Current Fraud Warnings

Our last message began a series of current fraud warnings when it introduced the book “Cleaning Up” by Barry Minkow a guy who conned thousands of investors out of millions of dollars by the time he was only 21. The last message told about the book, but these current fraud warnings share two huge fraud dangers that Minko‚Äôs book unknowingly exposes.

The first of the current fraud warnings is BEWARE of times when scams work best. Minkow called these times the perfect storm for fraud. Here is what he wrote.

“The movie The Perfect Storm is based on a true story of the disastrous collision of three separate storms in October of 1991.

Although usually one storm cancels another out, this time three converged to give rise to a storm of mammoth proportions. There is also a perfect storm for fraud. Three united elements can brew a heinous fraud with a giant wave likely to crush hapless investors like tiny sale boats on the open sea. Sophisticated perpetrators of fraudulent schemes are good meteorologists when determining that timing is right for massive frauds.”

Minkow then went on to show how the late nineties was such a perfect storm for fraud. Interest rates on savings were low. People could easily borrow six figure amounts with cheap interest rates based on their rising home equities. The three storms that were #1: low returns on investment, #2: easy access to low cost, #3 large loans.

“These conditions create once in a lifetime opportunities to raise millions of dollars (through fraud scams) from unwitting investors”, Minkow wrote.

The second of the current fraud warnings is that regretfully Barry Minkow was wrong! These conditions were not once in a lifetime, nor were they the perfect storm for fraud. Now conditions are even worse!

The first three conditions (low returns-easy access to large low cost loans) that make fraud and scams easier still exist. Now there are four more factors that turn this from a fraud storm into a dangerous category seven dangerous fraud scam hurricane! Here are the other four conditions.

Current Fraud Warnings Condition #4: The U.S. dollar is falling. Now investors not only get low returns, but they lose purchasing value in global terms.

Current Fraud Warnings Condition #5: Inflation is rising, gas and food prices are soaring and everything costs more.

Current Fraud Warnings Condition #6: The public is finally learning that Social Security is in trouble. This means that the current low returns on savings hurts investors more than ever. A huge wave of baby boomers have only six or seven years before they retire. They are asking, “If Social Security fails what happens when my meager savings run out?” They are under pressure to make better returns.

Current Fraud Warnings Condition #7: Minkow gives us this scam alert almost by accident. After leaving jail, he was hired by the FBI to train agents on how to spot fraud at their training center in Quantico Virginia. Here is what he said to these agents.

“If I were perpetrating fraud today, I would simply go offshore out of reach of the SEC and challenge the already overburdened FBI to come get me. Since 9/11 the Bureau has changed its priorities from white-collar crime to terrorism. And I think that an emphasis on keeping the nation safer is good, but perpetrators see the shift and that is why we are seeing a dramatic increase in white collar crime. The result? The FBI has relocated agents who used to work on white-collar crime to counterterrorism, and there was a void that perpetrators were more than glad to see. As long as investment fraud can be kept out of the jurisdiction of the SEC perpetrators will feel untouchable. That is because the SEC brings civil cases, not criminal cases and therefore has limitations outside the United States.”

In short many people feel a much greater need for high returns in their business or investing than ever before.

Here is the catch. An investor’s or business person’s increased need is no justification for overlooking rules of common sense. Yet people do! Usually law enforcement is there to protect them. Not so much now.

There you have it. The perfect category seven fraud scam gale is approaching. Actually it is not approaching. It is here! The need for current fraud warnings is at an all time high and you are so warned.

But what to do? What tools can we create to protect against this hurricane force of fraud and scams? Tomorrow’s message explains.

Until then good, safe business and investing to you!


P.S. My novel, the 65th Octave, provides an enjoyable way to learn about fraud and scams. The hero is a scam catching expert working for big banks. The book outlines why scams work and why suckers always lose. I recommend you read the book. It has some in-depth economic information but is also a fast paced, fun read.

Order the 65th Octave at

Sometimes one picture is worth a thousand words


To avoid scams balance yourself in nature like this cabin at Gary and Merri Scott’s Merrily Farm where you are welcome to visit and stay Little Horse Creek.