Protecting Older Adults from Scams and Fraud

By Garrett Vogel and Elaine Wiant

 

 

Q         Since my father died several years ago, my mother has received a number of letters, and more recently, e-mails from someone claiming to be the relative of an African public official. He claims to have a substantial sum of money that he wants to transfer out of the country.

 

In return for using mom’s bank account he is offering to pay her a 20% “commission”. While mother is eager to help those in need, not to mention picking up some extra money, we’re afraid of being taken advantage of. Should we pursue this opportunity?

 

A         NO!  This sounds like a variation of the “Nigerian Letter” which in turn had it’s origin in England as “The Spanish Prisoner” scheme hundreds of years ago (maybe there really isn’t anything new under the sun).

 

While the internet is a wonderful resource, be careful about a two-way communication with a stranger who contacts you.

 

This scam has two goals: 

  • to get money from you to cover “taxes, legal fees” or some other costs
  • to obtain personal information such as  bank and credit card accounts for later impersonation fraud.

 

The FBI says, “millions of dollars in losses are caused by these schemes annually”. I personally have spoken with an express package driver who told me that he picks up about one package to Nigeria every three weeks (multiply that by thousands of drivers!).

 

If you or someone you know is involved in or contacted about such a deal, contact the local office of the United States Secret Service at 972-868-3200 or the FBI at 972-559-5000. 

 

 

Q         Since Hurricane Katrina damaged or shutdown Gulf Coast oil production and refining I’ve received calls from several people offering me investment opportunities in domestic oil exploration projects.  One of the salesmen really seems nice and he even brought over a very professional brochure describing the project.

 

However, he’s pressuring me to make a decision this week and wants me to give him a cashier’s check. Most of my liquid assets are in cash and I’ve never done much investing outside of several mutual funds. While I’d certainly like to receive the returns they’re promising, I just don’t believe in “sure things”. Could this be some kind of scam?

 

A         YES!  When oil prices go up or supplies become tight you can predict the emergence of promoters. While Texas is still full of legitimate oilmen, energy crises are magnets for operators that are at best less than competent and at worst just plain dishonest.

 

It is not uncommon to see an untried company that actually looks like a “real” oil company, complete with drilling rigs, pipe and engineers.  Unfortunately, many of these promoters produce documents that are not reviewed by regulatory authorities or even energy professionals and are sold by commissioned salesmen out of telephone “boiler rooms”.  In fact, I’ve seen sales forces working out of temporary apartments and even motor homes in attempt to stay a step ahead of disgruntled investors and law enforcement officials. 

 

Hand delivering brochures and asking for a cashier’s check (or bank wire) can be a ploy to play to the trust, manners and occasional loneliness of people raised in the 1930s-1950s. Hand delivery is also fast, and a common pitch to try and stampede the investor into action by saying that time is of the essence and the opportunity won’t last long.

 

Some promoters try to avoid a paper trail, hoping to make mail fraud investigations more difficult. Cashier’s checks and wire transfers enable them to get the money quickly and  to hide it or move it offshore.

 

Remember, they approached you. You should ask why are they are offering you this “opportunity”.

 

If you are approached about this type of investment, information might be available from the State Securities Board (www.ssb.state.tx.us or 214-630-8681), the U.S. Securities and Exchange Commission (www.sec.gov or 817-978-3821) or the Texas Railroad Commission (www.rrc.state.tx.us or 512-463-7288).

 

Remember that there are many investment alternatives with well-known companies within the petroleum industry. Independent oil and gas exploration and production is a high-risk proposition that generally has no place in a senior’s portfolio.

 

Contact ThirdAge Services for more information on these and other issues relating to older adults at 214-741-4397 or 214-649-1392 or contact Mr. Vogel at gvogel@thirdageservices.com.

 

Garrett Vogel is a Certified Fraud Examiner with an MBA in accounting and finance from the University of California at Berkeley.  Elaine Wiant is a Certified Fraud Examiner and Fellow of the Society of Actuaries.  Along with Carole Larkin (Geriatric Care Manager with an M.A. degree in Applied Gerontology from University of North Texas), they are owners of ThirdAge Services LLC, a provider of care services and financial services to older adults and their families and friends.