Financial investment scams yield lessons for on and off-line relationships

Tuesday, December 7th, 2010
FBI Executive Assistant Director Shawn Henry, with Attorney General Eric Holder (right) and Chief Postal Inspector Guy Cottrell, talks about "Broken Trust."

FBI Executive Assistant Director Shawn Henry, with Attorney General Eric Holder (right) and Chief Postal Inspector Guy Cottrell, talks about "Broken Trust." Photo: courtesy

In the network culture, trust is fast becoming a “currency” as the sting of harassment, fraud and deception impact lives in profound ways. The typical headlines are cyberbullying and pedophile seduction of children.

And then there are bad actors after your money, as illustrated by the FBI news yesterday about Operation Broken Trust.

The FBI Financial Fraud Enforcement Task Force announced the largest investment fraud sweep in the United States concluded with 231 cases involving over 1,200 victims totaling $8 billion from actions taken August 16 through December 1, 2010.

Operation Broken Trust involved both criminal and civil law enforcement to focus on scams perpetrated by trusted members of their victims’ communities.

In the cyber-powered world we can become conditioned to treat a “connection” as trustworthy because of their affiliation with others in our personal networks. Trust without verification can lead to devastation.

Operation Broken Trust focused on criminals who leveraged personal networks, including church groups, to recruit victims into giving them money with the promise of big payoffs.

According to a press release by the U.S. Attorney Eastern District of California, Benjamin B. Wagner, based in Sacramento, one Ponzi scheme case was perpetrated by Barry Winnett and a co-schemer in Roseville who solicited 22 people to invest their retirement accounts amounting to $2,975,352.

Another case from this same office, Jesse Alvin Cripps Sr., 57, previously of Visalia, was indicted on 27 counts of mail fraud and three counts of money laundering – whose victims he recruited from contacts at church.

Lauren Horwood, spokesperson for the U.S. Attorney’s office in Sacramento, indicated that the first level of investors recruited for these scams received the return promised and then they referred their friends believing it was a genuine investment opportunity.

 “The sad thing is that the first people recruited into the scam are probably trustworthy friends who don’t realize the people they refer will be making payments to previous investors and risk losing their money,” said Horwood.

Marie Hall, Executive Director BeMoneySmartUSA

Marie Hall is the Executive Director of BeMoneySmartUSA, a financial literacy non-profit in Carmichael.

“It’s unfortunate, but you have to watch your money, make sure you don’t jump regardless of how good you feel about making the decision to invest with anyone and always, always do your research.  I always tell the kids and our adult students, if it’s too good to be true, than it probably is!” said Hall.

Other tips from BeMoneySmartUSA

  • You don’t get something for nothing, and we practice a very simple rule, never buy anything from anyone over the phone, or from your door step. 
  •  If you really think you want to make an investment, sleep on it, talk about it with other professionals (get a second opinion) and do the research.    
  • Use the services of a good attorney to review the legal documents and research the background through criminal research tools/companies on the company and the people you are planning to do business with. 
  • Don’t accept the paperwork they give you as legitimate until you have done your own research outside of them.  Spending a few hundred dollars to have an attorney watch your back is an investment that can save your bacon!

Resources:

BeMoneySmartUSA

Report financial fraud here: Web site of the Financial Fraud Enforcement Task Force

For tips on investment fraud prevention go to Operation Broken Trust

Related Reading:

On or off-line trust among ‘friends’ must be verifiable

Free workshops teach teens how to make money work for them

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Photo: Christy Benz

Joanna Jullien jullien@surewest.net

Joanna married her high school sweetheart and over the past 25 years they have raised two sons in Roseville, CA. She has a degree from UC Berkeley in Social Anthropology (corporate culture) and has over 20 years experience as a professional manager in information technology, manufacturing, energy and environment.

Joanna writes on parenting in the 21st century, as she has observed and personally experienced many strains on the parent-child relationship with the advent of the Internet, mobile phones and popular culture. 

 

  

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About Joanna Jullien

Joanna Jullien

Joanna (jullien@surewest.net) and her husband have raised two sons in Roseville, CA. She has a degree from U.C. Berkeley in Social Anthropology (corporate culture). Her honors thesis was awarded the Kroeber Prize and funding from National Science Foundation grant. Joanna writes to help parents with the modern-day leadership challenges of raising children. She is a contributing writer for The Granite Bay View, the Press Tribune, the Sacramento Examiner, and editor of Banana Moments.

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