Tag Archives: fraud

Be Rude With Some People

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As the Times Journal advises, Be Skeptical, Be Rude – Don’t Be a Victim

Each year, nearly 25 million Americans are victims of consumer fraud. Senior citizens are more at risk of telemarketing scams than any other age group. Fraudulent telemarketers direct 56 to 80 percent of their calls at older adults.

Evidence indicates that offenders believe older people have more assets and are more susceptible to excitement tactics or appeals to altruism. They have told police their ideal “mark” is an elderly person, who lives alone, with no contact with family members. They know that senior citizens will not give money or personal information to just any stranger. These experienced criminals have made a science of gaining the trust of older adults.

If a smooth talker wants to keep talking and you are concerned about his or her motives, cut the call quickly or even just hang up the telephone.  Follow up some of the principles involved in Assertiveness Training and stay in control of the conversation.  One trick is to have a short phrase that is easy to say, which is guaranteed, when repeated several times, to cause the caller to end the call. That could for example be “This is not for me.”

Scam artists are experts in establishing rapport to steal seniors’ money. There are a variety of approaches including:

  • You have won a prize, but must pay to receive it;
  • Great deals that need immediate payment with no written information;
  • Requests for donations for mysterious charities;
  • Calls from the supposed police, FBI or bank officials asking for “help” and your personal information.

Criminals assume that senior citizens will not report the crime to law enforcement officials because they will be ashamed of being victimized.  They also worry that concerned family members will take control of their finances.

Recognizing scammers is important and you then should report them to the appropriate law enforcement authorities.  This is critical to protect others. When you report a scammer, you help the police prosecute them and this stops the scammer from stealing from someone else.

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Seniors Fall For Ponzi Schemes

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Seniors often have financial concerns as they contemplate their future and their perhaps dwindling assets.  If they rely on Social Security and state pensions, even those are questioned by some who liken them to a Ponzi scheme. The older members who are drawing out now are being paid out of a fund that is being refilled by contributions from younger members who hope they will find there is something they can draw on in the distant future.

It is all very concerning and is made much more worrying by the deep recession that only slowly may be receding.  Many seniors will be worriedly scratching their heads on whether they will have enough to live on, particularly if they are in good health and may have a long life.

Couple that with the many cases of Financial Abuse of Elders that was covered in an earlier post, and you end up with concerned seniors who are not sure who to consult.  Some financial abuse cases are perpetrated by the seniors’ sons and daughters or by other family members.  Who then to turn to?  If a trusted friend suggests a mature person whom they have confidence in, then this may appear less thorny than having to involve the family in your financial matters.

If that mature person gains your trust and confidence, then it may be only a matter of time before they are suggesting ways of investing where you can get better returns than the low interest rates the banks presently offer on savings.  Once on the hook, you may soon find that your goose has been cooked (to mangle metaphors).

It is probable that there are many more Ponzi schemes than actually hit the headlines.  Bernard Madoff was of course the biggest in history, but others have caused equal misery to many seniors.  Last month, we all learned of Earl Jones, the Montreal Ponzi Schemer, who preyed on family members and friends and lived the high life as their savings disappeared.

Last week, here in Vancouver we read that B.C. Ponzi schemers were found guilty of fraud:

Four British Columbia residents, Hal (Mick) Allan McLeod, Kenneth Robert McMordie (aka Byrun Fox), Dianne Sharon Rosiek and David John Vaughan, were ruled guilty of fraud for violating securities laws by a B.C. Securities Commission panel. They lied to investors about how their money was being invested, what they could expect as a return, and the risk level of these investments.  Their Ponzi scheme cost some 800 investors more than $10 million US.

Today the news is that a $50 million Ponzi Scheme Is Alleged in Detroit.

A class action suit in Federal Court claims  that John Bravata and Richard Trabulsy masterminded BBC Equities and Bravata Financial Group, which stole $50 million from hundreds of people in a Ponzi scheme, . They are said to have promised 8 to 12 percent returns in a real estate scam, guaranteeing “safer returns than other investment options,” according to the complaint.  They began by soliciting family and friends for money, then began holding “free lunch” seminars each week to target senior citizens. Half of BBC’s money allegedly came from IRA accounts.

In all these cases, the seniors are likely to see only a fraction of their original holdings.  This is financial abuse of the very worst kind.  The only safeguard is to seek financial counsel and advice from only reputable and knowledgeable individuals who will not benefit in any way from the impartial advice they may give you.

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The Madoff Fraud – The Winners And Losers

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Today was the day to see the Madoff fraud victims and losers when Madoff was sent to jail.

Apparently not all Madoff investors were losers and some made profits.

The many Bernard Madoff investors who withdrew money from their accounts over the years are now wrestling with an ethical and legal quandary.  What they thought were profits was likely money stolen from other clients in what prosecutors are calling the largest Ponzi scheme in history.

Hundreds and maybe thousands of investors in Madoff’s funds have been withdrawing money from their accounts for many years. In many cases, those investors have withdrawn far more than their principal investment.

Such winners were probably not present on this day for the victims and losers. One loser but not a victim was clearly Bernard Madoff himself, who was remanded to jail and faces up to 150 years in prison.

At the trial, fifty courtroom seats were reserved for some of the estimated 4,000 victims of Madoff’s Ponzi scheme. Some had placed all their savings in Madoff’s firm.  Madoff, 70, pleaded guilty to charges that he swindled investors through his firm, Bernard L. Madoff Investment Securities LLC. None of his clients’ funds were invested in securities for more than 13 years.

Another big loser was the SEC.  As Campbell Brown said, the SEC ignored the whistle-blower in the Madoff case

The Securities and Exchange Commission completely bungled the investigation and likely cost Madoff’s victims even more money.  Although new SEC Chairman Mary Schapiro told a congressional panel that rewards might be a good way to help bring in leads, that was quite unnecessary in this case.  The SEC wouldn’t have had to shell out a dime when Harry Markopolos tried to deliver the Madoff corruption probe on a silver platter starting four years ago.

Another surprising winner according to one of the victims may be the Internal Revenue Service (IRS).  It is alleged that Madoff investors paid hundreds of millions, if not billions, of dollars in income taxes on phantom income that never existed.  Perhaps the Internal Revenue Service should not be allowed to keep that money.

It is certainly a tragedy of mammoth proportions, particularly for many of the victims whose lives have been irreparably damaged.

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