Due Diligence in Fraud Prevention, Part 2

[Charles Bacon]

Due Diligence in Fraud Prevention

You may want to read Part One first, before you read this Part Two.

From Part One: There are countless financial instruments, business documents and corporate/financial structures which are legitimate and have value. However, the con man, huckster, fraudster and scammer will use everyone and everything to part you from your money. Part One also contains a few recommendations to try to stay away from frauds and scams.

Part Two
Business-Related Frauds & Scams

1) Advance Fee Loans Scams: These are fake loan brokers offering incredible loans for any and all purposes, including paying off all debts, erase bad credit, etc. Advance fees range from $10 to thousands to cover anything from processing fees, first payments, etc.
2) Alaskan Trusts and Delaware Trusts: Supposed asset protection tools. The lawyers, trust companies and banks in these states are making money, but, sister state judgments are still enforceable in both Alaska and Delaware.
3) Annuity Abuse: Variable annuities can be good investments, but not for high income or high net individuals.
4) Anti-IRS theories (aka 16th Amendment): Run, do not walk, in the opposite direction.
5) Assembly /Craft Work at Home Scam: Just send in your money and you too can earn $100s and $1,000s per month. All you have to do is purchase the kit/samples/equipment/training manual.
6) Asset Protection Experts with False Credentials: Countless people are presenting themselves as experts in asset protection. Legal and tax training is critical for professionals who provide valid asset protection services.
7) Asset Protection to Save Income Taxes: While asset protection plans will usually reduce estate taxes, no asset protection plan will reduce income taxes.
8) Asset/Revenue Understatements: Countless variations. Use a competent auditor, and if you smell something, use a forensically trained auditor.
9) Bait and Switch: Get excited by that super special low price, find out the product is junk, let the salesman talk you into the high price product.
10) Bank Examiner Swindle.
11) Bank Guarantee Frauds.
12) Bank Paper.
13) Bankruptcy Fraud.
14) Blocked Fund Programs: Just put up some dough and you too can get that money out of that third world or former eastern block country.
15) Bulk Email.
16) Captive & Self-Insurance: If you create your own insurance company, you can pay yourself deductible premiums. Of course if you let the IRS in on the secret, they will tell you that there never was any chance that you could deduct anything, and by the way please pay the back taxes, interest, and those penalties that you owe.
17) Chain Letters.
18) Charging Order Protection: Often incorrectly used with Family Limited Partnership vehicle.

[djm491]

I work in public safety and we are seeing new trends develop in financial fraud and identity theft as criminals become more sophisticated.

Advance fee fraud scams commonly known as "419 scams" originate from countries including Nigeria, Canada and the UK. Many of these scams began with sending out spam emails, mass faxes and other types of phishing techniques. These methods are becoming outdated. There is a lot of educational information out there on how to prevent becoming a victim, and people using good old fashioned common sense easily avoid becoming a victim by simply not responding back.

Advance fee fraud scams have recently become more intricate. Many of the scammers are actively on the internet searching for their next victim on a more individual basis. Scammers use web sites such as E Bay, Craigslist, real estate locators etc. They find someone who has posted a vehicle, house or other article for sale or rent. Once their next victim is selected, the scammer begins the bartering process to purchase the item. The scammer will then ask for their victim's phone number, home address and possibly other identifying information.

This technique has been used at the corporate level by ordering goods or services via email.

In my next post I will discuss prevention tactics for these new scams to keep you from becoming the next victim.

[Charles Bacon]

You are quite right. Such scams have indeed not only been around a long time, but quite a number of variations have been used. Besides the ones you mention, one of the more recent is impressive. They will tell you about someone who died and point you to a news article, often in very reputable publications, "proving" that person did in fact die in some accident or such. It never ceases to amaze me how creative these crooks can get, and to what lengths they will go to separate people from their money, or worse.

BTW, I noticed in my original post that the last line is missing, which will point readers to my complete list of Business-Related Frauds & Scams online at /http://www.due.com/super/reference/index.cfm.
This of course includes the Nigerian scams, and a total of 96 frauds and scams.

[Carlos]

Originally Posted by Charles Bacon

You are quite right. Such scams have indeed not only been around a long time, but quite a number of variations have been used. Besides the ones you mention, one of the more recent is impressive. They will tell you about someone who died and point you to a news article, often in very reputable publications, "proving" that person did in fact die in some accident or such. It never ceases to amaze me how creative these crooks can get, and to what lengths they will go to separate people from their money, or worse.

Its crazy, I've seen most of those e-mails, it makes me sick to my stomach to even read them. How could you take advantage of someone else's misfortune, and use it to your advantage, just because you saw it on the net?

I've been recieving a lot of these spams in many of my e-mail addresses. Its crazy. You name it every type of spam mail, ESPECIALLY in my business e-mail. Now, I can't discern which e-mail to open. I recieve a lot of e-mails from our readers, and PR press releases.

I can't believe these corporations have the power to do this

[djm491]

Advance Fee Fraud Scams can be avoided by following simple steps:

1. If it looks too good to be true...It probablly is. Common sense is the best offense against fraud.

2. Beware of anyone contacting you via the internet from out of the country especially, Nigeria, the UK, and Canada.

3. If the person's country of origin is not readily determined, pay attention to the contact's use of the English language. Scammers from other countries often type in all caps, use bad punctuation, and unusual phrases ie. "Many blessings to you."

4. NEVER accept a cashier's check for payment, these are incredibly easy to counterfeit. A cashier's check is the most common point of loss for any scam victim.

5. Always verify payment prior to accepting it.

6. NEVER agree to send an "accidental" overpayment of money back to a purchaser this is the heart of the advance fee scam.

7. NEVER agree to wire money to a purchaser or agent via any type of telegram service.

8. NEVER give out personal information to anyone over the internet except through accounts / existing services that you have authorized.

9. Scammers have been attempting to order goods / services through corporate web sites. They have been known to send counterfeit forms of payment.

10. Be wary of guaranteed loans from what appears to be a trustworthy source for a fee paid in advance. Loans should only be obtained from legitimate financial institutions.


A final note, since the inception of the internet, scams have grown exponentially with millions of US currency leaving the country. Internet fraud is incredibly difficult to investigate. Many if not all Law Enforcement agencies on the local levels may not have the resources to investigate if you are a vicitm. Federal agencies will only investigate if your loss is significant.

Think of it this way, if someone from Nigeria took you money, how difficult would it be for you to find them? Law enforcement has the same dilema, and there is really no way to prosecute an international criminal for a simple theft. In this day and age, much of federal law enforcement funding is spent on homeland security rather than investigating such crimes. The best way to protect yourself is to use your common sense!

Two great resources are lookstoogoodtobetrue.com, and secretservice.gov. They offer frequent updates of these ever changing scams.

Thanks for the time with your comments and advice.
Your point about common sense is what bothers me. Yes, there is scams and emails everyone receives that looks legit, but there has to be some doubt but people still respond. The crooks must be experiencing success or they would stop - what does that say about our common sense?

What can we do to stop the email campaigns. The scams about property or accounts in my name are obvious to delete and move on, but the volume is sickening. Any advice?

[David Sandusky]

Originally Posted by Unregistered

What can we do to stop the email campaigns.

Online, don't put your email address out there. In forums and blogs like this one, you can be contacted if you register, but through contact forms not email that can be systematized.
Have a website? Same thing, create a contact form and don't but your email out as a link anywhere.
Having said that, I am careful and don't have free email accounts and still get spam...not like others I hear about, but I do.

In moderating this and other forums and blogs, it is amazing how much spam and trash gets blocked.

[ginger21]

hey guys, thanks for the advice. there are a lot of innocent people online who get scammed all the time. at least now, i won't be one of them!

Thanks for the responsible series of post on fraud prevention. Our continued obstacle is the creativity in how the spam and fraud artist manipulate seemingly legitimate information. Stay sharp people. Pick up the phone if you are not sure about someone.