| By
Gary Scott
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’s 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!
Gary
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 GaryScott.com
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. |
