Classic Scams
By William Cate

Scams don't die. They just fade in and out of consciousness. Pigeons have short memories. Over time, economic fluctuations and technological changes bring some swindles in and out of public awareness. There are thousands of scams being run every day. Few of these swindles are sufficiently successful to merit media attention. The public has to be bilked for billions of dollars before the media and Government take a serious interest in the swindle. Also, the line between a scam and an unwise business risk is blurred.

Three Classic Swindles

The Nigerian Scam owes its long held popularity to the Internet. The swindlers in Logos and elsewhere send hundreds of millions of spam emails seeking their pigeons. The Nigerian Scam was born of the NAZI Sting and the Mafia Swindle. The basic story for all three swindles is the same. Someone stole millions of dollars. The thief was either a relative or client of the party contacting the pigeon. The contacting person needs your help to move or launder the stolen money. For your help, the swindler is willing to pay you millions of dollars and allow you to manage all the funds in your country. Lots of pigeons think this is a great way to quickly get rich. However, the pigeon quickly learns that there are a few financial obstacles on their path to untold wealth. These obstacles usually start with taxes and fees that must be paid to release the money. Of course, the pigeon is expected to pay these fees. Once the pigeon has paid to overcome a few low-priced obstacles, the obstacles grow larger and the costs steeper. The effort to move or launder the money increasingly sounds like a Soap Opera. I've had two clients who each spent over a half-million dollars following this Soap Opera to nowhere. Banks move and launder money daily. If anyone has a fortune they only need to contact an international bank to get help. Plus, the bank would be overjoyed to manage the millions of dollars and odds are they would do a far better job than most pigeons.

Gold is over $600/oz. You can be certain that the gold bullion scam is growing in popularity as you read this article. The basic story is simple. We have tons of gold or other very valuable assets. We can't openly sell them for whatever reason. We want to sell them to you at a big discount. As with most good swindles, the story quickly evolves into a Soap Opera. During the last Bull Gold Market, an investment group on the East Coast hired me to investigate a gold mine in Arizona. I flew to Phoenix. With several other prospective gold buyers, we were flown at night blindfolded to the mine. The story was the gold miners don't want to pay taxes or comply with assorted Government mining and environmental regulations. When the blindfolds were removed, we were underground. We got a tour of the mining operation that required four miners, who only worked at night to keep the mine's location secret. We observed the one-ton-per-day milling operation. The rock being mined and process didn't appear to be mineralized, let alone have any gold in it. However, the mine reported producing 200,000 oz of dore gold a week. Two of my flying companions purchased that week's production at a 50% discount off the prevailing gold price. After all, the production was dore and not bullion bars. My rule is that if the offer involves gold, silver or diamonds, it's probably a scam. If you know the cost of shipping one ounce of gold from anywhere to Switzerland, you know the maximum possible discount for an ounce of gold over the bullion price. Swiss gold dealers will meet you at the airport. They will assay your gold and pay you half of its value before you leave the airport. They will take your gold through Swiss Customs. In a week, you will be paid the balance due you, less smelter costs. I know, I've done this for a couple of African mining groups.

A Recession is not that far into our future. A classic Recession Scam is the Prime Bank Guarantee Swindle. Again the basic story is simple. We are the unknown bank from nowhere. We'd be overjoyed to loan your struggling business millions of dollars. Of course you will have to pay our loan origination fees and related costs, but the money is yours once you get a Prime Bank to guarantee your loan. A Prime Bank is one of the five to twenty major banks in the World. While your rich Uncle Jose may be willing to cosign on a loan for your company, there is absolutely no reason that a major bank would do so. The major bank would be putting its funds at risk for no benefit. If they wanted to risk their money on your company, they would loan your company the needed funds.

Investigate any business offer before you write a check. If it sounds too good to be true, odds are it isn't true. If you don't understand the proposal the odds are you are not going to like the outcome of the agreement. If you have a doubt about doing the deal, there is no doubt. Don't do the deal. If you are in business, you should remind yourself every day that you can be taken by a swindler. Beware the easy road to riches.

About the Author
He is the Managing Director of Beowulf Investments []. He's the Executive Director of the Global Village Investment Club [] He's a Venture Capital & Equity Finance Consultant []

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