Beware of Frauds & Ripoffs
| Con Alert! Beware of Frauds & Ripoffs |
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Consider this scenario:
A fellow gets a letter in the mail, no return address. Inside, a simple slip of paper that says the Canucks will beat the Red Wings in the upcoming Saturday hockey game. The guy finds it kind of weird and chucks the letter away. Come Saturday, guess what! The Canucks win.
The following week, another envelope, no return address. Inside a slip of paper saying the Orioles will beat the Blue Jays in the Friday night game. Sure enough, the Orioles win.
The following week, same thing except the prediction is for the Lakers to beat the Bulls in the Sunday basketball game. The Lakers win.
By now the guy is getting interested and mentions the anonymous notes to his work buddies. Someone suggests that if another note comes, they should bet on it. Another note comes. They bet on the prediction. They win.
Same thing goes on for ten weeks running. They're betting more and more and at the end of the ten weeks, they've amassed a small fortune.
Then one night, the doorbell rings at the home of the guy getting the notes. A disheveled fellow is there and asks the guy, "Did you get my notes?" Well!
The fellow tells his "tale of woe". He's been cursed with the ability to predict the future. Everyone shuns him because he's weird. He can't hold down a job. Etc. Etc. Etc.
"Are you kidding?" says our hero. "A curse? Man, you've got a great gift there. Didn't you ever bet on your predictions to make money?"
"Betting? What's that?"
"What! You don't know about gambling?" And our friend in disbelief explains all about gambling to the guy at the door.
"Look," he says, "You don't have to be poor and unemployed. Tell me your next prediction and we'll cut you in on the winnings."
The fellow is reluctant. He's not sure he should profit, or let others profit from his ability. After some cajoling, he's convinced it's okay to gamble. But he doesn't feel right telling the guy his prediction to make money. If our friend gives him the money, he'll go and place the bet and come back and split the winnings.
A sure thing is a sure thing, so our friend and his pals pony up a wad of dough, gives it to the dishevelled man and urge him to go and place a bet.
Of course, they never see or hear from the guy again.
That is a real con that has been used by some very clever crooks to fleece people. How is it done? We'll explain that later!
But it is just one of many ways in which innocent people, blinded by greed, can be fleeced. The news this week reported yet again that people are being taken in by the Nigerian Scam. This fraud, which has been going on for decades, has taken many, many people to the cleaners.
The way it works is that you get a letter from someone claiming to be some official in Nigeria who has to launder some money for some strange reason that sounds superficially legitimate. They want to "borrow" your bank account, deposit $10 million to it, then withdraw $9 million from you, a legitimate source, so their money is then clean. You get to keep the extra million for your trouble. Yes, hundreds of people fall for this every year, year in and year out. I got a copy of the Nigerian Scam letter myself a while back (as an email - the crooks have gone modern) and it is reproduced on another page if you want to see one of its variants.
Then there's the old three card monte, the shell game and other carnival tricks. Frauds range from the simple to the sophisticated, but they take people in looking for an easy buck.
Another con is a re-insurance scheme for freighters. In a casual conversation at a cocktail party you hear from some guy making big money in insurance. After some cajoling, he reluctantly tells you about the scheme. Seems oil tankers that have been in an accident are not easily insured, even though the refurbished ship is unlikely to have a second accident. So a syndicate of private investors is insuring such ships at exorbitant rates. Profits are unbelievable.
You want in, so the guy contacts you down the road and gives you an opportunity. Costs $5000 to get in. You bite, and lo and behold, a year later, you double your money. Wow! What a great way to make money. Now another opportunity arises, but you need $50,000 to get in. You bite. Again you double your money in a year.
And now the big score. You've got a very rare chance to triple your money in a year, but the minimum investment is $500,000. You mortgage, beg and borrow to get the cash and put it up. And you never see it again. This is a real scam that has fleeced people of millions.
The most famous scam of all time was the original Ponzi scheme, named after Charles Ponzi. Modern chain letters and pyramid schemes are a version of the this con. It's characterized by people being payed off high percentage returns from the investments of new investors. Sometimes these schemes masquerade as multi-level marketing.
There's a way to recognize money scams. They all have several of the following characteristics:
The people perpetrating the fraud are sometimes innocent dupes themselves and not even aware they are doing anything wrong. One such scheme is the so-called Airplane Club fraud. This usually takes the form of clubs catering to wealthy or upper middle class women. You're invited to a party and meet a group of women who form an "airplane". One is the pilot, two are co-pilots, four are flight crews and eight are passengers. It costs you $5000 to become a passenger. Once the plane is "filled", the pilot collects the $40,000 that the passengers have paid and "flies away".
The plane is then split in two to become two planes. The co-pilots are now pilots. The flight crews become co-pilots. The passengers become flight crews. And eight new passengers are then recruited for each plane.
This is a classic Ponzi scheme. The dollar amounts can vary, but the scenario is standard. Sometimes called the Concorde Game, the scheme has even ensnared two public prosecutors! No one is immune.
The Internet has spawned a number of new scams and refurbished old ones, the most popular being variants of the chain letter or Ponzi scheme. I get them in my email at the rate of several a week. So beware. Be alert. And remember this:
If it sounds too good to be true, it probably is a fraud.
To find out how the sports prediction scam works or for an example of an actual Nigerian Scam letter, click the links below.
Sports Prediction Fraud
Nigerian Letter Scam
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