FLYNN: Fraud prevalent in tough times
Although financial fraud never goes away (having once been reported to be the third-largest industry in Nigeria), such fraud becomes more prevalent in hard economic times. That’s because people are desperate and more vulnerable to being duped, and because in hard economic times people reach out to help others in need.
Although a list of financial scams could fill a book, here are a few that have made news in recent weeks.
• Cash for Clunkers. This scam involves the offer of a cash for clunkers voucher. The criminal tells the victim this requires personal-identification information (SSN, birth date, name of favorite pet, etc.) and then uses that information to commit identity theft crimes. No voucher is forthcoming.
The Cash for Clunkers program is run only through participating new-car dealerships, and clunker payments go directly from the U.S. treasury to the dealer by electronic funds transfer. The program ends Monday.
• Real estate title fraud. Here, criminals search public records to find homes that are vacant or used as rentals, and that have no mortgage. A deed from the owner to the criminal is prepared by the criminal, the owner’s signature is forged, and the deed is recorded in the county real estate records. The criminal then sells the property to an innocent purchaser, pockets the sale proceeds and vanishes.
Although the true owner can get the fraudulent deed rescinded by a court, this will take time and money. Unless there was title insurance involved, the innocent purchaser will be the loser. If there was title insurance, the insurance company will take the hit.
• Social networking fraud. In this fraud, the bad guy impersonates someone participating in a social networking Web site. The bad guy acquires enough personal information to make the impersonation convincing. The bad guy then sends out a message to the contact list of the individual being impersonated saying something terrible has happened and the individual needs money.
The money that comes in goes to the impersonator, not the individual being impersonated.
• Charity scams. These scams involve requests for donations to help victims of a natural disaster. (Hurricane, tornado, flood, Chicago Cubs not making the post season playoffs, etc.)
However, the scam easily converts to a request for donations to help victims of the recession. Charitable organizations that solicit contributions in Colorado must register with the Secretary of State’s office. Before you give, go to www.sos.state .co.us and check out the organization asking you for a donation.
• Insurance fraud. Insurance fraud usually has an insurance company as the victim. (“Well officer, my house, which I haven’t been able to sell, just suddenly caught fire. Imagine my surprise.”)
However, there’s another form of insurance fraud. The Colorado attorney general’s office has been busy prosecuting individuals who have purported to sell insurance where no coverage was ever obtained. Instead, the premiums went into the pocket of the deceitful salesman.
• Fictitious lawyer fraud. The legal profession was recently embarrassed by the conviction of Howard Kieffer for pretending to be a lawyer when in fact he was not. Kieffer appeared as criminal defense counsel in at least one case in U.S. district court in Denver, where, apparently, the judge didn’t think he was any worse than other lawyers he had seen.
Kieffer no doubt learned something about the law during his four years in prison for filing false tax returns.
You can check to see if your lawyer is really a lawyer, and look at his or her disciplinary record, at www.coloradosupreme court.com.
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Jim Flynn is a private attorney at Flynn Wright & Fredman LLC in Colorado Springs. The firm primarily represents clients in the real estate, financial services and small-business sectors. Reach him at jtflynn@fwflegal.com.
