Leonard J. Hansen

Scams and Scalawags Introducing the deals to avoid - or be a victim of fraud

By Leonard J. Hansen

If you believe that crime is down in the United States, I’ve got some investment land in Florida to sell you. Of course it is under water and the gators and vermin may preclude your swimming. But trust me. If you believe that there are deals that are too good to be true but you can’t turn them down, I’m offering a special investor package on buying the Brooklyn Bridge. Just think of the great toll income, all in cash, that you and other investors can share. If you believe that fraud is only perpetrated against people with lots of money, have I got a home-based business for you - stuffing envelopes in your spare time. For under $100 you can have a business and career to produce thousands of dollars in income every week. Believe it? This reporter hopes not. If you believe that government and existing laws protect you and empower investigators and prosecutors, you must also believe in Santa Claus, the Easter Bunny and that everyone who calls you on the telephone or sends you uninvited e-mail messages is honest and trustworthy. The facts are simple, scary and should be learned by every mature adult: There are few real deals on land in Florida. Most successful fraud is perpetrated on people with middle income to lower-income means. The Brooklyn Bridge may have been “sold” many times by scam artists, but it is still, as it has always been, a government property. After they get your money, the oft-promoted "stuff envelopes at home" schemers only tell you to bilk others with the same promotion. Major high-tech systems do mail stuffing at a minuscule percentage of the hand-inserted price. And if the deal sounds too good to be true it is not probably, but predictably, a fraud - a scam, swindle, scheme - to take your money under totally false pretenses. Heck, taking money by fraud is easier and far less dangerous than facing someone while brandishing a weapon. And even when taking millions of dollars in scams, the risk of getting caught, prosecuted, convicted and sentenced is far less than being hit by lightning on a clear day in an intersection on Main Street in your home city or town. One in three American households has been victim of some sort of scam, according to a 1999 study by National White Collar Crime Center, the first such study in 20 years. A parallel study, particularly of telemarketing schemes by AARP, reported that more than half of the successful fraud is committed against persons age 50-plus. Estimates of the dollar volume of successful consumer fraud in the United States is pegged at least at $40 billion for the 14,000 illegal telemarketing firms, to $80 to $100 billion when including Internet and direct mail fraud. These figures are probably understated because most fraud goes unreported as victims are too embarrassed to tell authorities - or their adult children - that they’ve been had; and no government agency or program has ever tried to quantify the ever-increasing consumer loss to fraud. Violent crime in the United States is actively monitored and reported quarterly; but fraud is almost non-existent on the government radar screen. There are many reasons - and alibis - for the low priority, other than for a few high profile cases annually by the U.S. Department of Justice, other federal agencies and state attorneys general. There is some protective law but it is very difficult to enforce. When addressing the Triad senior anti-crime conference of the National Sheriffs’ Association in Baton Rouge, Louisiana, law enforcement officers recited a litany of scams and cases within their counties while near shouting their frustration about their inability to bring down the perpetrators. "We have the victims, but the perpetrators are a thousand miles or a continent away, and we don’t have the resources to investigate the perpetrators, nor do we have the laws to prosecute and convict them." The Federal Trade Commission (FTC) has no criminal (only civil) authority. The Securities and Exchange Commission (SEC) must oversee the legitimate securities business as a first priority, but does have a limited staff (under 200 based on a 1999 report), way short of the need, to investigate consumer investment fraud. Congress has talked about consumer fraud but is doing little but stall about it. Consider a different type of crime, a robbery. In this type of crime, investigators and prosecutors may have witnesses to the event, a surveillance camera, finger prints, getaway car registration, physical description, physical evidence, weapons ballistics and more. There is little doubt about the event, the loss, the injuries and, perhaps, the perpetrators. Prosecutors, when they have the suspects in the holding tank, grin broadly because: they have a thousand percent case, a sure prosecution. On other hand, the prosecutor on a fraud case seldom has an in-person perpetrator, no weapon, a victim who may be an older adult (who the defense will try in every way to rattle to categorize the person as senile), a questionable exchange between alleged perpetrator and victim, and critically, must prove intent, that the defendant did intend to defraud the victim. The possibility of a successful prosecution may drop to under 10 percent; and, even if successful and because there was not a bleeding victim, the convicted perpetrator may get a slap on the wrist with time off for good behavior. Another frustration by law enforcement was vented at the National Fraud Conference in Orlando: "A scam artist can set up a telephone boiler room in eight hours and be hyping a fraud the very next morning. By the time we get and can act on complaints, they have packed up and moved to another location." For a fraud operator using the Internet, the service of the fraudulent messages, newsletters, website and more can be done remotely, being almost invisibly to most government investigations. "Fraud operators update or replace their computer systems every eight months," said one expert at the conference. "The government procurement process takes at least three years. The crooks are always miles and years ahead of us." Fraud perpetrators can send a million e-mail messages in under thirty minutes, buying the mooch list of people who have already fallen for questionable pitches, for under $500. These unsolicited e-mail messages are called spam and, as you have a computer with Internet access, may bombard your in box. There have been many debates over legislation to stop or restrict spam, but the direct response industry, acting to protect its own marketing interests and not the consumer protection of individuals, has invoked the Bill of Rights and Freedom of Speech, blocking most efforts. The scams in your snail mail box, e-mail or as the voice at the other end of the telephone interrupting your dinner, may run the gamut from pyramid to Ponzi schemes, pump-and-dump to other investment fraud, vacation trip to "you’re a winner" in fraudulent sweepstakes, phony charitable pitches to messages that you desperately need to call an 809 area code and number to help get a friend out of a hospital/prison or other; or business opportunity schemes. As an individual, you are mainly without protection when it comes to fraud and the chances of recovery if you are victimized are just about nil. Therefore you must be your own first line of defense. Here is how and why: Be suspicious of every approach you receive by mail, e-mail or by telephone. Ask your self: "Why is this person calling/contacting me?" There are merchants in our home town who have earned your trust and, possibly, others who you avoid because they have not delivered what they promised, were late, provided a service of poor value, or have earned your distrust for yet another reason. Why, therefore, believe anyone or any pitch which comes to you unsolicited, from a stranger? Mature adults are the most trusting of demographic groups while having the greatest asset and discretionary income value so, if you’re near age 50-or-better, you are a prime target for every hornswaggler or scalawag who wants to take your money. Without undue alarm this reporter, who has investigated fraud for some 30 years, recommends that you question or distrust any and every unsolicited pitch by snail mail, e-mail or telephone. Just say no. You have no obligation to read, consider or listen to any pitch. You can’t lose if you don’t listen. Don’t be a hero or heroine, believing you’ll listen and develop evidence for the authorities. Protect yourself; and if enough people don’t fall for the scam artist pitches, they may have to get real jobs. Learn everything you can about the various scams so you can discuss them with friends, at club meetings or in social gatherings. Make other people aware. Urge your local Better Business Bureau and other consumer protection agencies to do a far more aggressive job in consumer fraud protection. Urge your local media to do likewise. If you do talk or share communication with anyone you do not know, never - repeat, never - give out your credit card information or Social Security account number; and never agree to send money by courier or express or have it picked up at your home for any reason whatsoever. Know that, as you have built your net worth by working hard and productively over many years, there are people absolutely dedicated to take it from you by using a ruse, a scam, a fraud. The scalawags know that theirs is the easiest way to riches by depriving you and others around the country; and they know that getting caught is only a remote possibility. If the offer is too good to be true, know that it is a fraud. That is the first step. Not being a victim in the second step, but you must be your own first line or protection.