Scams

It was Barnum Bailey who is reputed to have said that “there is a sucker born every minute.” Today’s scam artists operate on the basis of that old wisdom. Scams have really proliferated in the last few years both in numbers and the variety of approaches.

Let us start with the “soft scams” of the TV ads. Here the sucker is drawn in by the tall claims made in the ad be it for high returns on investments or longer endowments. You just need to put down your credit card number and you will soon be on your way to a lovely body or be the proud owner of the latest doodad which does less than it promises in the ad when you actually hold it in your hand. At least in the US there is a modicum of regulation which requires these ad makers to also broadcast the various caveats to the unsuspecting buyers. Of course most of these caveats are in extremely small print or spoken at three times the normal speed during the TV ad. But these caveats do exist for the wary.

At altogether another level are the scams which have brought Nigeria some prominence.Here is how this famous scam works: letters (or, nowadays, e-mail messages) postmarked from Nigeria (or Sierra Leone, or the Ivory Coast, or almost any other foreign nation) are sent to addresses taken from large mailing lists. The letters promise rich rewards for helping officials of that government (or bank, or quasi-government agency or sometimes just members of a particular family) out of an embarrassment or a legal problem. Typically, the pitch includes mention of multi-million dollar sums, with the open promise that you will be permitted to keep a startling percentage of the funds you're going to aid in squirreling away for these disadvantaged foreigners. But when you agree to participate in this international bail-out, you soon find that something is always going wrong: paperwork will be delayed, new questions are being asked, officials will need to be bribed. All of them require money from you — an insignificant sum, really, in light of the windfall about to land in your lap — to get things back on track. You pay, you wait for the transfer ... and all you'll get in return are more excuses about why the funds are being held up and assurances that everything can be straightened out if you'll just send a bit more cash to help the process along. Once your bank account has been sucked dry or you start making threats, you'll never hear from these Nigerians again. As for the money you've thrown at this, it's gone forever.

In another form taken by the Nigerian scam, a church or religious organization is contacted by a wealthy foreigner who says he desires nothing more than to leave his considerable fortune to that particular group. Maybe he says he's led a life of sin and is now trying to make good, or maybe he claims that as a devout Christian he heard about their good works and wants to leave his money to help continue them, but whatever the backstory, it's just a tale. Once again, there will be delays, each of them necessitating the "beneficiary" to spend a few thousand here and a few thousand there in an effort to collect money that never materializes.

In an earlier version of the same con, the victim is informed that he has just won an important prize in a foreign lottery he doesn't remember entering. Only when he tries to collect the money is he approached for payment of facilitation fees to get his winnings to him. Of course, it's the same con, with just a few elements unimportant to the execution of the thievery changed about. This Nigerian Scam has been emptying the pockets of victims for decades — first through letters, then with faxes, and now via e-mail.

In its earliest incarnation, which dates to at least the 1920s, it was known as 'The Spanish Prisoner' con. In that long-ago version, businessmen were contacted by someone trying to smuggle the scion of a wealthy family out of a prison in Spain. But of course the wealthy family would shower with riches those who helped secure the release of the boy. Those who were suckered into this paid for one failed rescue attempt after another, with the fictitious prisoner continuing to languish in his non-existent dungeon, always just one more bribe, one more scheme, one more try, away from being released. These days it's trapped funds not errant sons of well-to-do families that are the objects of these global wild goose chases, but the con is the same.

Then there is Bernie Madoff, who ran the latest version of a Ponzi scheme for people who wanted high returns on safe investments during good times and bad. A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going. Of course the system is destined to collapse because the earnings, if any, are less than the payments to investors. While the system eventually will collapse under its own weight, the example of Bernard Madoff illustrates the ability of a Ponzi scheme to delude both individual and institutional investors as well as securities authorities for long periods. Madoff's variant of the Ponzi Scheme stands as the largest financial investor fraud in history committed by a single person and prosecutors estimate losses at Madoff's hand totaling about $64.8 billion.

Finally there are the scams that affect the innocent bystanders. I was subject to one recently when I examined my telephone bill from Verizon. Here a company called Mindsprings had been charging me $ 20 a month for some services that I had not asked for and had never used. Verizon pointed out in the bill that if I did not pay these charges, my phone would not be cut almost asking me to not pay these charges. When I called them and asked them why they allowed these very obvious scammers and why they were becoming their collection agents, I was told that FEC required them to permit competition and to collect these charges if the company provided at least two identification for each member. Clearly the company had stolen some of these identities hoping to make a bonanza before enough people cottoned on to their chicanery. Verizon did offer to return the money and also to place a ban on such third party collection efforts if I so requested.

At the heart of a scam- except the last one- is the desire to obtain returns without effort or work. Scams normally take in people who have a touch of larceny in them. They want to take short cuts and feel that they can outwit the scammer. Sad to say, that rarely happens.