Professional Corner
Hoaxes and Cons
That Fool Even Savvy People
By Chuck Whitlock, Scambusters
Con artists don’t just prey on the ignorant. Even successful, sophisticated
people are victims.
Why? Successful people consider themselves smart enough to recognize
a good deal…they are too busy to check details…and they are driven
to move forward and to take chances. Most of all, they make juicy
targets because they have the most money to steal.
TAX-AVOIDANCE SCAM
Someone you trust – a financial planner, a close friend, or relative
– comes to you with a proposition. Put up $25,000 and you can double
your money in a month. Sound too good to be true? This trusted person
already did it, and it worked like a charm.
Example: You are told your money will be used to buy high-end automobiles
in a foreign country and bring them into the US without paying import
duties. Because the dealings are under the table, your profits will
not be reported to the IRS.
How the con works: The trusted friend probably did double his/her
money in a month. The con artist predicted the friend would invest
again during the next month and bring in others with him.
This time, the con artist reports that there are problems. Perhaps
the shipment was stopped at the border and everyone has to chip in
another $10,000 for taxes and penalties. Next, he says the truck driver
needs an expensive lawyer or he is going to name names – including
yours.
Eventually, you are told there is good news and there is bad news.
The money you invested is gone, but the truck driver isn’t talking,
so you have no IRS worries. You might walk away relieved despite your
financial loss. You won’t go to the police even if you suspect you
were duped because you knew you were breaking the law.
Variations on this con use all sorts of illegal activities – from
insurance scams to fencing stolen goods to counterfeiting or scalping
tickets to sports or entertainment events. One common version is aimed
at children of affluent people when they go off to college. The students
are told they can make a fortune quickly by fronting money for a campus
drug dealer.
Self-defense: Be wary whenever anyone – including a friend – offers
an opportunity that bends the law even slightly. Such investments
are never worth the risk.
BANK GUARD SCAM
You go to use your bank’s automated teller machine during non-business
hours and find an out-of-order sign on the machine. A uniformed "bank
guard" holding a clipboard and cash box says he can handle your
transaction.
How the con works: Successful people are accustomed to the convenience
of 24-hour banking, and they are ready to trust people in uniform.
The con takes place in the evening, when victims are tired and anxious
to get home. Some victims are depositing their company’s money, not
their own.
Don’t think it would work? I simulated this con once for a television
program. Among my 25 victims were a congressman, a police officer,
and a man responsible for the receipts of 18 pharmacies, totaling
$118,000. Only one woman seemed suspicious, and I managed to talk
her into leaving her money with me as well.
Even if you do not wish to make a deposit, in exchange for your withdrawal,
you would be asked for your name, account number, personal identification
number, Social Security number, address and mother’s maiden name.
Give out this information, and the con man can clean you out.
MEDICAL QUACKERY SCAMS
People who have a deadly disease that is either incurable or not
easily treated my mainstream medicine may fall pretty to medical scams
touting medical cures.
Example: You are told you have an inoperable cancer. On the Internet,
you learn about a controversial procedure involving an intervenous
drip of crushed apricot seeds, often referred to as laetrile. It is
not accepted in the US, but doctors in Mexico have achieved remission
in many patients. Desperate, you seek it out. These people have found
a con so attractive that their victims come right to their door.
Why the con works: The victim is vulnerable due to emotional distress.
Based on my research, approximately 17% of all cancer cases go into
remission without any treatment, although many later recur. The apricot
seeds have no proven positive effect. Nor does the solution similar
to toilet-bowl cleanser that one quack labeled Immunostim and, until
very recently, injected into cancer patients’ veins.
BUSINESS SCAMS
Any business in which the owner does not directly oversee every transaction
is a target for con artists.
Example: An employee might get into your payroll files and arrange
for checks to be cut twice a month to non-existent employees. Or issue
payments to a phantom supplier for hard-to-confirm services, such
as consulting or cleaning, that were never provided.
Self-defense: Your firm is less of a target if certain safeguards
are in place…
- Immediately discontinue computer passwords of ex-employees.
- Institute cross-training procedures. Require each employee to
make a procedure manual for his/her job. Everyone in your company
should make at least one colleague familiar with his accounts and
files. This makes it less likely that any employee will think he
can get away with something.
- Check the books carefully when someone in payroll or accounting
declines to take a vacation. Embezzlers may be hesitant to have
someone else look at their books.
- Institute firewalls around your computer system. Use codes with
both numerals and letters to protect against cyber-criminals outside
your firm. Do not let employees use names or birthdates as codes.
- No security system is foolproof, but you can make it harder for
high-tech criminals. The right computer security program depends
on your system and the sensitivity of your data.
- Create written procedures for purchasing, expense reimbursement,
and payroll functions. These should include supervision by more
than one employee.
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