Tuesday, February 5, 2008

Con Men's Prime Bank Note Scams on Upswing

--Playing on letter of credit / prime bank note confusion, con men rake off huge profits.

Magalia, California--A departure from letter of credit fraud has been the recent emergence of prime bank note fraud, mostly emanating from Europe, aimed at defrauding Americans, now facing an F.B.I. crackdown. This scam is considered a step up because it requires strict noncircumvention agreements, which impedes the mark's ability to adequately, independently verify information about the investment. Often a tough wrap-around is a nondisclosure agreement.

What advantages exist for con men? Here are some:

Complexity. This always attracts con men, who, scam fighters say, consider themselves mentally superior. And, prime bank notes give them a show-case stage setting from which to demonstrate this.

Prestige. Foreign exchange instruments are always a great lure--for vanity appeal alone.

Easy to apply faulty logic. Because foreign exchange is shrouded in the mysterious, con men have largely a free hand to befuddle the whole issue as to its process and implementation.

Foreign banks use bank guarantees the same way U.S. banks use letters of credit: to insure payment for goods in international trade. Like letters of credit, these are never traded or sold on any kind of market. Knowledge of this non-liquidity has crept out over recent years. Not so for foreign bank guarantees. Victims are still for the most part in the dark about these.

"This scam is a dream for con men who want to shoot big, with a really cleverly concocted premise to peddle," says legal thriller author, Jack Payne. whose book, Six Hours Past Thursday, spells out many such cons. "The bait is that they have access to a block of these guarantees. By reselling them several times they claim to be able to earn a usurious return for the mark. For example, a $20,000,000 deal, turned over 10 times at 2% would produce a $4,000,000 profit."

Payne summarizes, "These large scale scams are whoppers now, and growing.
F.B.I. action against these is picking up.
Once the sucker bites, it's finger-snap clean, fast, and efficient for the con man. His money is speedily dispersed from the foreign bank, in which it was deposited, into an offshore account and washed. Once laundered, it quickly disappears into the pocket of the con artist for his high living pleasures."

14 comments:

Eyebeam.Techtronics said...

The misunderstandings of Letters of Credit are so widespread that it's easy to see how this scam can exist.

terry said...

The size of these deals is phenomenal. I've heard that there is a hot market in just acquiring address lists of these suckers...$1,000 per name and up.

Felcher said...

My husband actually worked for one of these scam operations. This was before we were married, when he was in college. It had something to do with stocks. He admits he didn't know what he was doing. They had him reading from a script over the phone.

Larry P said...

Easy to apply faulty logic. That's right, the reason this scam is so successful is that it is all built around confusion. I used to work the international desk at a major New York bank, and saw a lot of this stuff. Keep up with these revelations, Jack.

Jack Payne said...

Larry, use my email address. I'd like to hear more.

Dolcett said...

I have a friend who once worked for one of the big New York investment banking houses, too. She says the speed and efficiency with which the con artists launder the money from these transactions is like watching a good magic show.

Jack Payne said...

You have my email address, too, Lynn. Would you get all info to me on this that you have? I am compiling.

Kelly said...

Hey there! Blogging About Flugpo nominated you for the Excellent Blogger Award! Now, the rules are for you to nominate 10 blogs for excellence. Here is where you were nominated
http://flugpo-blog.blogspot.com/2008/02/nominated-for-excellence.html

Keep up the excellent blogging!

Kelly

Jack Payne said...

I'm honored, Kelly. Much appreciate. Thanks.

Breyer said...

I think Terry is right. I heard one of these deals went for over a million bucks. If this scam is this big-time it's no wonder the names of the suckers involved would go for a thousand dollars or more apiece. That sounds cheap.

Mr. Grudge said...

Hi Jack, keeping victims confused is a good way to defraud because too many are unwilling to admit they do not understand something for fear of looking stupid. You mentioned vanity, that is one aspect of it. Thanks for a great post. -Mike.

Felcher said...

I meant to add, after my husband quit, police shut down the place and the head honchos did a perp walk in handcuffs out of the place. This was a long time ago.

sharyn said...

so even with the snow falling our con man watcher is keeping us up to date for slug scam artists. thank you JACK!

Anonymous said...

What a nice post. I really love reading these types or articles. I can?t wait to see what others have to say.