Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Global Banking: Some Sectors Look as "Precarious as Ever" - 28th Oct 20
Silver Price Minor Dip Possible Before 2nd Major Upleg Starts - 28th Oct 20
�� How to Carve a Simple and Scary Pumpkin Face for Covid Halloween 2020 �� - 28th Oct 20
Gold Price One Last Dip Likely Then Major Upleg to New Highs - 28th Oct 20
Smart Money Is Going All-In On This New Gold Frontier - 28th Oct 20
Gold Stocks Still Correcting - 27th Oct 20
Gold and Crypto: Is This How Charts Look Before A Monetary Collapse? - 27th Oct 20
Silver's Coming Double Trigger Shotgun Price Explosion - 27th Oct 20
The $126 Billion Gold Opportunity in Australia - 27th Oct 20
Tips to Breeze through Your Spanish Classes Online - 27th Oct 20
Try The “Compounding Capital Gains” Strategy Today - 26th Oct 20
UK Coronavirus Broken Test and Trace System, 5 Days for Covid-19 Results! - 26th Oct 20
How the Coronavirus is Exacerbating Global Inequality, Hunger - 26th Oct 20
The Top Gold Stock for 2021 - 26th Oct 20
Corporate Earnings Season: Here's What Stock Investors Need to Know - 25th Oct 20
�� Halloween 2020 TESCO Supermarkes Shoppers Covid Panic Buying! �� - 25th Oct 20
Three Unstoppable Forces Set to Drive Silver Prices - 25th Oct 20
Car Insurance And Insurance Claims and Options - 25th Oct 20
Best Pressure Washer Review - Karcher K7 Full Control Unboxing - 25th Oct 20
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The 10 Greatest Financial Scams in History

ConsumerWatch / Scams Feb 07, 2013 - 04:42 PM GMT

By: Money_Morning

ConsumerWatch

Over the past 40 years, only one new entry has been added to the Federal Bureau of Investigation (FBI) roster of "Top 10" investment scams - the very broad category of "Internet fraud."

The other financial rip-offs listed are merely new versions of tried and true swindles that have been around for decades or more - from Ponzi schemes and pyramid systems to phony stock offerings and commodity cons.


The big difference is that the one new category - Internet fraud - has greatly increased the frequency, speed and effectiveness of the other types of financial fraud, as well as exponentially increasing the scammers' take.

In 2009, there were 6,062 robberies of physical bank offices and branches, netting the perpetrators a total of $45.9 million in loot, more than $8 million of which was recovered by law enforcement officials. By contrast, there were more than 14,000 reported (and countless unreported) online attacks on banks and bank customers, with the estimated loss exceeding $110 million, almost none of which was recovered.

In addition, where physical bank theft is local, online robbery is global. MSNBC recently reported that a ring of cyber thieves based in Eastern Europe had used a so-called Trojan horse computer program to steal more than $1 million from the accounts of more than 3,000 British bank customers in just four weeks - and, even though the banks had identified the problem, they weren't able to immediately stop the thefts.

That mirrored an even broader rip-off of banks and their customers.

According to the FBI, a highly sophisticated group of thieves using cloned or stolen debit cards, with PINs gained primarily via Internet phishing scams, hit more than 2,100 ATM machines in 290 cities across North America, Asia and Europe, walking off with more than $9 million in cash in under 12 hours. That figure would have been much larger had many of the ATMs not been drained of all their bills.

Banks aren't the only targets, either. Overall, the FBI counted 335,655 complaints of online thieves targeting U.S. consumers, financial institutions, brokerage firms, retailers and other companies that maintain customer accounts, up 22.3% from 275,285 the previous year. The total take in those incidents was estimated at $559.7 million, up from just $264.6 million the year before.

And those numbers will almost certainly increase dramatically in the decade ahead, thanks to the growing use of cellphones, laptops and home computers to access personal bank, brokerage and other types of online accounts.

The National White Collar Crime Center (NW3C) says direct online thievery is just a drop in the bucket compared to all white-collar crime, most of which involves some form of investment or financial skullduggery. Examples include bankruptcy fraud, bribery, credit card fraud, counterfeiting both of currency and securities, embezzlement, identity theft, insurance fraud, kickback schemes, money laundering, price fixing and others.

The total cost of worldwide white-collar crime rose from just $5 billion in 1970 to $20 billion in 1980, $100 billion in 1990 and $220 billion in 2000, according to NW3C surveys and research of global law enforcement and regulatory reports.

But while the technology may have changed, financial scammers continue to rely mostly on the old standards.

* For more financial information to protect your wealth, and help grow it, view the latest special presentation from Money Morning. Click here to get all the details.

Classic Cons
The Ponzi scheme, named for Charles Ponzi who first used it in the early 1900s to fleece investors out of $10 million, continues to head every list of top financial frauds, probably because of its simplicity. The perpetrator merely promises huge returns and then delivers them, using money from new investors to pay off older ones, who praise the investment and draw in more and more new investors - until the operator has built up a big enough cash pool to abscond with all the money. See Bernie Madoff.

The big difference now is that the Internet can bring in money to the Ponzi operator in days rather than the months it used to take. The same is true of pyramid scams, where early investors profit by bringing in new suckers and raking off a share of the new money - until the whole thing collapses.

The Internet is even better suited to more complicated frauds. Using e-mail and/or highly professional-looking Internet Web sites, white-collar thieves can send out hundreds of thousands of sophisticated marketing appeals or official-looking documents in a matter of hours, reaping hundreds or even thousands of responses.

Problem is, the charities are bogus, the investments are phony, and the operators are long gone.

Seniors are particularly susceptible to many of these scams, being sold false charitable gift annuities, viatical settlements, reverse mortgages, or having their pension funds drained.

In 2005, for example, Pennsylvania authorities shut down a well-promoted "IRS-approved, IRA-authorized" investor plan that pulled more than $2 million out of senior pension programs in the state.

Of course, anyone can fall victim to an investment scammer. Following are nine other types of frauds or dubious investment offers you might encounter:

■Affinity fraud - These scams target groups with common interests, such as alumni associations or religious or ethnic clubs, letting the members sell one another on bad or fake investments.
■Annuity misrepresentation - These aren't scams so much as failure to disclose hefty sales commissions, huge surrender fees and other things that eat up the buyer's money.
■Promissory notes - These are short-term, supposedly high-return debt instruments issued by obscure or non-existent companies and sold by unlicensed individuals posing as brokers, insurance agents, etc.
■"Prime-bank" schemes - These offer small investors high returns by giving them supposed access to the world's elite banks and entry into the exclusive world of the ultra-rich.
■Brokerage scams - These can range from outright fraud, such as selling phony securities, to "pump-and-dump" promotions of penny stocks, unauthorized trading of customer accounts (known as "churning"), excess or hidden fees and other irregularities.
■Unlicensed agents - Nearly every financial endeavor is regulated and sales people are required to be licensed at either the state or federal level - but most scammers aren't. Even non-regulated operations usually have professional or business associations you should be able to check with if you have doubts.
■Pressure tactics - Cold callers operating out of boiler rooms similar to those portrayed in the 1980s film "Wall Street" promote commodity futures, precious metals, penny stocks, coins, and travel and vacation properties. While some cold calling operations are legitimate, many aren't. The bad ones typically offer either "a special one-time deal" or an opportunity you have to "grab now or you'll miss out." Diamond investments are popular among pressure sales teams since they're one of the few commodities not traded on any organized exchange, meaning you have no real way to compare prices to actual market values.
■False sales premises - These are often used in response to major shifts in public mood, such as the present distrust of Washington. A popular pitch currently being used promotes the purchase of antique gold coins because "the government has secret plans to confiscate all gold and prohibit individual ownership," as it did to a limited degree in 1933.
■Fake real estate sales or leases - These scams reflect the recent mortgage crisis and collapse of the real estate market in many areas of the country.
Because of foreclosures, weak sales and abandonment, many homes sit empty in places like Phoenix, Las Vegas and California's Central Valley. Scammers fake ownership papers to the empty properties, advertise them for sale or lease at below-market prices and then walk away with the deposits or down payments when they hook bargain-hungry buyers or tenants.

A comprehensive list of potential financial and investment scams would have many more entries, but the ones above should suffice to raise your suspicions any time you encounter an offer that sounds "too good to be true." Don't put your money on the line for anything you don't completely understand - that goes for potential risks, as well as rewards. And always verify that the offering company actually exists and the person presenting the offer is properly licensed, not just a glib talker with a slick presentation.

Where to Turn for Help

If you have reservations about a potential investment opportunity, or if you've been victimized by a financial scam, you might turn to one or more of the following agencies.

Better Business Bureau - With offices nationally, in every state and most large and mid-sized cities, the BBB can alert you to problems with local businesses, work-at-home programs, distributorships, sales routes you can buy and other one-on-one type rip-offs. They usually have lists of current online offers that are suspect or drawing lots of complaints. You can access the national BBB Web site at http://www.bbb.org/us/ and navigate to your home state or city chapter from there.

U.S. Securities and Exchange Commission (SEC) - Information is available on all securities-related fraud issues and investment scams, and you can file your own personal complaints or suspicions online at http://www.sec.gov/complaint.shtml.

Your SEC complaint can be anonymous or you can provide only limited personal data. However, the more information you give them, the more likely they'll be able to help you. Either way, include specific details about how, why and when you were bilked with any contact info you have on the fraudulent person or company involved.

You can also verify financials and regulatory standing on all publicly traded U.S. companies by accessing the SEC's EDGAR Database at: http://www.sec.gov/edgar.shtml.

U.S. Commodity Futures Trading Commission (CFTC) - If the scam involves commodity futures or options rather than stocks or bonds, the CFTC can help at: http://www.cftc.gov/

Internal Revenue Service - Since most scammers don't pay taxes, the IRS tries to keep track of them as well - not only to put them out of business but to prevent having to let you deduct your fraud losses. Check out posted IRS fraud information at: http://www.irs.gov/privacy/ article/0,,id=179820,00.html?portlet=5

U.S. Federal Bureau of Investigation (FBI) - For any kind of Internet fraud, bank-related scams or other interstate criminal activity, check with the FBI or report complaints at: http:// www.fbi.gov/. (Just for fun, you can also review the "10 Most Wanted" list on the FBI home page to see if you recognize anyone.)

Financial Industry Regulatory Authority (FINRA) - A professional association of investment regulators and agencies, FINRA has a Web page where you can check out your broker's credentials and review past complaints: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/.

If you've already been victimized, you might also get some combined help from all of these government agencies and others thanks to a new joint task force coming together right now and designed specifically to investigate and prosecute financial fraud cases.

Take a look at our latest special report for intelligence on new ways to protect, and grow, your wealth. All the details are right here.

Source :http://moneymorning.com/2011/09/09/classic-cons-10-financial-scams-fair-minded-investors-should-avoid/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules