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Fraud Secrets:

A Backstage Tour

Start the Tour here

Why con artists scam:

You're in for a surprise.

Profile of a con artist

What con artists look for:

How scammers chose their victims.


Why so few scammers go to jail

How con artists set up their victims:

The 10 steps con artists use to get your money.

What a con artist won't tell you: Questions you can ask a scammer that will make him run from you.

What a con artist will tell you

14 excuses a scammer will give you for not returning your money

Have I been scammed?

The line between a scam and poor business ethics can be hard to determine.

Where did my money go?

How do I find my money?





Find out for sure if your are being conned: spotting red flags in investment scams.


Cash for Securities • Scam Example 1 • Scam Example 2

Discount Example

The 12 most common excuses used by swindlers



Look for these tell-tale signs: In the Profit and In the Excuses


In the profit -  

Cash for Securities

1. Any investment in securities is a loan to the issuer, whether it be a company (stock or debenture), a government (T-Bill, T-Bond), a Promissory Note, or a municipality (Municipal Bond).  A security is a written promise to pay based on certain conditions.


2. Profits derived from securities investments are dependent on:

- the amount of INTEREST charged for the loan.

- the level of DISCOUNT obtainable on the security.

- an increase in value of the security on the SECONDARY MARKET.

- the ability of the issuer to make good on his promise.




3. Profits on securities are limited by what the borrower can afford to pay or is willing to pay for the loan, and by what the market can bear.

Scam Example 1:  You are told that with an investment of $10,000. you can achieve a profit of 300% in a one-year period.  For this to be possible, it means that the full amount repayable on the loan at maturity has to be $30,000.  That kind of interest is only illegally charged by loan sharks.  The felony is called usury.

Scam Example 2: You are told that bank guarantees will be purchased at discount and then resold on the secondary market for a profit of 50% per month.

- "BANK GUARANTEE" is a term used to describe a variety of commercial trade documents in which a bank guarantees payment of funds to a third party (the beneficiary) on behalf of its creditworthy client.  There is not specific document titled "bank guarantee".

- In international trade the term is used to describe a LETTER OF CREDIT [Documentary Credit , Stand-by Letter of Credit, Back-to-Back Letter of Credit] and so forth wherein a bank guarantees payment to a seller on behalf of its creditworthy client - the buyer.

- Guarantees are issued individually, against a single specific transaction.

- In order for a guarantee to be issued, the bank's client must complete an application and seek approval - a process that can take several days depending on the nature of the nature of the transaction, the countries involved, the banks involved, and the individuals involved.  As part of the application, the client specifies what documents must be presented by the seller before payment can be made.

- Interest is the fee the client pays the bank for the use of the bank's funds.

- Payment by the bank is based on the presentation and evaluation of documents required by its client.  (Proof of insurance, bills of lading, shipping information, etc.)

- Discount is an amount less than the full value of the payment guarantee document at maturity, i.e. the base amount plus interest earned.  It is the amount for which the guarantee can be sold in the secondary market.



Discount Example: Forfaiture.  Forfaiture is an undertaking by a specialized finance company wherein the forfaiting company assumes the risks of the beneficiary.  A beneficiary (the payee) in an international trade transaction (cross-border buying and selling of goods and services) may not wish to wait for his payment.  The payee forfeits his rights to the guarantee, and the forfaiting company pays him an amount less than the full value he would get if he waited for the final payment.  The beneficiary has now sold his guarantee at discount.  In return, it has become the duty of the forfaiting company to collect all the pertinent documents required for payment to be made.



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