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Of Fraud and Fools

posted on: Fri Mar 31 2017

April Fools’ Day: depending on where you fall on the gullibility scale, it’s either a harmless day of light pranks or a chance for the jerks among us to be, well, jerks.

From a young age we’re taught to watch our backs on April Fools’ Day—make sure there’s no Saran Wrap on the toilet, be extra cautious when accepting “treats” from “friends,” and, for the love of all that is good, keep one eye trained on your shoelaces!april fools

And then there’s fraud: a more consequential kind of foolery where there’s little teaching or training. As adults, most of us are aware of its existence, but are less well-versed in the clues and the consequences. And unlike April Fools’ Day, it’s not enough to keep your guard up for just one day to prevent fraud. As Nobel Laureate economist Robert Shiller points out, the world will never be rid of “fraud and fools.”

In honor of April Fools’ Day this year, we at Kount take a look at some of the most infamous cases of fraud and foolery.

ZZZZ Worst

In the 1980s, serial fraudster Barry J. Minkow was indicted at age 21 for racketeering, money laundering, and fraud when it became clear that his company ZZZZ Best Co. was not as profitable as claimed, but rather propped up on fraudulent credit card charges.

Since the initial conviction, Barry has returned to his fraudster ways a few times, from deliberately trying to drive down stock prices, to defrauding his San Diego church. As the old adage goes…if it walks like fraud, if it talks like fraud, it probably is fraud.

A Fraudster’s Seal of Approval

As Kount pointed out in our list of top Fraudulebrities, being on the A-List couldn’t protect Oprah and others from being the victims of fraud.

A fraudster stole Oprah’s identity and used the information to influence banks and brokerage firms to authorize purchases and transfers from her account. And the criminal behind this scheme didn’t stop with the queen of media: he also collected personal information from over 200 other wealthy Americans to convince banks and other financial organizations to make wire transfers up to $10 million before he was caught.

The Long Island Bling Ring

18 people were charged in $200M credit card fraud case for a scam that created 7,000 new identities!! The most recently arrested was a Long Island man who had been at large for some time. Authorities describe the operation as “an elaborate scheme that involved creating false identities, inflating their creditworthiness, and borrowing or spending against them without repaying the debts.” To date, this is one of the largest schemes ever charged by the U.S. Department of Justice and the FBI was involved in the investigation and arrests of those involved. 

Slow and Steady Steak Fraud

Sometimes $1.00 goes a long way. The U.S. Secret Service arrested a criminal ring for fraudulently “skimming” customer credit cards at high-end steak houses, charging $1.00 to their patrons’ cards. The small amount not only went unnoticed by patrons, but allowed skimmers to make a copy of credit cards through that swipe. The cards were then sold to a organized criminal organization who produced fraudulent cards and purchased $1 million in high-end goods. Finally, bringing this story full circle, the criminally purchased goods were then re-sold on third-party websites for cash.

While these instances of fraud were headline-worthy, the more prevalent threats are less flashy. Companies should re-examine their fraud prevention strategy to make sure it’s been updated to anticipate fraud before it happens. Catch up on the latest fraud trends at a local Fraud 360 event or from your desk with an upcoming Kount webinar, to ensure that neither you nor your customers are fooled this year.

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