Modus Operandi (11 page)

The con artist's success depends on his or her ability to appear normal. The job of selecting surnames for use in a bank scam is also a serious undertaking. The names picked should usually fit the racial characteristics of the con artist. Some names repeatedly used in bank scams are Daley, Ferguson, Ford, Hart, Marlowe, Martin, Mansfield, Mellon, Payne, Robinson, Sheppard, Taylor and Wilson. When a banker meets a person using a familiar surname by right or by choice he is inclined to be more than usually pleased to serve him. In banking, to be more than usually pleased means to freely accommodate the person with any services needed. These names appear to have an actual psychological effect upon those who see or use them.

Swindlers not blessed with an honest face can make good use of a uniform. The uniform might be that of an armed service, a civic organization or commercial enterprise. For several years banks in our area have been plagued by a person who masquerades as a filling station employee while negotiating worthless checks. By disguising himself in an oil-stained uniform, generally bearing a major oil company's insignia, he leads bank tellers to believe that he is employed locally and has been sent to the bank simply to cash his employer's checks. These are from a number of banks all bearing different signatures and all made out to the station that he pretends to represent. His average take at each bank was five hundred to seven hundred and fifty dollars.

Several checks stolen from a steel company were cashed at various stores by con artists in work clothes and steel helmets. In another case, checks stolen from a nursing home were cashed by a woman in an immaculate nurse's uniform.

But the key to these types of bank swindles is that the con artists must make themselves familiar to the people employed by the bank, either by frequently walking in and making minor deposits or by going into the bank with an appearance, name and uniform so that they appear to be nothing other than the average Joe simply trying to deposit a paycheck and take a little bit home for his week's wages.

The Free Inspection Con

Whatever your profession or business, the free inspection con is the simplest come-on for a profitable fraud. TV repairmen, auto mechanics, heating and air conditioning engineers, insect and rodent exterminators make the offer for a free inspection by advertising or by door-to-door canvassing. Once inside the TV set, under the automobile or under the house, the most cursory examination will disclose numerous components that need repair or replacing.

If a homeowner has been dumb enough to mail a postage-free return postcard on which he has indicated an interest in having, let's say, his furnace inspected, a smart operator may knock on his door and intimate that he represents a city government agency or utility company and request permission to inspect the home heating plant. The typical procedure of the furnace repair con is to gain access to the heating plant by some ruse and then take it apart and make it so that it will not be operable. At that point the con can refuse to assemble the parts into working condition on the grounds that the furnace is in immediate danger of causing a fire or explosion or of giving off deadly gas fumes.

Dead Man's Curse Con

Sad but true, the obituary columns present another opportunity for con artists. If you or I happen to be one of those listed in the obituary, we do not have to worry about being victimized, do we? The obituary columns of newspapers provide endless sucker lists for a variety of swindles. Packages of worthless merchandise "ordered by the deceased" are delivered COD to the next of kin. Or the bereaved are notified that the deceased had an insurance policy with one premium still unpaid. "Just pay the $35 premium and the insurance check will be sent to you by return mail," states the con artist, but the money never is because the policy never was.

Heir hunters are still around too. People with fairly common surnames get letters every day telling them about the death in some distant city of a relative who left a sizable estate. The suckers are asked to identify themselves and send ten or fifteen dollars as a filing fee, "So that you can be put on the list to be paid." The filing fee goes directly into the con artist's pockets.

The Bank Examiner Fraud

The bank examiner fraud is a swindle based on the hidden desire of many people to serve as a secret agent for the police. Victims are located through telephone books or through surveys. The first telephone call to the victim is double-talk alleging that there is some problem with their account at the local bank. The next call is allegedly from an officer of the bank. The spiel is that one of the bank's employees has been tampering with the accounts of depositors, and they want to catch him, but they need the victim's help to do so.

Cooperative victims are then informed that they should simply go to the bank, withdraw a specific sum, usually just short of the victim's total deposited funds and bring it home. The victim is assured that the withdrawal will be secretly watched by an armed agent who will follow the victim home to make certain the money is safe.

A few minutes after arrival at home with the money, the victim is visited by the con artist posing as the armed agent. After some more double-talk, the swindler counts the victim's money, gives her a signed deposit slip and takes the money. Hours, days and even weeks later the victim finds out the name on the deposit slip is fictitious, the bank knows nothing of this employee, and the money given to the swindler is a total loss.

The Ponzi Scheme

The Ponzi scheme or kiting is the basis of all investment frauds, security frauds or get-rich-quick schemes. In a Ponzi scheme—named after Charles Ponzi, the American legend who in December 1919 started this scam—the swindler uses money invested by new victims to pay a high interest on the investments of earlier victims. The money from the earlier victims was appropriated for the operator's own use rather than investing it as claimed in the spiel. A Ponzi scheme collapses when the swindler runs out of victims.

The most common version of a Ponzi scheme are chain letters and pyramid sales schemes, but the swindle can take an infinite variety of subtler forms. Virtually any investment

vehicle can start out legitimately and turn into a variation on Ponzi's original.

In recent years investigations have revealed that con artists have worked Ponzi operations in everything from offshore mutual and private hedge funds to real estate commodities contracts and gold coins. Hundreds of small investors around New York City were recently stung by a Los Angeles crook who sold them some $9 million worth of 270-day notes presumably invested in real estate and guaranteeing returns of 20 to 30 percent interest. Instead, the $9 million vanished.

A very juicy scandal uncovered within recent memory was the Home Stakes Production Company swindle. Home Stakes, based in Tulsa, Oklahoma, purported to be an oil drilling company run by an Oklahoma lawyer named Robert S. Trippet. Home Stakes sold tax shelter partnerships to hundreds of wealthy investors eager to avoid paying taxes. To disguise the complete lack of oil drilling operations, Trippet and his cronies fooled investors with a variety of maneuvers, even going so far as to paint irrigation pipes orange to make a California vegetable farm look like an operating oil field. When the company went bankrupt in 1973, unsuspecting investors lost $100 million or more. The list of investors was astounding and included some of the biggest names in United States industry, finance, law and show business. Some of the show business crowd victimized were Barbra Streisand, Liza Minelli, Walter Matthau, Can-dice Bergen, Bob Dylan, Mia Farrow, Barbara Walters and the late Jack Benny. Andy Williams alone was sunk for $538,000. So, those who get taken by a Ponzi racket have one consolation: They can always boast that they are in the same league with the nation's financial elite.

Our experience has shown that these Ponzi swindlers proliferate in cyclical patterns throughout history and very often take place when inflation and unemployment are very high. There is never a shortage of suckers ready to take a tumble. What sets Ponzi schemes apart from other more intricate swindles is this: The money the investors put up isn't invested in anything, and the profits are paid out of new money from subsequent investors. Eventually there aren't enough newcomers to keep this snowball going, and the game collapses.

No one knows if a successful Ponzi operator has ever found a way to close-out his swindle without it collapsing. When a Ponzi scheme collapses all of the latecomers lose. Only early investors can win, but many of them lose, too, because they reinvest with the expectation of making larger and larger gains. They become trapped by their own greed. To profit from a Ponzi fraud it's not enough to be the first one in; you have to be the first one out as well.

Bunko Games

The pigeon drop or pocketbook drop is the street bunko game that requires the minimum number of props: a pocketbook or an envelope and a sizable amount of cash. The pigeon is the victim and no more than two or three swindlers participate in the crime.

The game begins in the presence of the potential victim, when one of the swindlers apparently finds a pocket-book or envelope filled with money, usually from $500 to $2,500. The approach to the victim is disarming, combining happiness in finding the money along with the question, "What do I do now?" As the victim starts to discuss the swindler's apparent good fortune, a second swindler shows up. Assuming the roll of a stranger who just happens to witness the find and wants to be part of it, the second swindler joins in the spiel that makes the victim a partner in a plan to hold the money until the origin of the cash can be determined.

Since this will take time, the two swindlers team up to convince the sucker that he should hold the funds, but to assure them of the victim's good faith, they ask him to show cash equal to the amount found or close to it. Faced with the possible loss of one-third of the money, the gullible victim goes to a bank, gets the cash and shows it to the swindlers. They go through the motions of counting it, advising the victim of their satisfaction. They bundle the found money with the victim's cash, hand it to him, and arrange to meet again the next day.

Sometime after this parting, the natural curiosity of the victim leads to an examination of the secret bundle of money. It turns out to be newspapers or regular plain paper cut to money size. The swindlers switched the bundle just before they parted from the victim.

Swindles Against the Elderly

On the bottom of any detective's list of social miscreants would be the con man who impersonates a Social Security employee to gain access to an elderly person's home and confidence. Once this relationship is established there are a variety of con games used by these individuals. Here are a few along with actual case histories from the files of the Social Security Administration.

We once investigated two con men who contacted Social Security recipients, two elderly females, aged eighty-six and eighty-four, and told them that there had been overpayment. The eighty-six-year-old woman turned over $7,050 to the impersonators. The eighty-four-year-old told them she didn't have the $1,628 demanded, but that she could have it for them the next day. She then called the Social Security Office. This matter was reported to the Federal Bureau of Investigation.

Another type of con, frequently targeted toward elderly men, are pills and devices to enhance sex and advertised in senior citizen magazines or by direct mail. It is quite easy to purchase mailing lists, which go into great demographic detail in a market area. For instance, if a person wanted to target males over age sixty who reside in a certain location, they would simply contact a mailing label company who would ship them thousands of labels compiled according to recent research data. Armed with this information, con artists target these individuals and offer them pills and juices that they say can make a man, regardless of age, romantic, young, potent, as virile as the gods. These products are sold for ten to twenty dollars, but are made of nothing

but pineapple, papaya, peach, grape and apple juice.

Another con involving the elderly is the dance studio scam. In the most prominent one, the slick con artist preys on the desire of elderly widows and spinsters for attention and the emotional satisfaction this brings to an otherwise lonely existence. Swindling in this area is made possible through the device of lifetime memberships, whereby a studio contracts to provide several thousand hours of instruction to an elderly person who pays in advance. Many victims that we have met have reported to the Better Business Bureau that they have been bilked out of their life's savings for a lifetime membership or multiple lifetime memberships. In one case a dance studio signed a sixty-nine-year-old widow to eight lifetime memberships entitling her to 3,100 hours of instruction at a cost of $34,913.00. She was promised attractive male dancing partners and was assured that the lessons would make her a gifted dancer so that she could perform on television.

Another type of swindle is called the lonely hearts club. What these operators do is try to offer personal introductions to members of the opposite sex. They do not deliver people and charge anywhere from fifty to two hundred dollars. After responding to a newspaper ad for a matchmaker service for the elderly, the subscriber will call to investigate, send in his payment, and then wait patiently for his perfect match to show up. He is told over the telephone to exercise patience while the vast staff of the club sort out the right person for the match. In essence, this elderly victim is contacting one or two people working in a room with nothing but two phone lines and two chairs!