Scam of the day – July 13, 2016 – Evil spirit scam

Police in New York are warning people about a resurgence of a scam I first warned you about in the Scam of the day for May 21, 2012.   This particular scam targets Chinese Americans and begins when the scammer who is also of Chinese heritage approaches elderly Chinese women on the streets and tell them that they are plagued by evil spirits and that the only way to get rid of the evil spirits is through a purification ceremony.  They victims are told that they have to bring their cash and jewelry to the ceremony to purify their belongings and protect them from the evil spirits.  The victims’ cash and jewelry is then put in a bag and when the victims are not looking the money and jewelry is taken out of the bag by the scammer.  After the ceremony, the victims are told to take the bag home, but not to open the bag for a few days or the purification will not work.  By the time the victims learn they have been swindled, the scammers are long gone.  This particular scam has been preying upon the Asian communities in cities such as Boston, Seattle, Chicago and San Francisco in addition to New York.  In San Francisco alone, police estimate that the scammers managed to steal more than 2 million dollars worth of cash and valuables from about sixty victims reporting the crime.  This type of scam is also being reported in Haitian and Latino communities as fellow Haitians and Latinos prey upon people within their communities with similar scams.

TIPS

We tend to trust people who are like us; people who have the same cultural heritage, race, religion or social group.  Unfortunately, “people like us” can be swindlers who take advantage of our trust.  This type of fraud is called affinity fraud.  This was what happened to many of the Jewish victims of Bernie Madoff who preyed upon many victims using their shared religion as an inducement.  Be extra careful when an investment or other offer is made to you by someone who shares an affinity with you.  Check them out as you would anyone else before doing any business with them.

Scam of the day – February 25, 2015 – IRS releases its list of “Dirty Dozen” tax scams for 2015

Recently the IRS issued its annual list of “Dirty Dozen” tax scams although many of these scams are not scams that cheat taxpayers, but rather scams the scammers attempt to perpetrate on the IRS in order to get large fraudulent refunds.  These frauds against the IRS include excessive claims for fuel credits, abusive tax shelters and offshore tax avoidance schemes.  Here at Scamicide, however, we focus on those scams that target innocent citizens rather than the IRS.  The three primary consumer tax scams on the IRS’ list are phone scams, phishing scams and inflated refund scams.

This has been a particularly big year for aggressive phone scams where people receive phone calls from people purporting to be IRS employees demanding immediate payments of purported overdo taxes by wired funds or prepaid money cards.  People receiving these calls are threatened with fines, arrest, deportation and loss of drivers’ licenses among other penalties unless there is immediate compliance with the caller’s demand.  This is a total scam.  The IRS will not initiate such communications with any taxpayer by phone.

The second scam involves phony emails or text messages that again, appear to come from the IRS demanding information or payments under various guises.  Again, the IRS will not communicate with taxpayers in this fashion, so you can be confident when you receive such a communication that it is a scam.

Finally, unscrupulous scammers posing as tax preparers may promise huge refunds and ask unwary taxpayers to sign blank returns that the scammer fills in with fraudulent information.  Often these phony tax preparers make initial contact through a social group, religious group or some other group of which you may be a member taking advantage of the high level of trust for people who share such affiliations.  This type of fraud is called affinity fraud.

TIPS

The IRS will not initiate contact with anyone by telephone and even if your Caller ID indicates that the call is from the IRS, Caller ID can be fooled through a technique called “spoofing” to make it appear that the call has originated from the IRS when it has not.  In addition, the IRS will never demand that you wire in a payment or pay immediately by a prepaid money card.  Just hang up if you receive such a call.

Just as the IRS will not initiate contact with you by phone, it will also not initiate contact with you by email or text message.  Never provide personal information in response to an email until you have confirmed that the email or text message is legitimate.  In this case, you don’t even have to bother to verify the email or text message because the IRS will not communicate with you in this manner.  Also, don’t ever click on links or download attachments in emails or text messages unless you have confirmed that they are legitimate because often these links or attachments end up downloading malware on your computer or other device that steals your personal information and uses it to make you a victim of identity theft.

Finally, always check out the reputation and honesty of anyone you may use to prepare your taxes.  Never sign a blank form and remember my motto, “trust me, you can’t trust anyone.”  Merely because you may share a religious or social affiliation with someone does not make them trustworthy.  Just ask the people that trusted Bernie Madoff.

Scam of the day – December 30, 2012 – Former LA police officer charged in investment scam

Two weeks ago a former Los Angeles police officer was arrested on investment fraud in regard to a phony real estate investment scam.  Among the victims were thirteen present Los Angeles police department employees including four detectives who should have known better.  This scam is a good example of what is called affinity fraud where people put undeserved trust in someone offering an investment opportunity because that person is “someone like me.”  Affinity fraud works because people trust other people who may share a common bond.  Bernie Madoff preyed upon Jewish charities and individuals who trusted them because he shared their religion.  Brad Bleidt, another Ponzi schemer, scammed investors who trusted him because, like him, many of his investors were Masons.  The list goes on and on.  Scammers take advantage of every connection they can make with their victims to gain their trust and then steal their money.

TIPS

Merely because someone may share a common bond with you, whether it is race, religion or membership in a fraternal organization, you cannot trust that person when it comes to investing your money.  Remember my motto, “trust me, you can’t trust anyone.”  Before investing in anything, you should confirm that the investment and the investment advisor are legitimate.   You also should make sure that you truly understand the investment.  Bernie Madoff’s victims did not understand the type of investing strategy he employed.  If they did, they would have seen that it was flawed.  You can find detailed information about how to evaluate investments and investment advisors in my book “The Truth About Avoiding Scams.”

Scam of the day – September 24, 2012 – Bernie Madoff update

Bernie Madoff, the foremost Ponzi schemer in history is now serving the third year of his 150 year sentence in a federal prison in North Carolina.  His victims, many of whom lost their entire life savings have continued to feel the pain of his criminal acts  However, quietly and often out of the news, Irving Picard, the trustee appointed to liquidate Bernard L. Madoff Investment Securities and to attempt to recover funds on behalf of the victims of Madoff has been having some success.  Recently, Picard sent partial reimbursement checks ranging from $1,784 to $526.9 million dollars and totalling 2.48 billion dollars to 1,230 former customers and victims of Madoff.  The average payout of this distribution was 2.02 million dollars.  This brings the total amount recovered from various sources including insurance and settlements to 3.63 billion dollars.  It is expected that 44% of the victims with valid claims will end up totally compensated for their losses, which is amazing for scam victims

TIPS

The best way to not be swindled is to not be taken in the first place.  Madoff’s scam epitomized two common scam dangers.  The first is affinity fraud.  People tend to trust people who are “like them” without questioning what is being proposed to them.  Someone “like us” would never steal from us is how the victims think.  The truth is that scam artists, the only criminals we call artist,s make it a point to play up whatever they have in common with their victims, such as race, religion or ethnicity to get their victims to trust them instead of doing the kind of due diligence you should do before getting involved in any investment.  The second scam danger prominent in Madoff’s Ponzi scheme was that people who invested in it did not understand how the investment worked.  You should never invest in anything that you do not fully understand.  No one understood what Madoff was doing because, frankly, if they did, they would understand that it couldn’t work.  You may miss out on some good investments by limiting your investments to things you understand, but you won’t be a victim of a scam.

Scam of the day- September 1, 2012 – Latino foreclosure scam

The California Department of Real Estate is issuing a warning to Spanish speaking consumers to be wary of home foreclosure rescue scams.  Desperate times call for desperate measures and many homeowners who have been hurt by the weakened economy are having difficulty keeping current with their mortgage payments.  These people are preyed upon by scammers who take advantage of their victims’ desperation by offering loan modifications or other mortgage assistance in return for an advance fee.  Once the fee has been paid, these scammers vanish.  In California and other states with significant Spanish speaking populations, Latino scammers are preying upon people sharing the same cultural heritage.  Often the victims trust these scammers because they speak the same language and appear to be “like us.”  This is a common type of fraud called “affinity fraud” which is perpetrated by scammers who share some similar characteristic with their victims, such as ethnicity, race, religion or otherwise.

TIPS

Never pay an up front fee for assistance with your mortgage.  If you are having trouble paying your mortgage, speak directly with the lender or retain a lawyer to act on your behalf.  If you are ever approached by someone “like you” who offers such assistance or anything else, such as an investment opportunity, you should be even more skeptical not less skeptical.  Do your due diligence and check out this person and his or her program before getting involved.  Too often it will be a scam.

Scam of the day – August 21, 2012 – New Ponzi scheme

Charges were recently brought by the Securities and Exchange Commission against former University of Georgia football head coach and member of the college football hall of fame, Jim Donnan in regard to operating an eighty million dollar Ponzi scheme by which he stole money from other college coaches and former players by luring them into a phony business that he promised would bring tremendous profits.  Instead, the funds of later investors were used initially to pay off earlier investors in order to make the investment look good while Donnan, according to the SEC took the lions share of the funds invested for his personal use.

TIPS

This is a good cautionary tale of two types of scams.  The first is obviously a Ponzi scheme scam.  Always beware of investments that promise unreasonably high returns and never invest in anything that you do not completely understand.  You also should always do your own due diligence to check out the investment and the people touting the investment before putting in any money.   The second type of scam is called affinity fraud which occurs when people let their guard down when the person proposing the investment is “someone like us.”  People trust people who are like themselves and do not do the proper due diligence.  Trust me, you can’t trust anyone.  When someone appeals to you for an investment and they are people you know or of the same ethnic group, religion, national origin or any other similar characteristic to yourself, that is the time that you must be the most careful.

Scam of the day – July 31, 2012 – Latino lottery scam

Recently a particular form of affinity fraud has been affecting members of the latino community in  California, but the lesson is one that applies to everyone and regardless of where you live.   The scam involves a Spanish speaking person approaching another person of latino heritage and telling the victim that the sammer has a winning lottery ticket, but because he or she is not a citizen, he or she cannot collect the winnings.  Often the scammer will further appeal to the victim through distinctive Spanish terms of endearment and will also often make religious references.  They tell the victim that they need to provide collateral to the lottery in order to claim the prize.  Often they will also have phony lawyers with them to help convince the victims of the legitimacy of the claim.   Other times they provide telephone numbers to phony lottery headquarters where a co-conspirator “verifies” what the scammer has been telling the victim.  Ultimately, the victim turns over money to the scammer to use as collateral and agrees to aid in making the claim of the winnings, but ends up with nothing.

TIPS

No American lotteries require winners to be citizens.  No American lotteries require collateral be put up in order to collect your winnings.   However, the biggest lesson from this type of scam is the danger of what is called affinity fraud which occurs when the scammer is someone who is “like you.”  They may share a common religion, ethnicity or membership in a fraternal group.  All of these things raise your trust level and scammers know this and take advantage of this.  Regardless of who is offering you a proposal, you should never accept the proposal merely because they are “like you.”  In fact, it should make you more suspicious.  Trust me, you can’t trust anyone.

Scam of the day – June 26, 2012 – Latest Bernie Madoff developments and the lessons to be learned

The New York Attorney General just announced a settlement with Hedge Fund Manager Ezra Merkin, by which Merkin will pay 410 million dollars to victims of Bernie Madoff’s Ponzi scheme.  Merkin was reportedly managing his clients’ investments by merely turning the money over to Madoff to invest and being paid reportedly approximately 35 million dollars a year for doing nothing more than taking his clients’ money and giving it to Madoff without proper investigation or research.

TIPS

The lessons to be learned by the Bernie Madoff Ponzi scheme are many including, never invest in anything that you do not completely understand, always investigate anyone who will be dealing with your money, avoid becoming a victim of affinity fraud by excessively trusting someone merely because they belong to the same social, ethnic or religious group as you and as illustrated strongly in the Madoff scandal, never have your investment advisor also be the person who holds your money.  Bernie Madoff was both the investor and the custodian of the assets.  If you work with an investment advisor, always have an independent custodian hold the investments so that you get independent statements that verify your investments.

Scam of the day – May 21, 2012 – Evil spirit scam

Three women have been arrested this week in San Francisco in a scam that has been targeting older Chinese women in San Francisco and other major cities throughout the country with sizeable Chinese populations such as Boston and New York.  However, even though this particular scam targeted elderly Chinese women, the lessons to be learned from this type of affinity scam are for everyone.  This particular scam began when the scammers who were also had Chinese heritage approached elderly Chinese women on the streets and told them that they were plagued by evil spirits and that the only way to get rid of the evil spirits was through a purification ceremony.  They were also told that they had to bring their cash and jewelry to the ceremony to purify their belongings and protect them from the evil spirits.  The victims’ cash and jewelry was then put in a bag and when the victims were not looking the money and jewelry was taken out of the bag.  After the ceremony, the victims were told to take the bag home, but not to open the bag for a few days or the purification would not work.  By the time the victims learned they had been swindled, the scammers were long gone.  fortunately three of the scammers were arrested this week.

TIPS

We tend to trust people who are like us; people who have the same cultural heritage, race, religion or social group.  Unfortunately, “people like us” can be swindlers who take advantage of our trust.  This was what happened to many of the Jewish victims of Bernie Madoff who preyed upon many victims using their shared religion as an inducement.  Be extra careful when an investment or other offer is made to you by someone who shares an affinity with you.  Check them out as you would anyone else before doing any business with them.