Interludes - Fraud in the Middle Ages

Fraud is as old as time - as this interesting article points out.

We will get back to the law school thread in the next post.

http://www.medievalists.net/2014/02/26/defraud-lord-medieval-manor/

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Interludes - Amazing Fraud out of China

We will get back to the law school series in the next post.  But, this article was too good to pass up.

I've said it before and I will continue saying it: the imagination that fraudsters have is sometimes better than J.R.R. Tolkien (writer of The Lord of the Rings) or Robert E Howard (the guy who created Conan the Barbarian).

http://www.telegraph.co.uk/news/worldnews/asia/china/10646217/Chinese-fraudster-fakes-superhuman-powers-to-rob-victims.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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Pump and Dump 8

So, what is the best method to avoid the "Pump and Dump" fraud?  As always, the most basic advice is not to invest on the fly and to stop and think before throwing money at a "once in a lifetime" investment.  The second piece of advice is the usual as well: get another opinion.

      Once again, it is worth reminding that the most common form of any type of fraud is pressure to buy.  A fraudster wants your money before you have a chance to think through an investment and so the high-pressure sales techniques are needed.

    

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Pump and Dump 7

Why is it that after the hype is over the stock starts to fall in a "Pump and Dump" scheme?  In other words, why is there a "dump" part of the "Pump and Dump?"
    The whole point of the scam is to get people excited about the stock.  It has been said that the stock market is 80% psychology and 20% actual economics.  I am in no position to comment on this nor will I make the attempt.  However, it is a basic fact of advertising that the more "buzz" there is about a stock (or really just about anything), the more people will be interested in it.

     The "Pump" part of the whole scheme, therefore, is to get as many people as possible interested in the stock.  The more people interested, the better.  Once the "Dump" part of this whole thing begins, people lose interest in the stock.  Since the stock was never really a good investment anyway, once the hype dies down, there is nothing really there.

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Be careful who you think is an authority figure

We take a break from the Pump and Dump thread for this post to refer back to Cracked magazine for a funny look at some con artists who pretended to be someone else.

Warning: profanity

http://www.cracked.com/article_20738_5-authority-figures-no-one-realized-were-con-artists.html

I noticed the post from yesterday was not working so I removed it.  I will bring back a clear post for tomorrow.

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Pump and Dump 5

OK - back to our thread.

     Look at the first element of "Pump and Dump" again - the target is subjected to a high pressure sales pitch to buy the stock in question that will later be dumped.  How many times have we seen this before?  The target is subjected to intense pressure to "buy NOW NOW NOW" or lose out on the opportunity of a lifetime.

     As has been discussed previously on this blog, so many issues begin when someone is told that they have to buy NOW.  It is extremely unlikely that any reputable securities dealer will ever tell a client that a purchase has to be made immediately.  There are, of course, issues where a stock may be available for the first time because of an Initial Public Offering or some other type of offering that is not normally available.  However, offerings such as these are usually well-publicized or information about them is available through channels that reputable security dealers use.  If someone is telling you that this is "secret" information, something is usually strange.

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Pump and Dump 4

There are really only two elements to the entire "pump and dump" scam.

     The first, as described, is the necessity of the fraudster getting as many people as possible to buy the stock.  This involves the high-pressure "boiler room" tactics of telling potential clients that the stock in question is going to go up or is going up and, in essence, the client would be a fool to miss out on the opportunity.  It involves really nothing more than a high-pressure sales pitch.

     The second element is: once the stock has reached its artificially inflated price, the fraudster now has the "inside knowledge" to know that the stock will soon be losing its value because the stock has been artificially inflated.  At this point, before anyone can really react, the fraudster now knows that he is in the perfect position to sell which, of course, he does.  He sells as much of the stock as possible.  Of course by doing so, he gets an insane profit from the whole thing.

     Once again, we see the high-pressure sales tactics at work. 

   We will discuss how to avoid this fraud in the next series of posts. 

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Pump and Dump 3

OK - so we have seen how the Pump and Dump scam works: a huckster will take a stock (or like investment), advertise it to all potential buyers as the "one to buy" or "you must buy NOW!"  This creates a false sense of confidence about the stock and creates unwarranted attention.  This attention, of course, creates an incentive to purchase the stock in large quantities or encourages many people to purchase the stock.

     In any case, the result is the same: the price of the stock goes up because of the demand.  The price becomes artificially inflated.  A viscous circle develops - the more the word gets out, the more the stock is in demand which of course leads to the price of the stock go up because of the demand..

    Then, after the stock reaches its maximum inflated value (or what is thought to be the maximum value) and the hucksters then sell the stock at the artificially inflated value.  In other words, they get out while the going is good.  Once the people at the top sell the stock, it creates a spiral effect where others sell the stock as well, but at a much lower value.

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Pump & Dump 1

We will spend the next series of posts focusing on "pump and dump" fraud.  This is another classic form of fraud which appears with depressing regularity.

The FBI defines "pump and dump" as follows:

"This scheme—commonly referred to as a “pump and dump”—creates artificial buying pressure for a targeted security, generally a low-trading volume issuer in the over-the-counter securities market largely controlled by the fraud perpetrators. This artificially increased trading volume has the effect of artificially increasing the price of the targeted security (i.e., the “pump”), which is rapidly sold off into the inflated market for the security by the fraud perpetrators (i.e., the “dump”); resulting in illicit gains to the perpetrators and losses to innocent third party investors. Typically, the increased trading volume is generated by inducing unwitting investors to purchase shares of the targeted security through false or deceptive sales practices and/or public information releases."

As stated, we will explore this in the next series of posts.

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

 

Video on accounting fraud

Interesting video on the basics of accounting fraud

http://finance.yahoo.com/video/breakout-spot-accounting-fraud-110000943.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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Obamacare and Fraud VII

This will be the final post on the initial issues with Obamacare.

     As can be seen, there is really nothing new here.  Fraudsters use a variety of scams which have been around for many years and these scams are simply adapted to a new program.  The real issue with Obamacare, however, is that as of this writing, there are very few hard answers available.  This program is so large and so new that it seems everyone is getting in on the act. 

    The only answer is that only information from verifiable Federal Government sources is accurate.  Even if it means waiting for such an answer (especially now since, as of this writing, the Federal Government is shut down), it is worth waiting for such an answer. 

     Such is the reality of the world.

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Obamacare and Fraud V

Seniors are especially vulnerable to fraud related to Obamacare.

     Consumer protection advocates worry that fraudsters will falsely tell seniors that they need to renew their Medicare coverage or sign up for new exchanges in an effort to get seniors to divulge critical personal applications on application forms.  This is a concern as a great many seniors in the United States are already signed up for various forms of Federal Government assistance and so it might appear rational to a senior that a "representative" from the Government needs a person to fill out additional information for the new Obamacare programs.

     The same warnings always apply - never give out information that is being asked of you from an unsolicited source.  Federal Government representatives will already have your social security information, date of birth and other important personal information.  They will not have to ask for it.

     Although the verdict is still out on just how Obamacare will work, it is clear that there has not been a vehicle like Obamacare in some time that can be used by fraudsters to steal social security information and other personal information.

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

 

 

Obamacare and Fraud IV

OK - there is already a fraud going around based on Obamacare, although it is nothing more than a variation on a theme and has been around for many years.

     The victim will get a call from someone purporting to be from the Federal Government and state that insurance cards under the Affordable Care Act (a/k/a Obamacare) will be mailed out.  However, before these cards can be mailed out, the person needs to give over some personal information to "verify" who they are, namely their social security numbers, dates of birth, bank account, etc.

    Once again, the same old self-defense applies here.  Do not give out personal information to people who are contacting you unsolicited.  The representatives of the Federal Government do not randomly cold-call people - it is the other way around.  You have to call an agent of the Government to contact them.

 

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.

                                             

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----------à>>>>>>>>>>>>>>>gene tausk

 

Obamacare and Fraud III

     OK - let's start to examine how fraud can occur with the Obamacare program and what can be done to avoid being caught up in such fraud.

      It is important to remember that NO Federal agency will call you and offer you services for a fee or call and ask for vital information (social security number, date of birth, personal ID information, bank account information, etc.). If anything, a Federal agency will already have this information with them and will ask you to verify this information before they help you.  And by "verify," I mean that they will tell you to verify the correct information they already have.  They will not be "fishing" for such information.

    Therefore, if you get a call from someone purporting to be from the Federal Government who wants to "help" you with Obamacare, it is most likely a scam.

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

 

 

Obamacare and Fraud II

As I begin to write this thread, I am confronted by the problems that many people experience when writing about Obamacare - the program is so new and so untested that there is virtually no blueprint about what to expect or how to enact the programs.  This blog is apolitical and I am not trying to make any type of statement one way or the other.  However, it is clear that implementation of Obamacare policies and what is expected of providers, Federal workers charged with implementing the program and individuals attempting to sign up for the program that there are a great deal of questions and answers are not always available.

    Confusing situations such as this one, therefore, especially confusing situations on a nationwide scale are almost tailor-made for fraudsters.  Fraudsters can take advantage of confusing situations and this most certainly qualifies.  There are already reports of fraudsters taking advantage of the confusion. 

   Therefore, the next series of posts will simply reiterate some of the basic information on how not to get "scammed" by fraudsters in general.  Such information should apply to even a large program such as Obamacare.

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 IV

     I am going to wrap up this discussion with just a simple observation: it has long been known by observers of human behavior that the further someone goes down a road, the more difficult it is to turn back.  This is, of course, to what Dr. Sagan was alluding in his quote.  People who try and help those who are victims of fraud sometimes react in amazement at just how far "down the rabbit hole" a victim has descended.  Some victims, even after losing everything to a fraud scam, continue to believe in the light at the end of the tunnel.

    I have seen this myself in victims of the infamous Nigerian 419 scams (referenced earlier in this Blog).  Even after the victim has sent thousands, sometimes tens of thousands of dollars to the "Nigerian Prince," still more money is sent.  There is always that faint hope among victims, tragic as it is, that this has not all been for nothing, that somewhere there will be the payoff.  For those who are not involved in the fraud, it seems unbelievable.  But, this mentality persists among victims and is taken advantage of by the fraudsters.

     Throughout this Blog, I always make reference to the fact that fraudsters are con men, they are confidence men.  This means not only that they take advantage of the victim's confidence in the fraudster, but the fraudster himself projects an unwavering belief in himself, a self-confidence which appears to the victim and is believed by the victim.  This unwavering confidence in the fraudster, even if the fraudster is only a series of emails, is what separates fraud from all other types of crime.  This ability to take a victim down the road to where there appears no turning back is an ability which fraudsters possess, even if onlookers not involved in the process cannot understand it.

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 III

    There are many reasons why someone who is caught up in a long-term fraud scheme may be reluctant to take a step back, listen to advice and not continue with the scheme.  As I stated in an earlier post, I am not a mental-health professional and it is not the purpose of this blog to analyze people.  However, sometimes when I do have to confront victims of scams, especially those who have been victimized over a long period of time, I do have to take note of the fact that they may not be receptive to what I have to say.  In fact, they can be downright hostile.  Sometimes it seems that I am the bad guy for even daring to suggest that they are the victim of fraud.

    It is sad and depressing to have to deal with these situations.  I can sometimes feel the frustration and anger of family members or close friends that are trying to help such victims get out of the scams.  But reading Dr. Sagan's quote reminded me again that there are very human frailties which play a role in people being the victim of scams.  The desire to "get rich quick" is only one aspect of human behavior which controls or plays a role in becoming a victim. 

   Dr. Sagan's quote serves to warn us that once we go down a dark hole, sometimes it seems that there is no escape.

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 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