Fraud victim advocacy, fraud recoginition and prevention education, and law enforcement support

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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about losing your funds and Bank Guarantees

Warning: In High-Yield Investment Program Fraud, your money is never invested in anything.  It is stolen the moment you transfer it from your home account to the fraudster side.


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On this page:

  1. How can I lose my funds if they will be in my control at all times?

  2. How can I lose my funds if they are being exchanged for a Prime Bank Guarantee that is acceptable to my bank?

Q. How can I lose my funds if they will be in my control at all times?

A. Good question. The only problem is that your funds will not be in your control at all times. The fraudster persuades you of this in the beginning. Once you are convinced that you will not lose your money (or that of others), you will most likely be asked to sign a POWER OF ATTORNEY authorizing the "TRADER" to either exchange your funds for financial instruments, or to leverage your funds against the purchase of financial instruments of a far greater value than you have in the account.

So what is actually happening here? Well, to begin with the fraudster now has your confidence, your belief in him and the system,your intense desire to make quick profits of fantastic value, and control over the funds in your account once you sign the Power of Attorney.

Next you will be told that your funds will not be in jeopardy because the person to whom you are assigning a Power of Attorney is authorized by the bank (by some special license) to ensure that your funds will always be available to you, or that either cash or financial instruments of an equal value will exist in your account.

Finally, you will be told that if you try to access your account, it will mess up the trading and you will be in default.  You are told that you cannot call the bank or speak with any bank officer because you will blow the secrecy of the transaction and/or that you will be 'blackballed' and excluded from any further trades.

All of this gives the fraudster not only time to withdraw your funds, but transfer them far away from your account and make personal use of them.  You will be kept hanging with empty promises and empty threats.  The fraudster makes ample use of fear tactics in order to prevent you from reporting him for as long as possible.

The reality is that your funds were gone within minutes of the of the time they hit the other bank. All the bank needs to see is that you have authorized access to your funds. Beyond that, nothing is really their business or concern.

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Q. How can I lose my funds if they are being exchanged for a Prime Bank Guarantee that is acceptable to my bank?

A. Alright, let's examine a Prime Bank Guarantee by breaking it down into components, and then looking at bank procedure.

The word 'Prime Bank' signifies a bank in the top ten or so of creditworthiness on a global level. That is to say that the bank has exhibited an absolute minimum of defaults over a year's period as decided by a recognized independent rating agency such as Standard and Poor's.

A guarantee is " A contractual engagement to answer for the debt, default or failure of another person. The guarantor is obligated in respect of the obligee of a third party (principal debtor or obligor) to pay the debt if the third party fails to perform. The purpose of a guarantee is to secure a claim, mainly in order to raise credit.

... more from the World Bank

In plain English: in order to secure a guarantee of credit/payment from any bank, 'prime' or otherwise, the person or entity wishing the guarantee must file an application with a bank.  The guarantee is approved depending on the creditworthiness of the applicant.

What this means precisely is that the bank is merely substituting its good name for that of its proven and qualified client. Either now or later, the bank's client will have to reimburse the bank for the bank's outlay of funds to the beneficiary designated on the guarantee.

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Guarantees are issued in the form of an AVAL (a corporate note issued by a company whose creditworthiness is good enough for the company's bank to stamp and sign it, guaranteeing payment of the note), a LETTER OF CREDIT or a any financial credit instrument used in international trade, a mortgage, a car loan, a business loan, or any financial instrument that a bank issues in favor of another party based on the creditworthiness of the entity guaranteeing the funds to the bank.

Additionally, guarantees require a great deal of paperwork both before and after they are issued.

Now you have to ask yourself - by what process, using your money ascollateral, is the 'Trader' is going to obtain a bank guarantee?

If the 'Trader' flat-out purchases a Letter of Credit (LC), who is the beneficiary (the person to receive the funds, i.e. cash in the LC)?

If the LC is interest-bearing, meaning that the LC is actually a loan (someone is borrowing your money and that someone is going to pay for the use of the money), what is the interest, who is making the interest payment, and how are the profits being generated to pay the interest?

We're only talking about a fixed sum of money being exchanged for a financial instrument of the same value plus acceptable interest (as opposed to usury).

There are other scenarios available, but the bottom line remains the same - your funds are going one way, and you are going another.

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Based on the above information, how does the 'Trader' propose to exchange your funds for a guarantee that is acceptable to your bank?

He won't be able to do this at all.

The excuse given will most likely be that your bank is not adequate to the task and another bank will be have to be used.  Every ploy available will be used to make you switch your funds from your direct control.  It is of absolutely no use whatsoever to the fraudster for you to have a financial instrument in your possession that lists you as the beneficiary, because in effect you will only have exchanged the cash funds in your account for a kind of check made out to yourself.

Not to mention the fact that a Letter of Credit, for instance, requires that it will be used for the purchase of goods or services.

Warning!  If the 'Trader' does give you a guarantee or copy of a guarantee that he is stating is from the bank, you can be sure it isn't.

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