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fraud recognition & prevention education, fraud victim advocacy, law enforcement support

Fraud recognition & prevention education, fraud victim advocacy, law enforcement support

                    

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Fraud Secrets:

A Backstage Tour

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Why con artists scam

Profile of a con artist

What con artists look for

How con artists set up their victims

What a con artist won't tell you

What a con artist will tell you

Have I been scammed?

12 excuses for not returning your money

How do I find my money?

Where did my money go?

If you lost your funds in an investment scam, speak to your accountant about a theft deduction.

 

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Secondary market fraud: truth vs. scam

From The Dictionary of Financial Scam Terms

An easy-to-understand guide to financial terms used by swindlers

 

Secondary Market:

 

Generically, any market that depends on the existence of the primary market.  The prices in the secondary market are partially dependent on the prices in the primary market.

 

A catch-all term for any market whose existence depends on the products created in the primary market, whether it be cars, farm equipment, mortgages, BANKER'S ACCEPTANCES, TREASURIES, CERTIFICATES OF DEPOSIT, PROMISSORY NOTES, etc.

 

This is just one example: a lending bank (primary market) holding SEASONED individual mortgages on its own customers, i.e. mortgages on which the payments have a good record for at least one year, can sell a block of these qualified mortgages to a finance company, let's say ABC Mortgage (secondary market), a large investor in mortgages.

 

ABC pays the lending bank the risk-adjusted fair value of those mortgages.  ABC gets the full rights to all remaining interest and principal payments.  (In many instances, the lending bank continues to collect the mortgage payments for an administration fee, so you may not know that your loan has been sold, but this in no way affects either the value of your loan or your obligations).

 

Here is another example: the lending bank owns individually qualified mortgages for a nanosecond and sells them by established contract to ABC Mortgage.  The lending bank profits by the points it collected from the borrower, and by the administration fee it is paid by ABC for collecting the monthly payments from the borrower.

 

In each case, the value of each individual mortgage is judged by the terms of the loan, the quality of the lender, and various calculations based on risk-adjusted fair value calculation standards for the current market.

 

 

The Scam: Swindlers involved in HIGH-YIELD INVESTMENT PROGRAM scams often refer to the Secondary Market as pension funds, brokerage houses, Trusts, and insurance companies that purchase FRESH CUT SECURITIES created in bulk* once they have been seasoned for as short a period as overnight.  The swindler tells a potential investor that enormous profits can be made by purchasing these fresh cut securities and selling them the next day in the Secondary Market.

 

The con artist tells you that "seasoned" means that the Secondary Market cannot purchase securities directly from the issuer.  The con artist must use your money to create the securities or purchase the securities, known in ScamSpeak as a FUNDS FIRST deal.  Once this has been accomplished, the securities are considered a safe investment by the Secondary Market.

 

*The scammer would have you believe that securities are created in bulk, run off the printing press in batches, as it were - unattached to individual specific transactions.

 

This is complete hogwash and bears absolutely no resemblance to actual issuance and trade of securities, BANK GUARANTEES, or LETTERS OF CREDIT.

 

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