Carl Sagan on fraud II

The quote by the late Dr. Carl Sagan points to a type of behavior I have noticed after working for several years in the field of white-collar criminal defense and fraud investigation: after a person has been the victim of an ongoing swindle for a length of time, eventually the person refuses to believe that he is a victim.

     I am not a psychiatrist or psychologist and the purpose of this job is not to analyze people.  However, a person does not have to be a mental health professional to notice and appreciate a certain character trend. 

   The fraudsters knows and appreciates that his victim falls into certain predictable patterns of behavior.  It is the job of the fraudster to take advantage of these patterns for his own advantage and gain.  Fraudsters further know that if they can get the victim in deep enough to his scheme, they can continue the scheme.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Carl Sagan on fraud

Carl Sagan, the late astronomer and host of "Cosmos," was and is a personal hero of mine.  I am not certain if he intended for this statement to apply to those who get sucked up in fraud schemes, but I think it is appropriate.  We will discuss this in the next few posts:

"One of the saddest lessons of history is this: if we have been bamboozled long enough, we tend to reject any evidence of the bamboozle.  We're no longer interested in finding out the truth.  The bamboozle has captured us.  It is simply too painful to acknowledge, even to ourselves, that we've been taken.   Once you give a charlatan power over you, you almost never get it back."

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Sad case of fraud on the West Coast

Strange case of fraud and rap music production, of all things.

Courtesy of American Greed - a fantastic TV show.

http://www.cnbc.com/id/100918004

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Money laundering in the Northern District

Money Laundering in the Northern District of Texas

http://www.justice.gov/usao/txn/PressRelease/2013/SEP2013/sep26Pat_Simon_sent.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Tax Fraud in the Western District

Tax Fraud in the Western District of Texas

http://www.justice.gov/usao/txw/news/2013/Yassine_Mike_Austin_Tax_sen.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Securities fraud in the Northern District

Securities Fraud in the Northern District of Texas

http://www.justice.gov/usao/txn/PressRelease/2013/SEP2013/sep19Wynn_Cantu_arrest.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Mail fraud in the Northern District

Mail fraud in the Northern District of Texas

http://www.justice.gov/usao/txn/PressRelease/2013/SEP2013/sep20Robert_Bruce_sent.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Customs violations in the Eastern District

Customs violations in the Eastern District of Texas

http://www.justice.gov/usao/txe/News/2013/edtx-wang-091013.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

 

Bank fraud in the Eastern District

Bank fraud in the Eastern District of Texas

http://www.justice.gov/usao/txe/News/2013/edtx-wcc-henge-090513.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

$26 Million Fraud Scheme

$26 million fraud scheme in the Southern District of Texas

http://www.justice.gov/usao/txs/1News/Releases/2013%20September/130916%20-%20Aleman%20and%20Barbosa.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Owner of a tax preparation firm pleads guilty to tax fraud

Odd story from the Southern District of Texas

http://www.justice.gov/usao/txs/1News/Releases/2013%20September/130916%20-%20Kitine.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Charges of drugs/money laundering in the Southern District

Several individuals charged with drug crimes and money laundering in the Southern District of Texas

http://www.justice.gov/usao/txs/1News/Releases/2013%20September/130912%20-%20Ruiz%20et%20al.html

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Affinity Fraud XII

   Affinity fraud is clearly an insidious type of fraud which preys upon the goodwill of a group.  All fraud relies on deception and lies, but affinity fraud works on a group level rather than upon individuals. 

     It should be clear from these series of posts that those who commit affinity fraud can rely on the cohesiveness of the group to allow them to skip several steps in building up trust. The trust already exists between the group members; the fraudster only has to get the leader of the group to perpetuate the fraud and this will be enough to draw in more than one person. 

     Further, the members of the group that is the victim of affinity fraud find that their guard is often lowered and the steps that a rational person normally would take to avoid being scammed are ignored. 

     Unfortunately, in the modern world (or for that matter, at any time in history), being a member of a group does not mean that human greed is not at work. 

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

 

Affinity Fraud XI

Some more ways to avoid affinity fraud include:

1.  As always, be extremely cautious of any investment that is billed as a "once in a lifetime opportunity."  Affinity fraudsters use their connections within the network to try and bypass people's "fraud detectors" by saying this "once in a lifetime opportunity" is for group members only.

2.  If members of the group are told to keep the investment "confidential," this should be another red-flag. 

3.  If you are told to avoid seeking professional advice from a neutral third party, once again this is another sign that something may be up.

We will wrap up this discussion in the next few posts. 

NOTE - information in this article is taken from an article in the March/April 2013 issue of Fraud Magazine by Frank Perri and Richard Brody.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                           

http://www.tauskvega.com

 

Affinity Fraud X

OK - we have spent the last few posts discussing what is affinity fraud and how it works.  Like any other type of fraud, the most important question is: how can affinity fraud be prevented?

     The first way to defeat affinity fraud is the most basic lesson - don't let your guard down just because someone is appealing to the group as a member of the group or through a group leader.  Group leaders and group members, unfortunately, cannot be held to a different level of trust than other individuals.  The same type of skepticism and doubt should be applied to investment schemes within the group. 

    Further, if a member of the group that is offering an investment cannot take the time to reduce the offer to writing for further analysis, this should be a clear red flag.

NOTE - information in this article is taken from an article in the March/April 2013 issue of Fraud Magazine by Frank Perri and Richard Brody.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                           

http://www.tauskvega.com

 

Affinity Fraud IX

It should be obvious now that affinity fraud is difficult to stop because it takes advantage of very real human emotions.  When a person is a part of a group, whether it be a religious group, social group, recreational group, etc., there is a level of trust between the individuals.  After all, the person essentially wants to spend time with the other members of the group, otherwise they would not be there in the first place.  Therefore, when a person is committing affinity fraud, many of the doors are already open for him since all he needs to do is simply take advantage of the group connections which already exist.

     This means that a common thread in many of these schemes is that investors within the group do not do any research (or little research) on their own concerning the "investments" that are made available to group members through the fraudster.  Sad to say, but it is clear that a fraudster who infiltrates a group to commit affinity fraud is already "pre cleared" to take advantage of group members.

NOTE - information in this article is taken from an article in the March/April 2013 issue of Fraud Magazine by Frank Perri and Richard Brody.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk

Affinity Fraud VIII

    Fraudsters who perpetuate affinity fraud use the emotional bonds between the group members to help advance the fraud.  Remember, it is the bonds between the group members that make the group special in the first place.  A good fraudster knows how to take advantage of these bonds.

     Fraudsters move the affinity fraud forward with the group by several means.  Among them are:

1.  telling the group members that reporting the frauds will prohibit any possible returns on the investment;

2.  persuading investigators not to cooperate with investigations by referring to signed confidentiality agreements.

NOTE - information in this article is taken from an article in the March/April 2013 issue of Fraud Magazine by Frank Perri and Richard Brody.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk

Affinity Fraud VII

There are other reasons that a group which is caught up in affinity fraud may not want to involve the police.

1.  Many times members of the group that are themselves the victim of affinity fraud do not believe that a member of the group would steal from them.  This type of "groupthink" is common in cults, but occurs throughout other groups as well and should not be confused solely as cult behavior.

2.  This also leads into the fact that many times members of a group simply cannot accept the fact that "one of their own" would engage in such behavior.

NOTE - information in this article is taken from an article in the March/April 2013 issue of Fraud Magazine by Frank Perri and Richard Brody.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk

Affinity Fraud VI

   Some of the other factors that prevent a group from going to law enforcement when a fraud is going on within the group also include:

1.  A group generally desires to solve the problem within the group.  Going to an outside source, even if it is to the police or a 3rd party investigator, can be seen as a failure of the group.

2.  The group may desire not to have a member of the group prosecuted, even if the person has broken the law or done something wrong.  Once again, this has to do with the internal dynamics of the group.

3.  The group may have a desire to have the person who committed the malfeasance "repent," not be prosecuted.

NOTE - information in this article is taken from an article in the March/April 2013 issue of Fraud Magazine by Frank Perri and Richard Brody.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk

Affinity Fraud V

It can be seen from the previous posts that affinity fraud works much like other fraud with the defining characteristic of working within a group (normally a close-knit group).  Breaking affinity fraud, however, creates some special issues.

     First, because the fraud occurs within a close-knit group, it is difficult to get within the group.  The group dynamics usually means that there is an issue in dealing with outsiders, if not outright distrust.  In breaking affinity fraud, therefore, the main issue at first is to convince the group members to work with outsiders.

NOTE - information in this article is taken from an article in the March/April 2013 issue of Fraud Magazine by Frank Perri and Richard Brody.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

                                             

http://www.tauskvega.com

 

----------à>>>>>>>>>>>>>>>gene tausk