Tugging at the Heart Strings | Scams and Frauds Series by Larry Goldsmith – Part Three

As tax season approaches, we wanted to share a NEW Info-Series with you highlighting some of the scams and frauds that are running rampant in today’s day and age. We hope this series, written by Larry G. Goldsmith, will help raise your awareness to these scammers’ newest tactics and provide you with tips to avoid being their next victim. 

Each week, Larry will share a story or two about a specific type of scam or fraud, as well as what you can do about it if you suspect you’ve already been a victim. We hope you find this series helpful and insightful. Stay safe out there! 

[Larry G. Goldsmith, JD, CPA, MAFF is a financial forensic accountant as well as a published author, licensed attorney, and certified public accountant.]

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It’s true that people take advantage of others. It’s also true that someone can be taken advantage of by people they already know. To follow are stories of scams that highlight just how challenging it can be to discern what’s real and what isn’t:

Louie the Scammer, pretended to be a preacher visiting the elderly in a senior or nursing home. He bribed an underpaid office worker to learn who the wealthier residents were, as well as those most vulnerable. Louie would visit, sit and talk for countless hours with these individuals before employing his scam, slowly earning their trust and affection. At some point later, Louie would say that he needed to cut back his visits and not see the lonely elderly person again because others were willing to pay him for his time and he must feed his family. That is when Louie begins cashing in, receiving money for each visit. Eventually, Louie will become a beneficiary in the individual’s will.

You’ve probably seen this one online as it’s fairly common. In fact, I have had friends who were in bad marriages or simply lonely who sought companionship. They would meet an individual online and over a couple of months of conversations, my friends became smitten in love. At some point, their online lover would express a need for money to solve a problem or to obtain a visa to visit my friend. The lover will soak them for as much money as possible hoping that my friend never wises up to the scam.

Taking it further, some individuals will read an advertisement for women in Russia, or a third world country seeking a companion for life and feel that their feelings of loneliness have been solved. The advertised divas will be devoted lovers forever and adore fat, balding old men.

Loneliness is a terrible and painful thing and can make us susceptible to a scam.

Sometimes family members are the ones seeking your money. Many times, clients have come to me seeking my advice. Their child has an addiction and needs money to clean themselves up. The addiction can be bad financial decisions, drugs, or legal matters. Other times, the child or a relative needs a bank guarantee, investment, or loan for a business venture.

In most cases, there is a tendency to provide a helping hand, especially if it is your child in need. However, I have found that once the client begins providing money, the relative keeps coming back for more, especially when there is an addiction (one tranche of funds will never provide a cure). My advice is always the same: If you must help, never commit an amount of money that you will need later for your own retirement. If there is an addiction, never give them money directly. Pay a verifiable third-party like a treatment center instead.

A client came to me and said that his daughter and her boyfriend needed a co-signer for a ten-million-dollar construction loan to build five multi-million-dollar homes on the north shore. They planned to buy existing homes, tear them down and construct modern large residences. The couple had residential home construction experience but not in the multi-million-dollar market. My client wanted to help his daughter, but not risk ten million. He decided to limit his generosity. He placed restrictions on the use of the monies and required them to build a single home. The housing recession hit, and he lost the money he guaranteed to the bank.

With artificial intelligence, fraudsters have been able to capture the sound patterns of an individual’s voice and create dialogue. My mother received a phone call that my nephew, her grandson, had been arrested in Georgia while visiting a college friend. He pleaded with my mom not to tell my sister, his mother. He begged my mother to help him out with the bail and the costs to retain a lawyer, telling her he’d be sitting in jail for a week until the hearing. My mother asked questions to verify his identity. The voice and the answers seemed to check out. Just then, she remembered that his mother told my mom that my nephew was in California visiting his then girlfriend. My mom wisely ended the call.

Today’s fraudsters are savvy and manipulative. The best approach is to be vigilant. The fraudster—whether it’s a caller, a friend, a companion, or a caring person—is not who you think they are. If someone is asking you for money, that’s a red flag.