DOCSLIB.ORG

Investment Swindles and Con Schemes I. Introduction

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Investment Swindles and Con Schemes I. Introduction INVESTMENT SWINDLES AND CON SCHEMES TABLE OF CONTENTS I. INTRODUCTION ........................................................................................................................................... 1 II. INVESTMENT SWINDLES AND CON SCHEMES OVERVIEW Who Are the Perpetrators and Victims of These Schemes? .............................................................................. 3 Why Do the Perpetrators Commit These Con Schemes? .................................................................................. 3 Why Do Consumers Become Victims to These Schemes? ................................................................................ 4 What Are the Red Flags That Characterize These Con Schemes? .................................................................... 4 How Are These Con Schemes Executed? ............................................................................................................. 5 Effects on Consumers .............................................................................................................................................. 6 Review Questions ..................................................................................................................................................... 7 III. INVESTMENT SCHEMES Introduction ............................................................................................................................................................... 8 Bonds ....................................................................................................................................................................... 10 Junk Bonds ..................................................................................................................................................... 10 Zero-Coupon Bonds ..................................................................................................................................... 11 Certificates of Deposit ........................................................................................................................................... 12 Callable CDs ................................................................................................................................................... 13 Equity Indexed Certificates of Deposit ...................................................................................................... 16 Collectibles ............................................................................................................................................................... 16 Art .................................................................................................................................................................... 16 Precious Stones and Metals .......................................................................................................................... 16 Rare Coins ....................................................................................................................................................... 17 Commodities ........................................................................................................................................................... 18 Exotic Commodities ...................................................................................................................................... 18 Oil and Gas Investment Fraud .................................................................................................................... 18 Futures ...................................................................................................................................................................... 18 Commodities Futures Contracts .................................................................................................................. 19 Commodity Trading Systems ....................................................................................................................... 22 Commodity Pools .......................................................................................................................................... 23 “IRA-Approved” Investments .............................................................................................................................. 23 Variable Annuities .......................................................................................................................................... 24 Offshore and Overseas Investments ................................................................................................................... 24 Foreign Exchange (FOREX) Investment Fraud ...................................................................................... 24 Prime Bank Guarantees ................................................................................................................................ 25 Options ..................................................................................................................................................................... 25 Exchange-Traded Options ........................................................................................................................... 26 Relationship of the Underlying Instrument to the Option ...................................................................... 26 Option Values and Premiums ...................................................................................................................... 27 Over-the-Counter (OTC) Options.............................................................................................................. 27 Scalping Schemes ........................................................................................................................................... 27 Hedge Funds .................................................................................................................................................. 28 Promissory Notes ................................................................................................................................................... 29 Real Estate Investment Scams .............................................................................................................................. 30 Real Estate Limited Partnerships ................................................................................................................ 30 Investment Swindles and Con Schemes i INVESTMENT SWINDLES AND CON SCHEMES III. INVESTMENT SCHEMES (CONT.) Timeshares ...................................................................................................................................................... 31 Real Estate Options ....................................................................................................................................... 31 Securities ................................................................................................................................................................... 31 Repurchase Agreements ............................................................................................................................... 31 Treasury Securities ......................................................................................................................................... 32 Unregistered and Falsely Represented Securities ...................................................................................... 34 Stock Scams ............................................................................................................................................................. 34 Blind Pools ...................................................................................................................................................... 35 Micro-Cap Companies .................................................................................................................................. 35 Online Day Trading ....................................................................................................................................... 36 Penny Stock .................................................................................................................................................... 37 Worthless Stock ............................................................................................................................................. 37 Viatical Settlements ................................................................................................................................................. 38 Clean Sheeting ................................................................................................................................................ 39 Online Investments ................................................................................................................................................ 40 Review Questions ................................................................................................................................................... 42 IV. INVESTMENT MARKETING SCHEMES AND TECHNIQUES Types of Marketing Schemes ................................................................................................................................ 44 Ponzi Schemes...............................................................................................................................................
Load more

Recommended publications
  • Effect of Pyramid Schemes to the Economy of the Country - Case of Tanzania
    International Journal of Humanities and Management Sciences (IJHMS) Volume 5, Issue 1 (2017) ISSN 2320–4044 (Online) Effect of pyramid schemes to the Economy of the Country - Case of Tanzania Theobald Francis Kipilimba come up with appropriate laws and mechanisms that will stop Abstract— Pyramid scheme, in their various forms, are not a those unscrupulous people praying on unsuspecting new thing in the world, however, they have reared their ugly individuals. Help supervisory institutions formulate menacing heads‘ in the Tanzanians society only recently. Before the appropriate policies that will require all investment plans to Development entrepreneurship Community Initiative (DECI) debacle be documented, filed and thoroughly scrutinized and come up other schemes such as Women Empowering, woman had already with the ways to recover assets of the culprits and use them to racked havoc in the society.This study intended to evaluate the extent compensate the victims of get rich quick schemes. to which Tanzanians knew about the pyramid schemes operating in the world, their participation in these schemes and their general feelings towards the scammers, our judicial system and the course II. BASIC VIEW OF PYRAMID SCHEME action they are likely to take in the event they are scammed. Results Pyramid scheme is a fraudulent moneymaking scheme in show that most Tanzanians are very naïve when it comes to pyramid which people are recruited to make payments to others above schemes, with very scant knowledge about these schemes. Many do them in a hierocracy while expecting to receive payments not know if they have participated in these schemes but in those instances that they had, they suffered huge financial losses.
    [Show full text]
  • The Economics of Cryptocurrency Pump and Dump Schemes
    The Economics of Cryptocurrency Pump and Dump Schemes JT Hamrick, Farhang Rouhi, Arghya Mukherjee, Amir Feder, Neil Gandal, Tyler Moore, and Marie Vasek∗ Abstract The surge of interest in cryptocurrencies has been accompanied by a pro- liferation of fraud. This paper examines pump and dump schemes. The recent explosion of nearly 2,000 cryptocurrencies in an unregulated environment has expanded the scope for abuse. We quantify the scope of cryptocurrency pump and dump on Discord and Telegram, two popular group-messaging platforms. We joined all relevant Telegram and Discord groups/channels and identified nearly 5,000 different pumps. Our findings provide the first measure of the scope of pumps and suggest that this phenomenon is widespread and prices often rise significantly. We also examine which factors affect the pump's \suc- cess." 1 Introduction As mainstream finance invests in cryptocurrency assets and as some countries take steps toward legalizing bitcoin as a payment system, it is important to understand how susceptible cryptocurrency markets are to manipulation. This is especially true since cryptocurrency assets are no longer a niche market. The market capitaliza- tion of all cryptocurrencies exceeded $800 Billion at the end of 2017. Even after the huge fall in valuations, the market capitalization of these assets is currently around $140 Billion. This valuation is greater than the fifth largest U.S. commer- cial bank/commercial bank holding company in 2018, Morgan Stanley, which has a market capitalization of approximately $100 Billion.1 In this paper, we examine a particular type of price manipulation: the \pump and dump" scheme. These schemes inflate the price of an asset temporarily so a ∗Hamrick: University of Tulsa, [email protected].
    [Show full text]
  • Naïve Or Desperate? Investors Continue to Be Swindled by Investment Schemes. Jonathan Hafen
    Naïve or Desperate? Investors continue to be swindled by investment schemes. Jonathan Hafen Though the economy appears to be rebounding, many investors are still feeling the sting of having lost hefty percentages of their savings. Lower interest rates and returns on traditionally low risk investments put investors in a vulnerable position where they may feel the need to "catch up" to where they were a few years ago. Investors, particularly if they are elderly, trying to find better than prevailing returns may let their guard down to seemingly legitimate swindlers offering high return, "low-risk" investments. Fraudulent investment schemes come in all shapes and sizes, but generally have two common elements-they seem too good to be true and they are too good to be true. Eighty years ago, Charles Ponzi created his namesake scheme and investors are still falling for virtually identical scams today. Ponzi schemes promise either fixed rates of return above the prevailing market or exorbitant returns ranging from 45% to 100% and more. Early investors receive monthly, quarterly or annual interest from the cash generated from a widening pool of investors. Of course, they are receiving nothing more than a small portion of their own money back. The illusion of profit keeps the duped investors satisfied and delays the realization they have been tricked. Early investors usually play a part in keeping the scheme alive by telling friends or family of their good fortune. They essentially become references for new investors, which makes them unwitting accomplices. These scams always collapse under their own weight because new investments eventually slow and cannot sustain the rate of return promised as the number of investors grows.
    [Show full text]
  • This Booklet Is Published by the South Pasadena Police Department Crime Prevention Unit 1422 Mission Street South Pasadena, CA 91030 626-403-7270
    This booklet is published by the South Pasadena Police Department Crime Prevention Unit 1422 Mission Street South Pasadena, CA 91030 626-403-7270 www.southpasadenaca.gov/police Scams and Cons INTRODUCTION Most people think they are too smart to A Residents Guide to Prevention fall for a scam or a con. However, according to the Federal Trade Commission in 2011, scam and con Table of Contents artists were able to swindle over 25 million US adults. Introduction 1 Defining Scams and Cons 2 Scam and con artists don’t discriminate, regardless of race or age. They History 2 look for the old and young, male and female. Seniors are often targeted because they are usually lonely and compassionate. Scam and con artists Myths 3 use this to their advantage by trying to befriend them. They offer promises Types of Scams and Cons of quick wealth to seniors who are on a fixed income and are out to steal - Home Repair 4 their savings. People in their 20s are more often victims to scams than - Fake Accidents 5 seniors, but lose less money than seniors. - Distraction Thefts - Residential Burglary 6 Unlike other types of crimes, scams and cons are non-violent crimes and - While Shopping 6 involve the suspect being friendly. Because scam and con artists work by - Foreign Lottery 8 deception, they have excellent communication skills to try to gain one’s - Advance Fee (Nigerian Letter) 9 confidence. - Sweepstakes 10 This booklet was developed to help residents know the various types of - Fake Charities 11 scams and cons that are being used today.
    [Show full text]
  • Howard R. Elisofon Partner; Co-Chair, Securities Litigation and Enforcement [email protected] (212) 592-1437 PHONE (212) 545-3366 FAX
    Howard R. Elisofon Partner; Co-Chair, Securities Litigation and Enforcement [email protected] (212) 592-1437 PHONE (212) 545-3366 FAX Howard Elisofon is a nationally renowned litigator with more than 35 years of experience in securities law and enforcement. Howard began his career as trial counsel for the SEC’s Division of Enforcement. He subsequently worked in a variety of senior legal positions at Prudential Securities and First New York Securities, where he obtained his Series 7 and Series 24 licenses, and then in private practice at Greenberg Traurig LLP, where he was a founding member of the firm’s New York office. As co-chair of Herrick’s Securities Litigation and Enforcement practice, Howard focuses on securities and commodities litigation, arbitration, mediation and investigations for broker- dealers, brokerage firms, investment advisers, investment companies, venture capital firms and insurance companies, as well as securities traders and industry executives. He represents clients in a wide variety of complex commercial litigation matters, as well as enforcement proceedings before the SEC, the Offices of the U.S. Attorneys, the New York State Attorney General and New York State District Attorneys, as well as FINRA and various exchanges, and state securities and insurance regulators. A frequent speaker on securities and enforcement related topics, and a sought-after authority on broker-dealer issues, Howard’s commentary is often featured in major media outlets. High-Profile Government Investigations and Litigation Howard has defended clients in numerous high-profile government investigations, including the Drexel Burnham/Ivan Boesky insider trading matter, the Prudential Securities limited partnership fraud scandal, the Prudential market timing investigation and the Stanford Ponzi scheme.
    [Show full text]
  • Complete Guide for Trading Pump and Dump Stocks
    Complete Guide for Trading Pump and Dump Stocks Pump and dump stocks make me sick and just to be clear I do not trade these setups. When I look at a stock chart I normally see bulls and bears battling to see who will come out on top. However, when I look at a pump and dump stock it just saddens me. For those of you that watched the show Spartacus, it’s like when Gladiators have to fight outside of the arena and in dark alleys. As I see the sharp incline up and subsequent collapse, I think of all the poor souls that have lost IRA accounts, college savings and down payments for their homes. Well in this article, I’m going to cover 2 ways you can profit from these setups and clues a pump and dump scenario is taking place. Before we hit the two strategies, let’s first ground ourselves on the background of pump and dump stocks. What is a Pump and Dump Stock? These are stocks that shoot up like a rocket in a short period of time, only to crash down just as quickly shortly thereafter. The stocks often come out of nowhere and then the buzz on them reaches a feverish pitch. We can break the pump and dump down into three phases. Pump and Dump Phases Phase 1 – The Markup Every phase of the pump and dump scheme are challenging, but phase one is really tricky. The ring of thieves need to come up with an entire plan of attack to drum up excitement for the security but more importantly people pulling out their own cash.
    [Show full text]
  • Address Munging: the Practice of Disguising, Or Munging, an E-Mail Address to Prevent It Being Automatically Collected and Used
    Address Munging: the practice of disguising, or munging, an e-mail address to prevent it being automatically collected and used as a target for people and organizations that send unsolicited bulk e-mail address. Adware: or advertising-supported software is any software package which automatically plays, displays, or downloads advertising material to a computer after the software is installed on it or while the application is being used. Some types of adware are also spyware and can be classified as privacy-invasive software. Adware is software designed to force pre-chosen ads to display on your system. Some adware is designed to be malicious and will pop up ads with such speed and frequency that they seem to be taking over everything, slowing down your system and tying up all of your system resources. When adware is coupled with spyware, it can be a frustrating ride, to say the least. Backdoor: in a computer system (or cryptosystem or algorithm) is a method of bypassing normal authentication, securing remote access to a computer, obtaining access to plaintext, and so on, while attempting to remain undetected. The backdoor may take the form of an installed program (e.g., Back Orifice), or could be a modification to an existing program or hardware device. A back door is a point of entry that circumvents normal security and can be used by a cracker to access a network or computer system. Usually back doors are created by system developers as shortcuts to speed access through security during the development stage and then are overlooked and never properly removed during final implementation.
    [Show full text]
  • Exploring Stakeholder Mobilization in the Instance of Corporate Fraud and Ponzi Schemes
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by OPUS: Open Uleth Scholarship - University of Lethbridge Research Repository University of Lethbridge Research Repository OPUS http://opus.uleth.ca Theses Business, Dhillon School of 2011 Get mad, stay mad : exploring stakeholder mobilization in the instance of corporate fraud and Ponzi schemes McCormick, Cameron Anthony Lethbridge, Alta. : University of Lethbridge, Faculty of Management, c2011 http://hdl.handle.net/10133/3248 Downloaded from University of Lethbridge Research Repository, OPUS GET MAD, STAY MAD: EXPLORING STAKEHOLDER MOBILIZATION IN THE INSTANCE OF CORPORATE FRAUD AND PONZI SCHEMES Cameron Anthony McCormick Bachelor of Commerce in Cooperative Education, University of Alberta, 2003 A Thesis Submitted to the School of Graduate Studies of the University of Lethbridge in Partial Fulfillment of the Requirements for the Degree MASTER OF SCIENCE IN MANAGEMENT Faculty of Management University of Lethbridge LETHBRIDGE, ALBERTA, CANADA © Cameron McCormick, 2011 Dedication This thesis is the result of an off the cuff remark she made on our very first date; therefore, I dedicate this to my darling wife: Krista. Without your love, kindness and support, I never would have started this journey, let alone finish it. I love you and thank- you for believing in me when no one else did. iii Abstract Using a multi-case study, three Ponzi schemes were investigated: Road2Gold, Bernie Madoff’s empire, and the Earl Jones affair. This grounded study used an inductive bottom-up methodology to observe and describe stakeholder mobilization in reaction to corporate fraud. This research on stakeholder behaviour in Ponzi schemes articulates new theory for describing stakeholder behaviour and possible determinants for successful mobilization to action.
    [Show full text]
  • Protect Yourself. Don't Be a Victim of Fraud
    ROCIC • REGIONAL ORGANIZED CRIME INFORMATION CENTER • www.riss.net Tips to Protect Yourself ►Don’t Be A Victim! ROCIC • REGIONAL ORGANIZED CRIME INFORMATION CENTER • www.riss.net Protect Yourself • Don’t Be a Victim of Fraud 1 Table of Contents Con Artists and FlimFlams • 3 Bank Examiner • Broken Bottle Scam • Caller ID or Spoofing • C.O.D. Scam • Diversion Burglary • Door-to-Door Solicitor • Fortune Telling Fraud • Handkerchief Switch • Jury Duty Scam • Latin Lotto • Lottery Scams/Foreign Lottery • Lotteries • Pickpocket Diver- sion • Pigeon Drop • Police Follow-Up Scam • Recovery Rooms • Rock in a Box • Sweet- heart Swindle Con • Three-Card-Monte • Toner Rooms • Truck Stop Three-Card-Monte • Yellow Page Advertising Scheme Business and Investment Fraud • 17 Business Fraud • Telemarketing Fraud • Nigerian Letter or 419 Fraud • Advance Fee Schemes • Fake Check Scam • Redemption/Strawman/Bond Fraud • Letter of Credit Fraud • Prime Bank Note Fraud • Ponzi Schemes • Pyramid Schemes • Market Manipula- tion or Pump and Dump Fraud Identity Theft • 29 Fraud Against Senior Citizens • 30 Counterfeit Prescription Fraud • Funeral and Cemetery Fraud • Fraudulent Anti-Aging Products • Reverse Mortgage Fraud • Long Term Care Insurance Fraud Telemarketing Fraud • 36 Automobile Insurance Fraud • 42 Medical and Insurance Fraud • 46 Medical Equipment Fraud • Medicare Fraud • Dental • Medical Identity Scams • False Medical Claims • Discount Cards for Medical Insurance • Obamacare Scams • Medicare Scams • Workers Compensation • Stolen Premiums • Crooked Doctors and Lawyers Travel Industry Fraud • 57 Social Media Fraud • 61 Computer Fraud • 63 Internet Fraud • 65 Internet Auction Fraud • Internet Non-Delivery of Merchandise • Credit Card Fraud • Internet Investment Fraud • Preventing Online Fraud Home Improvement Fraud • 71 REGIONAL ORGANIZED CRIME INFORMATION CENTER • A RISS Center Protect Yourself • Don’t Be a Victim of Fraud 2 Sources of Information Many of the narratives for electronic or Internet fraud came from the FBI website at www.fbi.gov.
    [Show full text]
  • Stages of Postmortem Decomposition
    METHODS FOR ESTIMATION OF TIME OF DEATH RATE METHODS (i.e. estimation of tree’s age by height / rate of growth) - Rate of drying or discoloration of blood pools - Rigor Mortis - Livor Mortis - Algor Mortis - Decomposition - Flora (plants) around body - Fauna (insects) around body CONCURRENCE METHODS (i.e. estimation of tree’s age by counting rings) - Bloodstain vs. tire - Time of last know meal - Stopping of watch - Depth of footprint in snow - Depth of rainwater collected EVIDENCE FOR ESTIMATION OF TIME OF DEATH 1. CORPORAL EVIDENCE - In the body 2. ENVIRONMENTAL AND ASSOCIATED EVIDENCE - In the vicinity and general surroundings 3. ANAMNESTIC EVIDENCE - Based on the decedent’s ordinary habits and daily activities Envir. and Assoc. Corporal Evidence Evidence Anamnestic Evidence - stage of decomp of organs - uncollected milk, mail, - usual activities vs. exterior newspapers - soot in airway - lights on / off - walking and sleeping patterns - medical conditions (ASCVD, pre surgery) - alarm clock set - eating habits, times, type of foods - alcohol / drug levels - food on stove / in refrig - appointment - beard, nails, hair - type of clothing day / night indoors / outdoor seasonal (remote deaths) condition of clothing (mold, leached dyes) - sales slips, receipts - animals in house Use a combination of all evidence available to you, giving weight to the more reliable / documentable. Be suspicious when some factors seem to vary considerably from the others. STAGES OF POSTMORTEM DECOMPOSITION 1. Blue-green discoloration of skin RLQ and LLQ abdomen 24 hrs Entire abdomen 36 hrs 2. Marbling (Green-black discoloration in blood vessel distribution- hemolyzed blood reacts with hydrogen sulfide. Extravasation diffusion (leads to generalized dark purple-black skin 3.
    [Show full text]
  • TELEXFREE SECURITIES LITIGATION This Document Relates To
    Case 4:14-md-02566-TSH Document 790 Filed 12/04/19 Page 1 of 430 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS IN RE: TELEXFREE SECURITIES LITIGATION This Document Relates To: MDL No. 4:14-md-2566-TSH All Cases CELIO DA SILVA, RITA DOS SANTOS, PUTATIVE CLASS REPRESENTATIVES AND CLASS ACTION THOSE SIMILARLY SITUATED, Plaintiffs, v. FIFTH CONSOLIDATED AMENDED COMPLAINT TELEXELECTRIC, LLLP; et al., (CORRECTED) Defendants. DEMAND FOR TRIAL BY JURY Case 4:14-md-02566-TSH Document 790 Filed 12/04/19 Page 2 of 430 TABLE OF CONTENTS TABLE OF CONTENTS .............................................................................................................. i I. JURISDICTION AND VENUE .......................................................................................... 12 II. THE PARTIES ..................................................................................................................... 12 A. PLAINTIFFS ................................................................................................................ 12 B. DEFENDANTS ............................................................................................................. 14 1. TELEXFREE DEFENDANTS ........................................................................ 14 a. Third-Party TelexFree Bankrupt Entities ...................................................... 14 b. Electric and Mobile ........................................................................................... 15 2. OTHER OPERATIONAL DEFENDANTS ..................................................
    [Show full text]
  • Zerohack Zer0pwn Youranonnews Yevgeniy Anikin Yes Men
    Zerohack Zer0Pwn YourAnonNews Yevgeniy Anikin Yes Men YamaTough Xtreme x-Leader xenu xen0nymous www.oem.com.mx www.nytimes.com/pages/world/asia/index.html www.informador.com.mx www.futuregov.asia www.cronica.com.mx www.asiapacificsecuritymagazine.com Worm Wolfy Withdrawal* WillyFoReal Wikileaks IRC 88.80.16.13/9999 IRC Channel WikiLeaks WiiSpellWhy whitekidney Wells Fargo weed WallRoad w0rmware Vulnerability Vladislav Khorokhorin Visa Inc. Virus Virgin Islands "Viewpointe Archive Services, LLC" Versability Verizon Venezuela Vegas Vatican City USB US Trust US Bankcorp Uruguay Uran0n unusedcrayon United Kingdom UnicormCr3w unfittoprint unelected.org UndisclosedAnon Ukraine UGNazi ua_musti_1905 U.S. Bankcorp TYLER Turkey trosec113 Trojan Horse Trojan Trivette TriCk Tribalzer0 Transnistria transaction Traitor traffic court Tradecraft Trade Secrets "Total System Services, Inc." Topiary Top Secret Tom Stracener TibitXimer Thumb Drive Thomson Reuters TheWikiBoat thepeoplescause the_infecti0n The Unknowns The UnderTaker The Syrian electronic army The Jokerhack Thailand ThaCosmo th3j35t3r testeux1 TEST Telecomix TehWongZ Teddy Bigglesworth TeaMp0isoN TeamHav0k Team Ghost Shell Team Digi7al tdl4 taxes TARP tango down Tampa Tammy Shapiro Taiwan Tabu T0x1c t0wN T.A.R.P. Syrian Electronic Army syndiv Symantec Corporation Switzerland Swingers Club SWIFT Sweden Swan SwaggSec Swagg Security "SunGard Data Systems, Inc." Stuxnet Stringer Streamroller Stole* Sterlok SteelAnne st0rm SQLi Spyware Spying Spydevilz Spy Camera Sposed Spook Spoofing Splendide
    [Show full text]