SUMMARY: There appears to be a world wide rash of schemes to obtain money by any possible illegal means. We are all used to the scams out of Nigeria, but it appears we do NOT pay enough attention to others.
We suggest you trace a copy of INVESTIGATE Magazine - obtain the November 2004 issue. Interesting scams to avoid.
MENU: Overview: Four Square Church: 2003 Example:
Accountant's advice: PLP & Trask: 2005 Example
This appeared in the NZ Herald, New Zealand in December 2004. It outlines the various ways people can be parted forever from their money.
The Elderly an easy target for scammers
Tricks old and new are popping up all the time and duping not just the stupid into parting with their hard-earned cash
Kiwis [and others all over the world] are falling for fraudsters who offer riches, but deliver scams.
Just this week a Bay of Plenty couple [ NZ ] spoke about losing their life savings in a fake investment scheme.
Those behind the scam, Lee Papple and Tina West, are awaiting sentencing for luring 120 people into investing large sums of money that they subsequently lost.
Barely a week goes past without another scam hitting the headlines.
The [NZ] Serious Fraud Office (SFO) is investigating nearly 20 scams in which about $50 million has been lost and that, says director David Bradshaw, is just the "tip of the iceberg" .
Meanwhile, two more Kiwi women face prosecution. Patricia Lenine Mabel Walsh, 65, is up for 89 charges offraud, forgery and theft, and her aunt, Elva Mary Medhurst, 78, is accused of two charges of theft in relation to an alleged fraud.
Walsh allegedly told investors in a failed apartment scheme that she needed their money to get an overseas charitable trust to recoup their losses.
But the investors and Walsh lost their money to a smooth-talking conman.
Ifs not just Kiwi fraudsters you need to be wary of. In the age of the internet and cheap foreign travel, illegal investment scams know no borders and Kiwis' love of overseas experts means they're easy prey for fast-talking foreigners.
Unfortunately, no matter how many scams Government agencies close down, more pop up.
The people behind these schemes tend to breed like rats, often using the internet like a sewer pipe to reach their victims.
Where does a rip-off end and a scam begin?
There are plenty ofrip-offs or poor-value investments on the market in which you could lose your money.
But for a rip-off to become a scam, "there has to be a dishonest intention to defraud someone", says Bradshaw.
What are the typical investment scams?
- The most common variety is the Ponzi scam.
Named after American Charles Ponzi, these schemes offer to double your money in just a few months.
New victims are continually recruited and their capital is siphoned off by the person at the top of the pyramid, with some of it used to pay "interest" to early investors.
Eventually, the pyramid collapses because there is no real investment I vehicle and the new capital dries up.
- Advance Fee Fraud or Nigerian scam.
Typically, con artists send emails to random addresses claiming to be officials, business people or relatives of Government honchos from an African country wanting help to. get money out of the country.
They usually claim to need a foreign bank account for the transfer millions of dollars and offer to do it to your account, providing you pay paperwork fees in advance.
You're offered a share of the money. If you fall for the patter, you'll lose the money you send.
In many cases, such as the Walsh/ Medhurst case, these fees can run into hundreds of thousands of dollars.
- Prime bank instrument fraud.
Fraudsters using this method sell the idea of a secret investment market where foreign banks deal in instruments with names such as Prime Bank Guarantees and Prime Bank Notes.
You're offered huge profits to invest in such schemes, but your money simply vanishes.
According to the SFO, some fmancial and investment advisers have been duped into investing their clients' money.
- Bogus share tips.
In this scam, con artists buy large holdings on the cheap of little-known shares in obscure foreign companies. They then spam millions of internet users with a recommendation to buy the shares.
Inevitably, thousands of the recipients do so - pushing the price sky high.
The con artist sells out before the inevitable share price crash comes as the supply of new investors dries up.
- . Foreign lotteries.
Typically, victims of this fraud receive officiallooking letters notifying them that they have won money in a foreign lottery.
To claim the prize, they need to pay a sum, running into thousands of dollars, to cover taxes, bank costs, and processing fees.
- Housing and property fraud
These are numerous and in Queensland-style frauds with property investors are flown to an exotic location, shown over the property and convinced to purchase.
Victims often feel an affinity to the fraudster who has paid for a holiday and shown them a good time.
And if they waver when it time to sign, tame solicitors and accountants are trotted out complete the duping. .
- Signs over ownership
Another style of housing fraud of concern to the SFO is one where a homeowner unwittingly signs the ownership of his or her home over to a fraudster in return for cash often used to payoff debts.
The victim effectively becomes a tenant and, if they fall behind in rent, can be evicted.
The Commerce Commission has new powers under the Credit Contracts and Consumer Finance Act of2003 to deal with this style of oppressive contract and the instances of this scam have been reduced during the past year. .
- Investment seminars. Many an investor has been set on the path to riches by attending property and other investment seminars. But not all these seminars are what they seem.lfyou attend a seminar and are asked to invest money in a property or investment while there, especially if there's little paperwork or a sense of urgency, think long and hard.
- Credit card and bank frauds.
Criminals are becoming increasingly sophisticated at card and bank fraud.
The BNZ's general manager of credit cards, Mark Wilkshire, says victims are usually targeted with one offour methods:
1. Credit card theft.
2. Skimming. Your card is removed from your sight, often in a foreign restaurant or shop, and a counterfeit made from the imprint.
3. PIN theft. A convincing fraudster calls you masquerading as a bank official or police officer and gets you to divulge your security information, giving them access to your account.
4. Phishing. You get an email that appears to come from your bank, asking you to click on a link and verify your security details. The link takes you to a website that is a copy of the real bank.
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Matthew 6:19
Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal has something to say about this as well. |
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Who is most at risk?
The biggest losers, and often the easiest to cheat, are those with more than a few grey hairs who may be worrying if they have sufficient capital to enjoy their retirement.
Victims are often sucked in slowly. In the case ofBay of Plenty couple Jessica and AJan, they were snared by a classic Ponzi scheme.
When they started to receive huge "interest" payments on their initial $30,000 investment, they ploughed another $100,000 into the scheme and lost the lot.
Often people who have already been scammed are the easiest to suck into the web, says scambusting Australian Neil Jenman.
Once they've lost money, the victims are often willing to go in one step deeper to recover lost money.
Victims can't just be written off as stupid.
One of the alleged victims of the Walsh and Medhurst case, who lost $400,000, was a former partner j an Auckland law fIrm. ' Being fmancially naive or greed isn't a crime.
As Jenman points "Even if they were greedy, that doesn't excuse financial assault in the same way as lust doesn't excuse sexual assault."
What are the telltale signs?
Scams are often so obvious it's hard to understand how people get sucked hook, line and sinker.
The telltale signs are:
- little or no paperwork,
- suggestions of fantastic returns,
- claims of "no-risk" or "guaranteed" returns"
Why do people fall for scams?
A typical fraudster offers to impart the "secrets of the rich" or offers investments usually only available to the rich or large corporations.
Victims have heard of or know people who have made a killing in property or shares and want a slice of the action.
It's not uncommon for the fraudsters to have links with the church and churchgoers are often victims in "affinity frauds".
In the case of PappIe, her victims thought their money would be safe because she was a member of the Church of the Latter Day Saints [ Mormons ]
How to protect yourself.
The golden rule of scam-proofIng your finances is to get everything in writing and have it checked out by
your lawyer or accountant,
not theirs.
When it comes to investing in anything, you should never forget, the old adage:
''If it looks too good to be true, it is."
If these investments were really so good, why would they' be offered to strangers?
[ The balance of the article refers in particualr to NZ and is cut for our world wide readership ]
[ Thanks to Diana Clement for her excellent & timely article -Ed ]
About the Author...
Diana Clement is an Auckland, NZ, based freelance writer.
Foursquare Gospel
lost $14 million invested in what authorities allege were Ponzi schemes.
March 21, 2004 By E. Scott Reckard,
Los Angeles Times
The president and treasurer of the International Church of the Foursquare Gospel have resigned after the church's loss of $14 million in two allegedly fraudulent investment schemes, the Los Angeles-based institution said Wednesday.
Foursquare's board of directors last week accepted the resignation of President Paul Risser, a minister with the Pentecostal church for more than 40 years and its top executive since 1998. Risser described his departure as "in the best interests of everyone," Foursquare spokesman Ron Williams said.
Refer http://www.healingwaterschurch.com
Accountant's Advice
Re: INVESTMENT.
As an accountant previously providing financial counselling in the Christian community in Brisbane, I have had multiple “gullible” people tell me of this “Christian” investment program that was going to make them 500% return in a year. Unfortunately, it is many of the lower income Christian people who have fallen for these scams. I have always warned people that if the return on investment is more than (6%) per annum in the last 3 years, you are risking all your capital (investment). Other scams involving many Christians (and promoted by Christians) in the last few years included the 3% home loan from America, and the no questions asked credit card from Canada. No body I know of actually got anything!
Re: Christian Financial Scams
Christians are demonstrating wisdom when they seek advice from Christians who are independent from the group of people promoting an investment cause. Australian Churches have seen “promoters” of a range of “get rich quick” strategies over the years. Investments with an attached promise of the blessing of God generally appear to be honest and exciting at first appearance, and people tend to be caught up in the excitement, and hopes of the alleged “promises of God”. Whether it is an investment loan to a retirement village, or the latest multi level marketed “blessing from God”, you should use some of the following steps.
- 1. Seek independent Christian Counsel, from mature Christians, whether they are businessmen, elders or soundly minded, financially wise people.
- 2. Check the documentation provided promoting the product. Most scams fail to provide all the correct legal information. For a first step, look for a name of a person who is contactable at a physical (non post box) address. For Australian entities, an ABN and full address and name details. I have found that most doubtful investments fail to provide “legal” documentation.
- 3. Phone your local consumer affairs department, and or use the Internet to verify the credibility of the business. In Australia, you can use www.abr.gov.au to check if a business is registered with an ABN. Qld Consumer Affairs offers a free “little black book of scams.”
- 4. Ask every question that comes to mind, and remember, if there is pressure to act quickly, beware.
- 5. If everything seems OK, you need to then sort it out with both God and your family!
Anthony Pike (of Nundah, QLD), B.Bus(acct) M.Ed.
(Anthony is currently [2003] researching towards a Doctorate in Business Failure and Entrepreneurship. He is NOT able to provide financial counselling services.)
[ Original HERE... ]
EDITORIAL NOTE: It is reliably reported to CWM that some “pastors” or church leaders could find themselves in prison as a result of Ponzi money schemes that they have knowingly foisted upon their unwitting church constituents. A ponzi scheme promises huge returns to the early participant, whilst it has been a common practice for the money deposited by latter participants to pay the fabulous returns to the early participants.
The money has to run out at some stage in these schemes.
2005 Example
The Dominion Post A7 Friday 29th July & NZ Herald A9 Reported that fraudsters have ripped nz$15million dollars from investors.
Sorry to say this , but the "nice people" at church can turn out to be crooks/gangsters/ wolves/ratbags.
Recently 3 people were up before the Rotorua Judge & Jury regarding a scheme whereby you would get 100% (one hundred percent) per month.
No mistake, that is what was offered.
If something is to hard to believe, then walk away. The Promoters were "nice people" and went to church (
really!)
However as always , be like Acts 17:11 BEFORE you agree & sign.
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Appeared in Issue CETF NR 29 2004
"...contend for the faith which was once delivered unto the saints" -- Jude v3
© Copyright 2006 Christian Witness Ministries, except where noted. All rights reserved
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-Last revised-
Monday, October 09, 2006
