When is it a scam?

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How do you tell the difference between a genuine business opportunity and a dodgy or completely bogus scheme?

A huge challenge today is that with modern digital technology the ability to produce truly top class forged documents is in everybody’s hands.

This applies to both paper based and electronic documents. You can no longer rely on what you see either in person or electronically.

Anything is too easy to copy or forge from scratch and the results are nearly perfect, every time.

And of course you will be provided with names, numbers, web site and e mail addresses to be used to verify the veracity of the documents and information.

Perhaps a business card or two will be put in your hand by the representative you meet.

And electronic sleight of hand can make you believe you are seeing what you are not and talking to who you aren’t.

The illusion is crafted to perfection. It is very simple with today’s technology to craft a nearly perfect illusion.

Human senses are dominated by the visual to a huge extent so we tend to believe what we see.

If everything looks good – it is significant that we always say that something “looks” good – we will tend to be taken in by the scam.

We will phone the numbers we are given check the figures, visit the right web site and so on while we “verify” that everything is above board.

We are excited; this is it, the big one (greed and lack of judgement kicking in!) and we go for it boots and all!

We trust what we see and this is our downfall.

This aided and abetted by the common misconception that we will all someday come across that magic, secret deal that will make our fortune.

The deal that has only been made available to us because we are special, selected investors who will understand the proposition.

Don’t tell anyone, it’s secret.

That’s the giveaway.

It’s a scam.

That’s also their protection; don’t tell anyone its secret.

By all means check out what we have told you, where we steer you to; but don’t tell anyone its secret.

Above all don’t tell your professional advisors.

If it looks too good to be true, it is.

Please don’t be misled into believing that this only happens in grubby, back street deals, it happens everywhere.

So what do you do?

When presented with any opportunity you must go back to basics.

Good old fashioned leg work, face to face interviews with vetted people and research and verification.

Check all facts by making direct, independent contact with the company concerned.

Don’t call the number on the business card you were given, don’t take the number from the documents or the web site, do it the old fashioned way, look the number up yourself in the telephone directory.

Make an appointment to see the man at his office and go through the documents.

Be sceptical, demand detailed verifiable answers and independently verifiable paperwork.

And take you auditor or financial advisor with you; tell him to be obstructive, sceptical, judgemental, argumentative and confrontational.

Whatever the deal entails take an appropriate subject specialist with you to the meeting.

And tell him to be sceptical.

Generate a bit of heat; get a debate going; make the person PROVE all factual contentions.

If everything checks out, the documents, facts and contentions made prove to be true, by all means invest your life savings.

Maybe there is a tooth fairy and Santa lives at the North Pole.

But make sure you verify everything personally AND independently with knowledgeable experts.

I am prepared to bet that only 1 in 100,000 of these opportunities will actually check out.

In most cases you will never see or hear from the promoters of these schemes again.

Anatomy of a fraud scheme

The following characteristics will be present:

·         The returns are above normal, guaranteed with no risk

·         The deal is secret, confidential, special

·         It relies on special “insider” knowledge or contacts

·         Key facts cannot be independently verified due to the secret nature of the deal

·         It is border line unethical, a bit murky but not illegal but it must be kept strictly confidential

·         It will have at least one key, larger than life personality involved who will cement the whole deal by sheer force of personality

·         It will give you up front incentives at the slightest display of interest

·         It will seem too good to be true

·         You must act NOW the market is up, the market is down, the commodity price is –whatever- the point is to stampede you into a quick decision

Of course all of these things play into our human nature desire to want to be involved in secret, slightly dodgy, very lucrative business.

Business that for a short while makes us feel like one of the chosen few, special people with insider knowledge.

My advice to you is that if even ONE of these factors is present, run a mile, immediately.

To paraphrase Mark Twain “better to miss the opportunity and be thought to be a fool than to invest and remove all doubt”

Healthy scepticism, common sense and attention to detail will save you a lot of heartache.

Control your emotions, your ego and your greed and you will be able to avoid the worst pitfalls of clever schemes.

And remember the saying that a penny’s prevention is worth more than a pound of cure.

Visit Corporate Crime Watch for more


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