45 million was located overseas and, because of complicated currency laws, they couldn’t repatriate the money directly. So, if you’d allow that sum to pass through your bank account, they’d allow you to keep one-third as commission. The scam, named after the clause in the Nigerian Criminal Code Act that outlaws it, is forever known as “419 fraud.”

Now, the fraudsters are making the most of tough times by bombarding Americans with e-mail offers to help people get out of debt, refinance mortgages and earn extra money by working at home.

[img] An excerpt from a “419 fraud” e-mail currently in circulation.

Variations on this e-mail — stilted English and all (see a portion of one at left) — are circulating in the millions. This one says that a textile company is receiving orders from North America, Australia and Europe and needs “payment officers” in those areas. All the company needs is help processing the payments — via the payment officer’s bank account.

The man behind these missives is a professional fraudster in Lagos who goes by the G-mail alias Macjon. He uses at least nine other aliases through Yahoo!, Virgin.net, Btinternet and Hotmail. He also uses the same address with other fictitious companies: Crain Willis & Son, Huaxiang Group, Jaku Jenkins & Son, United Asia Trading, Anthony Smith & Son, Union Materials, European Industrial Supplies, Imperial Fabrics London, and Assorted Food Conglomerate.

IF YOU SWALLOW MACJON’S BAIT, you’re automatically hired. Within a week, you receive a check made out to you for $3,200 to $4,800 from a car dealer in Nevada, an oil company in Texas or even the American Bar Association in Chicago. You’re instructed to deposit it, wait until it clears, then wire 90% of it to someone designated by Macjon, usually in the Philippines. Your bank makes the money available within a few days, but invariably, once you’ve sent the 90%, Macjon’s check bounces back as counterfeit.

Investigators in the U.K. who are tracking him note that, since Dec. 1, 2008, Macjon has targeted 13.5 million Americans with the work-at-home e-mail scam. Investigators estimate his success rate at around 0.1%. That’s 13,500 victims from whom he’s stolen as much as $40.5 million.

Frighteningly, Macjon is merely one of about 100 modern-day 419ers plying the trade. He and the others buy American e-mail address lists from about a dozen U.S. based “lead sellers.” In this case, it was Beginmarketing.com, based in Broomall, Pa. Prices are negotiable, but five million addresses can go for as little as a few hundred bucks. Beginmarketing also transmitted several million of the RM Fabrics’ e-mails on behalf of Macjon. The man behind Beginmarketing, Michael Flores, denies any wrongdoing.

IN FACT, THERE ARE NO REQUIREMENTS that lead sellers know their clients or, for that matter, care. The Federal Trade Commission, which might otherwise be able to do something about this, is a toothless tiger. It has a Website filled with warnings about e-mail fraud, but its protection is only for commercial messages to consumers. These messages don’t fit that category, because they’re not offering goods or services, says a spokesperson. The U.S. Secret Service, which used to aggressively track Nigerian scammers, no longer updates its database of 419 scam letters as regularly, owing to budgetary constraints and manpower issues. The Secret Service would — and does — arrest anyone sending fraudulent e-mails if it comes upon them. But it isn’t nearly as active in pursuing these cases as it once was.

Most lead sellers give lip service on their Websites to propriety, stating that they refuse to sell through third parties or to deal with businesses that don’t have a Website. Yet they do business with Macjon, who pays through third parties and whose phony companies don’t have Websites.

Don Reid, an Australian who runs Apacheleads.com, purportedly out of North Carolina, admits to doing business with Macjon. Reached by phone in Australia, he says, “We don’t know who these people are.”

Yet, on Dec. 20, 2008, when someone signing e-mails “LeadGuy” at Apacheleads.com contacted Macjon, offering a two-for-one sale of lists, he demanded the following from the Nigerian: “You need to pay with Western Union, none of your stolen cards…okay? Don’t ask me for any other payment method or for free samples. The answer is no on both. You tried to steal from me with a stolen card in the past, so we will only take Western Union from you.”

Hearing that e-mail quoted, Reid mumbled, “I’m out of here,” and hung up.

 

JEFFREY ROBINSON writes books about fraud, money-laundering and organized crime.


 

JURY DUTY FRAUD - Fear and Your Civic Duty

 

The fear factor is an effective fraud technique used to panic citizens who have never broken a law in their life.

An official looking letter or email arrives with your name and address clearly spelled out. It claims to come from some official-sounding body—Bailiff of the State Court, Jury Summons Office, Jury Administrative Office, Clerk of the Court, Judicial District Jury Office, Office of Jury Commissioner, whatever. Next to your name and address, there is a case number and near that, a return address, which is often a post office box. There is also a phone number which, when you ring it, turns out to be an answering machine.

The message explains how sometime ago—usually 90 to 120 days—a notice was sent to you requiring your presence on a jury. In every state of the Union, when you’re notified to serve on a jury, you are legally obliged to respond. This notice says that when you failed to respond, a second notice was issued. When you failed to respond to that, a third notice was sent, allowing you a fixed amount of time—say 14 days—to explain to the court why you disregarded those previous notices. Furthermore, the third notice clearly spelled out that should you fail to respond this time, an arrest warrant would be issued.

Now, the message says that having failed to provide a suitable explanation for your absence, a warrant has indeed been issued for your arrest. The charge is noted as either contempt of court or failure to appear. In either case, you are informed, you are subject to immediate arrest, and a guilty verdict at trial can carry with it jail time.

You cry, “But I’m innocent.”

Which is precisely what the fraudster is counting on.

Faced with something as sudden and dramatic as the possibility of going to jail, very few people have the presence of mind to think this through: I was not previously summoned for jury duty, because if I had been, I would have received the official notice by mail. After all, they knew how to reach me with this. How come they didn’t find me with the previous three notices? And, do the courts really operate this way?

Instead, all you can think of is, I’m a fugitive.

Given this predictable result, the fraudster has provided you with a convenient solution. The notice says, if the warrant has been issued in error—you think, damn right it has—you should go to our website, or phone our special jury hotline number, and provide sufficient proof of your innocence.

So you make a beeline for the escape hatch. To prove that you’re you and not the person named on the arrest warrant, the website or the hotline requires personal information: name, address, phone, birth date, mother’s maiden name, Social Security number, banking and credit card details, etc. And in your panic, you hand the con man exactly what he needs.

While letters and email are what’s commonly used in this scam, some fraudsters have taken to the phone to inform potential victims of the arrest warrant. They identify themselves as officers of the court, sometimes even using the real name of a person working in a real court office. They admonish you for missing jury duty—or, in one variation, they announce that they are giving you yet another chance, but need to prescreen prospective jurors—and go through the same scenario as the website and hotline, demanding personal information. Should you balk at giving them that information, they threaten not just arrest but also the possibility of steep fines.

In one simple variation, you can be excused from having missed jury duty and the arrest warrant will be dropped, if you agree to pay a fine using your credit card. But it has to be right now. Any delay will put you in further jeopardy.

Of course, if you take the time to look closely, you should see through this. Names and addresses of prospective jurors usually come from voter registration lists, so jury offices already have your name and address. And that’s all they need. Contact between the courts and prospective jurors comes through the mail. No one is summoned for jury duty by email. Nor do court officials phone people who have missed jury duty. Only con men do that.

There is nothing about jury duty that requires you to divulge your mother’s maiden name, your bank account number or your credit card information. Nothing whatsoever! And in some rare instance when phone contact with a genuine court official is necessary, you will never be asked for personal or sensitive information.

But fear is extremely effective. It’s a rare person who, when faced with this, is cool and collected enough to do the easiest, simplest and most obvious thing: Go to a phone book or ask information for the number of the real clerk of the real court—never ring a phone number provided in an unsolicited email, letter, or phone call—and ask him, what’s this all about?

Fear is the motivation behind such frauds as:

*** Text messages from your bank announcing that your account has been closed due to suspicious activities. You are instructed to dial an 800 number, after which you’re asked to verify your account number and password, obviously so that the scammers can clean it out.

*** Email from a company that intends to foreclose on your home and then demands a fee to stop it.

*** Someone pretending to be your credit card company saying there’s been a serious breach and you will need to reactivate your card by telling them your card number and new password.

(c) Jeffrey Robinson 2010, 2012

 

Reprinted from:

Jeffrey Robinson’s There’s a Sucker Born Every Minute: A Revelation of Audacious Frauds, Scams, and Cons — How to Spot Them, How to Stop Them

 

http://amzn.to/J6WZle

fraudbookcover_2.jpg

 

FBI SCAM EMAIL - SERIOUSLY DUMB CRIMINALS ARE THE BEST!


This is a scam email going around, purportedly from the FBI. How stupid is the guy behind it? Check out spelling, capitalization, run-on sentences, grammar, failing 2nd grade knowledge of English AND the Nigerian address. Dumb criminals are the best! Enjoy this wonderfully stupid email. Just don’t answer it!

===================================================

 

Anti-Terrorist and Monetary Crimes Division
Fbi Headquarters In Washington, D.C.
Federal Bureau Of Investigation
J. Edgar Hoover Building
935 Pennsylvania Avenue, NW Washington, D.C. 20535-0001 Website: www.fbi.gov

Attention, This is the final warning you are going to receive from me do you get me?

I hope you understand how many times this message has been sent to you?.

We have warned you so many times and you have decided to ignore our e-mails or because you believe we have not been instructed to get you arrested and today if you fail to respond back to us with the payment then we would first send a letter to the mayor of the city where you reside and direct them to close your bank account until you have been jailed and all your properties will be confiscated by the fbi. We would also send a letter to the company/agency that you are working for so that they could get you fired until we are through with our investigations because a suspect is not suppose to be working for the government or any private organization.

Your id which we have in our database have been sent to all the crimes agencies in America for them to inset you in their website as an internet fraudsters and to warn people from having any deals with you. This would have been solved all this while if you had gotten the certificate signed/endorsed and stamped as you where instructed in the e-mail below. this is the federal bureau of investigation (FBI) am writing in response to the e-mail you sent to us and am using this medium to inform you that there is no more time left to waste because you have been given from the 3rd of January. As stated earlier to have the document endorsed/signed and stamped without failure and you must adhere to this directives to avoid you blaming yourself at last when we must have arrested and jailed you for life and all your properties confiscated.

You have failed to comply with our directives and that was the reason why we did not hear from you on the 3rd as our director has already been notified about you to get the process completed.Yesterday and right now the warrant of arrest has been signed against you and it will be carried out in the next 72hours as strictly signed by the fbi director. We have investigated and found out that you didn’t have any idea when the fraudulent deal was committed with your information’s/identity and right now if you ID is placed on our website as a wanted person, i believe you know that it will be a shame to you and your entire family because after then it will be announce in all the local channels that you are wanted by the fbi.

As a good Christian and a honest man, I decided to see how i could be of help to you because i will not be happy to see you end up in jail and all your properties confiscated all because your information’s was used to carry out a fraudulent transactions.I called the EFCC NIGERIA and they directed me to a private attorney who could help you get the process done and he stated that he will endorse/sign and stamp the document at the sum of $98usd only and i believe this process is cheaper for you. You need to do everything possible within today and tomorrow to get this process done because our director has called to inform me that the warrant of arrest has been signed against you and once it has been approved, then the arrest will be carried out and from our investigations we learnt that you were the person that forwarded your identity to one impostor/fraudsters in Nigeria when he had a deal with you about the transfer of some illegal funds into your bank account which is valued at the sum of $10.500,000.00 usd.

I pleaded on your behalf so that this agency could give you 11/21/2011 so that you can get this process done because i learnt that you were sent several e-mail without getting a response from you.please bear it in mind that this is the only way that i can able to help you at this moment or you would have to face the law and its consequences once it has back-fall on you. You would make the payment through western union money transfer to the EFCC with the below details.

NAME: CHI JACOB
ADDRESS:  LAGOS  NIGERIA
TEXT QUESTION:FOR
ANSWER: YOU
AMOUNT: $98
MTCN===========?
Senders Full Name======
Address:=============

Send the payment details to me which are senders name and address, mtcn number, text question and answer used and the amount sent. Make sure that you didn’t hesitate making the payment down to the agency by today so that they could have the certificate endorsed, signed and stamped immediately without any further delay. After all this process has been carried out, then we would have to proceed to the bank for the transfer of your compensation funds which is valued at the sum of $10.500,000.00 usd which was suppose to have been transferred to you all this while.

Note/ all the crimes agencies have been contacted on this regards and we shall trace and arrest you if you disregard this instructions. You are given a grace today to make the payment for the document after which your failure to do that will attract a maximum arrest and finally you will be appearing in court for act of terrorism, money laundering and drug trafficking charges, so be warned not to try any thing funny because you are been watched.

THANKS FOR YOUR CO-OPERATION.

ROBERT MUELLER II

WASHINGTON DC
Anti-Terrorist and Monetary Crimes Division
Fbi Headquarters In Washington, D.C.
Federal Bureau Of Investigation
J. Edgar Hoover Building
935 Pennsylvania Avenue, NW Washington, D.C. 20535-0001 Website: www.fbi.gov

 

WHY CONMEN PICK ON SENIORS

There is a reason why conmen pick on seniors.

It’s because they are particularly vulnerable to fraud in two specific areas.

The first is money matters, such as investments, banking and insurance. The second is health.

Even if many seniors are living on a fixed income, generally speaking as a group, they have cash in the bank. Many own their own homes and their property is often mortgage free. Many also have credit cards with above average spending and cash-advance limits because they tend to pay their balances in full every month.

Then, the older we get, the less capable we tend to be when it comes to handling stressful and confusing situations.

Crooks see seniors as a low risk target, being less likely than other groups to report fraud. Some senior victims are too embarrassed about having been taken. Some don’t want their sons or daughters to think that they’re no longer capable of handling their own finances. Others don’t know how to go about reporting a crime and worry that, if they do, there could be ramifications. And then, those who do choose to fight back, often make poor witnesses. Memory isn’t what it used to be. Exact dates and times are difficult to recall. Verbatim conversations and precise descriptions get muddled.

That said, fraudsters targeting seniors only have to worry about a trial if they actually get arrested. The odds of that happening are remote because they build safeguards into their scams. The most important precaution they take is to put state lines and international borders between themselves and their victims.

After all, why take a big risk by running a scam down the block, when the Internet, phones, faxes, credit cards and on-line bank transfers make it so simple to sit, comfortably and anonymously, hundreds if not thousands of miles away?

(Excerpted from:

“There’s A Sucker Born Every Minute” by Jeffrey Robinson http://www.jeffreyrobinson.com/book-sucker.html )

(c) Jeffrey Robinson 2010, 2012

A TWO-WAY STREET CRIME

Fraud is a two-way street crime.

That means, if a conman is going to steal your money, he needs you to help him get it.

Unlike theft by force or violence, fraud is theft by stealth and trust. It is a crime of persuasion. The scammers job, duping you into parting with your money, begins by somehow making you susceptible to being duped.

Playing on your emotions, he needs to make you believe a very basic lie — that he has the power to make you richer, sexier, happier and that all you have to do to become richer, sexier, happier is to let him into your life. That, by giving him your money, your wishes will come true.

While most of us would never open the door to a stranger who has come to steal our wallet, thousands of people willingly let fraudsters into their lives every day, only to find out the hard way the meaning of betrayal.

One of the most basic human emotions that conmen rely on — heavily! — is greed. Who wouldn’t turn down a get-rich-quick scheme if he or she was 100% convinced that it is 1000% foolproof? So, the fraudster goes about convincing you that, beyond any shadow of doubt, you can’t possibly lose.

Once he ignites your greed, he knows that carelessness will automatically follow, and that’s the slippery-slope to stupidity. Successful fraudsters not only understand this, they play off it with devastating effect. After all, this is how they make their living.

Later, when a scam is dissected, almost all victims invariably ask, “How could I have fallen for that?”

That’s never a simple question for a victim to answer, because the victim played a role in his or her own demise. Being hoodwinked by a criminal truly hurts. Yet, in the cold light of day, how it happened and why it happened becomes obvious — it happened because common sense took the day off.

And there-in lies the best protection anyone can have when it comes to preventing fraud — a healthy dose of common sense.

If the deal someone is offering you strikes you as too good to be true, if your gut feeling is driving you to ask, how come I got so lucky, then the best advice ever is, when in doubt, don’t.

Don’t let the fraudster in your front door.

Don’t believe that you have been singled out from all the other people on the planet to win at whatever game your new friend is playing at.

In our complex, globalized, hi-tech world, fraudsters, scammers and conmen of all shapes and sizes are more skilled in their craft, more elusive through their use of technology and more erudite in their understanding of our desires than ever before. And, like animals in the jungle, there is a natural culling of the herd. Bad fraudsters get arrested. The good ones just get better.

It’s common sense that levels the playing field.

That’s why the old caveat is still the best: If it is too good to be true, it ain’t true!

Nothing could be more common sense than that.

 

(c) Jeffrey Robinson 2010, 2112


 

Long Live 7th Grade English

Remember Mrs. Dribblenose, the craggy white-haired English teacher back in 7th grade who made you write compositions about really boring subjects such as, “Why Wheat Matters To Me,” then scribbled red ink all over your pages, correcting your sentence structure, spelling and grammar?

She’s the one who tried to drum into your head stuff like: don’t end sentences with prepositions; declension is the noun analog to conjugation; and, the complete predicate is everything in the sentence that the complete subject isn’t. (Huh?)

When you’re educated in the United States and Canada or, in fact, anywhere throughout the native English-speaking world, there is always a Mrs. Dribblenose. Thanks to her, the language as we speak it and write it is familiar.

Then along comes this:

“Dear Trusted Friend – This is to officially inform you that it has come to our notice, the Federal Bureau Investigation (FBI), that the sum of $8.3 Million U.S Dollars contained is here in the United State Of America in your name. That is why we have decided to contact you directly to acquire the proper verifications and proof from you to show that you are the rightful person to receive this fund, because the above mentioned amount is a huge amount of money, that is why we want to make sure that money you are about to receive is legal and we need to verify that you are not involved in any terrorist movement and money laundry. It has already been confirmed in your name, but funds are right now in our custody waiting to be released to you, we have verified and investigated that you are the right beneficiary to claim the funds, all we need from you is verification and proof due to the huge amount of money involved. As a matter of national security, we are to serve and to protect the UNITED STATES OF AMERICA.”

What’s wrong with that?

Simple. Whoever wrote such gibberish never had to face Mrs. Dribblenose. So how could this possibly be from someone working for the FBI?

Granted, not all email scammers are so outrageously illiterate. But that’s a genuine email, and it’s surprising how many scammers — pretending to be native English speakers — don’t seem to know the basic rules of English grammar.

Or, how to spell.

Or, that when you write a sentence which is too long, and contains all sorts of sub-clauses, even when those sub-clauses are supposed to be helping to make a point but fails because the sub-clauses don’t make any more sense than the rest of the letter, which means you wind up with a really badly written, run-on sentence—like this one—then something is radically wrong.

Common sense says that anytime you receive an emailed offer of free money from a perfect stranger—and that includes the FBI!—throw it away. Common sense also says that if there’s an attachment with an email from a perfect stranger, never open it.

Sadly, sometimes, in the face of greed, common sense can take a holiday.

So how’s this for a “golden rule”:

If your “English speaking” pen-pal is promising you instant wealth, inordinate fame, better sex, more hair or lasting friendship, and couldn’t pass Mrs. Dribblenose’s 7th Grade English Class… guaranteed, it’s a scam.

NOTES ON FRAUD --- Where The Money Is

Funny thing about your bank account — it’s yours.

Back in the 1930s and the 1940s there was a little guy named Willie Sutton who made a career out of robbing banks, getting thrown in jail, escaping and then robbing more banks. This went on for years, turning him into something of a folk legend.

Legend has it that, at one point when he was asked by a journalist, “Willie, why do you rob banks,” he answered, “Cause that’s where the money is.”

Today, crooks don’t have to walk into a bank with a shotgun and say, “This is a stick up.” That’s far too risky for what will, inevitably, be  a very small reward. Instead, they simply have to find a way into your bank account.

Today, your bank account where the money is.

And even if you’re happy to let your cable company and your credit card company and your cell phone company take what you owe them out of your account automatically every month, why on earth would you ever allow a total stranger to wade into your money and help himself?

You get an email, or a phone call, from someone purporting to work at your bank, saying that there have been several suspicious withdrawals from your account and, because they’re worried for you, they want to verify the suspicious activity. Hey, that’s my money, you insist, I never wrote those checks. That’s right, you’re told, we’re sure there’s something wrong, so let’s take a look. May we have your account number and pin number.

Or, you receive an email which says much the same thing: “… we have become aware of suspicious activities…” and provides a link to the bank’s site where you have to log in with your password and pin. You don’t notice, because you’re not looking, that while the site looks exactly like your bank’s, the address of that site isn’t quite the same as the bank’s official online site.

Or, you answer an ad for a work-at-home scheme that requires you to deposit third party checks into your account. We will pay you 10% of the total deposits, comes the promise. What’s more, comes the re-assurance, you won’t have to send any money out of your account until after the check you’ve deposited for us, clears. So you put a $4000 check from some company into your account, and three days later, when you see the deposit has been credited to your account, you wire out $3600. And that’s the easiest $400 you’ve ever made.

Unfortunately… three days after that, the bank informs you that the $4000 check was counterfeit. You say, but it cleared. And they say, no, it didn’t clear, we merely credited that money to you, and now you owe us $3600.

Put simply:

  • Anytime someone you think you know wants information by email or over the phone, ask yourself, would I give this same information to a total stranger if he asked for it on the street?
  • Never click on a link sent to you by email, unless it’s from friend, and even then, worry about viruses. If you need to check something with your bank, use the link they gave you when you opened the account, or go to the branch and do it face to face. Your bank will never send an email or phone you to verify your account number or pin.
  • Anyone who wants to use your bank account, especially if he’s willing to pay you for the privilege, is a crook!


© Jeffrey Robinson, 2010, 2012


Is This the Party To Whom I’m Currently Stealing

The phone rings and a friendly voice on the other end offers you a once-in-a-lifetime golden investment opportunity. But, he warns, once-in-a-lifetime means right now, this instant, you have to say yes pronto or it’s gone, forever.

It’s like the old joke:

Day 1: I have private, hush-hush access to these shares that are going onto the market tomorrow morning for a penny and are worth at least 1000 times that.

I’ll take 1000 shares.

Day 2: We’re up to two-cents a share, you’ve doubled your money.

I’ll take 5000 shares.

Day 3: They’ve just his ten-cents a share and they’re still climbing.

I’ll take 10,000 shares.

Day 4: We’re going beyond 50-cents a share. I’m telling you, this is the bargain of the century.

I’ll take 20,000 shares.

Day 5: We just this minute hit a dollar a share.

Sell.

To who?

Sound apocryphal? Sadly, it’s not. Despite all the technological advancements of the past 10 years, telemarketing fraud is still a huge industry and the bogus investment side of it works just like that.

Using high-pressure techniques—talking so fast that victims don’t have time to think is one of the most common techniques—fraudsters purposely pump prices then disappear, leaving “investors” clinging to the wreckage.

It might be stocks and shares. This is a foolproof, no risk, perfect investment that you’ve got to make right now because my boss is pressuring me to sell this and if you don’t say yes right away, I’ll have to offer it to someone else.

It might be a free vacation. You can have one week in the Bahamas for two, air fare included… so are meals, taxes, tips, sightseeing, everything… absolutely free… no strings attached. Except there are strings. You have to subscribe to something, or buy something, or register for something, and to do that, they need your credit card number, expiry date, mother’s maiden name and the three digit code on the back of the card. A week later, your card shows thousands of dollars worth of charges in Hong Kong, Prague, Marrakech and Punte del Este.

Or it might be a survey. We’re a non-profit organization trying to get information for a major university that will use it to help (choose one) a) doctors prescribe to senior citizens; b) banks better understand the mortgage market; c) the Red Cross get much needed aid money to the victims of some recent disaster. It sounds innocent enough, until you find out that the nice person doing the survey has just signed you up for a) prescription medicines from some questionable third world country; b) a new mortgage or c) a huge donation to a charity you’ve never heard of which, surprise, turns out to be the crooks.

Given the fact that the bad guys are so good at being bad guys, and have absolutely no qualms or conscience when it comes to irreparably harming people by pretending to be their phone friend, the best way to protect yourself is to hang up.

Next, you can put yourself on the national “Do Not Call” registry. It’s free. (Tel: 888-382-1222). Or register online. That should screen out legitimate telemarketers. And while it won’t necessarily stop the boiler room crooks, once the legitimate guys have stopped calling, you can pretty much assume any telemarketer who phones you now is a scammer.

In the end, the best advice is the same advice our parents tried to drill through our heads when we were kids:

NEVER TALK TO STRANGERS!

 

 

(c) Jeffrey Robinson, 2010, 2112

 

NOTES ON FRAUD --- Your New Best Friend, The Tooth Fairy

An email arrives, out of the blue, announcing that you've fortuitously won $9 million in some mysterious foreign lottery.

Isn't life just filled with surprises!

So, your new best friend is the Tooth Fairy.

Thanks to the email revolution, which has changed the way the world communicates, conmen and scammers have fast, easy and dirt-cheap access to in-boxes by the hundreds of millions.

In the old days, they had to use snail-mail and their success rate was 1-2%. Not bad for any direct mail campaign, but still a costly way of doing business. To make it work, they had to steal phone books from around the world so they knew who to write to. (After the 1966 Atlanta Olympics, for instance, every hotel in town reported dozens of phone books had disappeared from the rooms. Two months later, Atlanta was bombarded with millions of scam letters.)

Then, they had to pay hundreds of people to work under sweatshop conditions addressing envelopes. Not willing to pay for postage, the fraudsters printed counterfeit stamps, which meant that hundreds of thousands of scam letters were regularly intercepted by postal authorities and never delivered.

Today, to reach 15 million people, they can buy that many email addresses for as little as $300-$500, then program a bunch of laptops to spew out emails overnight. Granted, many people rely on spam filters to keep junk out of their in-boxes, so the success rate with email is much lower than with snail mail. But email means the crooks can reach 50 or 100 times as many people for no real cost.

Does it really matter that you've never heard of this lottery you just won?

All you have to do to claim your prize is pay a minimal fee so that a certified check can be over-nighted to you, supposedly by Fedex or UPS, from the official lottery prize office in Spain (or Ireland, Nigeria, Canada, Bangkok, Finland, Peru, some place, any place). The cost of the overnight envelope, including handling, is a mere $92. A small price to pay for life changing money.

But a foolish price to pay for thin air.

Now consider this. If the Tooth Fairy sends out 15 million emails and gets back one positive response for every 10,000, that translates to a return of $1,380,000. Next week, say, only 10 million emails go out. The week after that, perhaps 12 million. And so it goes. Week after week. Because there is always a small percentage of people who will fall for it, this is a full-time, highly lucrative business.

Yes, life is indeed filled with surprises.

Like when you put that first lost tooth under your pillow and found 25-cents there the next morning.

Unfortunately, life is also filled with certain indisputable truths, such as  these three things I know to be true:

* Luck and greed are not the same thing.

* No one is going to send you money just because you have an email address.

* If you didn't buy a ticket, you didn't win the lottery!  

 

© Jeffrey Robinson, 2010, 2012