Modus Operandi Page 8

  Our experience has shown that these Ponzi swindlers proliferate in cyclical patterns throughout history and very often take place when inflation and unemployment are very high. There is never a shortage of suckers ready to take a tumble. What sets Ponzi schemes apart from other more intricate swindles is this: The money the investors put up isn't invested in anything, and the profits are paid out of new money from subsequent investors. Eventually there aren't enough newcomers to keep this snowball going, and the game collapses.

  No one knows if a successful Ponzi operator has ever found a way to close-out his swindle without it collapsing. When a Ponzi scheme collapses all of the latecomers lose. Only early investors can win, but many of them lose, too, because they reinvest with the expectation of making larger and larger gains. They become trapped by their own greed. To profit from a Ponzi fraud it's not enough to be the first one in; you have to be the first one out as well.

  Bunko Games

  The pigeon drop or pocketbook drop is the street bunko game that requires the minimum number of props: a pocketbook or an envelope and a sizable amount of cash. The pigeon is the victim and no more than two or three swindlers participate in the crime.

  The game begins in the presence of the potential victim, when one of the swindlers apparently finds a pocket-book or envelope filled with money, usually from $500 to $2,500. The approach to the victim is disarming, combining happiness in finding the money along with the question, "What do I do now?" As the victim starts to discuss the swindler's apparent good fortune, a second swindler shows up. Assuming the roll of a stranger who just happens to witness the find and wants to be part of it, the second swindler joins in the spiel that makes the victim a partner in a plan to hold the money until the origin of the cash can be determined.

  Since this will take time, the two swindlers team up to convince the sucker that he should hold the funds, but to assure them of the victim's good faith, they ask him to show cash equal to the amount found or close to it. Faced with the possible loss of one-third of the money, the gullible victim goes to a bank, gets the cash and shows it to the swindlers. They go through the motions of counting it, advising the victim of their satisfaction. They bundle the found money with the victim's cash, hand it to him, and arrange to meet again the next day.

  Sometime after this parting, the natural curiosity of the victim leads to an examination of the secret bundle of money. It turns out to be newspapers or regular plain paper cut to money size. The swindlers switched the bundle just before they parted from the victim.

  Swindles Against the Elderly

  On the bottom of any detective's list of social miscreants would be the con man who impersonates a Social Security employee to gain access to an elderly person's home and confidence. Once this relationship is established there are a variety of con games used by these individuals. Here are a few along with actual case histories from the files of the Social Security Administration.

  We once investigated two con men who contacted Social Security recipients, two elderly females, aged eighty-six and eighty-four, and told them that there had been overpayment. The eighty-six-year-old woman turned over $7,050 to the impersonators. The eighty-four-year-old told them she didn't have the $1,628 demanded, but that she could have it for them the next day. She then called the Social Security Office. This matter was reported to the Federal Bureau of Investigation.

  Another type of con, frequently targeted toward elderly men, are pills and devices to enhance sex and advertised in senior citizen magazines or by direct mail. It is quite easy to purchase mailing lists, which go into great demographic detail in a market area. For instance, if a person wanted to target males over age sixty who reside in a certain location, they would simply contact a mailing label company who would ship them thousands of labels compiled according to recent research data. Armed with this information, con artists target these individuals and offer them pills and juices that they say can make a man, regardless of age, romantic, young, potent, as virile as the gods. These products are sold for ten to twenty dollars, but are made of nothing

  but pineapple, papaya, peach, grape and apple juice.

  Another con involving the elderly is the dance studio scam. In the most prominent one, the slick con artist preys on the desire of elderly widows and spinsters for attention and the emotional satisfaction this brings to an otherwise lonely existence. Swindling in this area is made possible through the device of lifetime memberships, whereby a studio contracts to provide several thousand hours of instruction to an elderly person who pays in advance. Many victims that we have met have reported to the Better Business Bureau that they have been bilked out of their life's savings for a lifetime membership or multiple lifetime memberships. In one case a dance studio signed a sixty-nine-year-old widow to eight lifetime memberships entitling her to 3,100 hours of instruction at a cost of $34,913.00. She was promised attractive male dancing partners and was assured that the lessons would make her a gifted dancer so that she could perform on television.

  Another type of swindle is called the lonely hearts club. What these operators do is try to offer personal introductions to members of the opposite sex. They do not deliver people and charge anywhere from fifty to two hundred dollars. After responding to a newspaper ad for a matchmaker service for the elderly, the subscriber will call to investigate, send in his payment, and then wait patiently for his perfect match to show up. He is told over the telephone to exercise patience while the vast staff of the club sort out the right person for the match. In essence, this elderly victim is contacting one or two people working in a room with nothing but two phone lines and two chairs!

  There are also correspondence clubs that take the initial deposits and then go much further to receive more funds from their cons. An elderly gentleman receives delightful letters from a widow across the country found for him by the correspondence club. These, of course, are form letters that are written by the thousands each month by the employees of the scam. After a few months of writing, the widow declares her intentions to visit the gentleman. His interest peaked, he is all set for this visit. However, in transit to the gentleman's home, she falls seriously "ill" and cables him for a bundle of money just until she can get to her own bank and make a withdrawal. The money is sent by the expectant gentleman and that is the last that is heard of the nonexistent widow.

  Gypsy swindlers and door-to-door confidence men exploit the elderly to the tune of millions annually through a variety of schemes. Many of these con artists pose as city inspectors telling people that their storm sewers need cleaning to pass inspection. They will work two hours and charge a person $1,050. Other times they will insist that they are roofing inspectors and state that the roof will need painting and repair. They will go on the roof and work for about three or four hours and charge $1,685.

  In another investigation that we handled, a retired physician in his eighties gave a representative of an alleged termite control firm $1,790 for treatment of his home, after being shown a piece of termite-eaten wood supposedly removed from his basement. Subsequent investigation failed to establish that there was any termite activity in the home.

  A Glossary lor Con Artists

  Noted below is the compendium of con artist language. Be sure con artists in your works are flamboyant, extraverted and expert salesmen. To make them realistic you should have them use the following terms and know exactly what they mean:

  Big Con A confidence game or trick, usually with an elaborate set up, that nets the swindler big money.

  Boob A victim or dupe.

  Booster A shoplifter, also an assistant to the operator of a con game.

  Bunko A confidence game or swindle. Cannon A pickpocket.

  Capper An outside man who works for a gambler, one who brings in the suckers.

  Century A one hundred dollar bill, also called a C-note.

  Check Kiting Passing a check whose amount has been fraudulently raised. A check bearing a forged signature or check without funds to cover it.


  Chump A sucker.

  Clip Artist A swindler.

  Cold Deckel deck of cards dishonestly introduced into a game.

  Flush Describes a sucker who has plenty of money.

  Front Money Money put up to lead a sucker into a swindle.

  Gaff Any method, device or system used by a swindler to trick a sucker.

  Grand A thousand dollars or G-note. Gyp Artiste swindler.

  Haul The swindler's take or profit, also called loot, gravy, cut, doe or swag.

  Hooked To be swindled.

  Laying Paper Passing worthless checks.

  Layout The swindler's paraphernalia, also called the set up.

  Mark prospective or actual victim of a confidence game.

  Nut The sum total of expenses.

  One Spot A one dollar bill.

  Paper Hanger A bad check passer.

  Patsy A dupe or victim of a swindle.

  Phony Counterfeit money or a package of paper with good bills on the outside.

  Pigeon The dupe or victim of a confidence game.

  Poke A pocketbook or wallet.

  Rap A complaint or criminal charge.

  Salesman A swindlers advanceman who makes the first contact with the mark.

  Score To pull off a swindle and then the proceeds from the swindle.

  Shill A swindler's assistant who poses as one of the crowd. He may be permitted to win a short card game to facilitate bringing in victims.

  Short Con A confidence game in which little preparation is needed and small stakes are involved.

  Spieler The person who does most of the talking in a con game.

  Steerer A confidence operator who first approaches the intended victim. Also called the salesman.

  Sucker From the swindler's standpoint any person not engaged in some swindling activity. Also called the fall guy, sap, pigeon, dupe, gull, easy mark, boob, chump, egg, patsy or customer.

  Thimble Rigger A shell game operator.

  Touch The victim of a swindle or a sucker.

  Trick A swindle. To pull a trick is to swindle.

  Trim To swindle, fleece, jip, clip, beat or cheat a sucker.

  We all know that the most desirable article to forge is paper money. But, counterfeiters and forgers do not just deal in currency. Anything that can be used to make a profit will be duplicated and sold: artwork, bank checks and stocks and bonds, even blue jeans and pocketbooks. If there is a market for an item, you can almost guarantee there will be someone willing to reproduce it cheaper.

  What is counterfeiting? It is defined in criminal codes as an act of copying or producing a genuine facsimile for the purpose of unlawfully circulating them for profit. The enforcement of federal counterfeiting laws is done mainly by the U.S. Treasury Department through the Secret Service.

  Currencies

  The currency most often counterfeited in the U.S. is the twenty dollar bill. Store clerks will take them with little or no hesitation; especially when a cashier is confronted with a line of customers. Today's counterfeiters will not attempt to fool the unsuspecting cashier with a perfectly manufactured counterfeit bill. Instead, they rely on the clerk's lack of attention to pass the bogus bills. This is achieved by placing the counterfeit currency between a number of authentic bills, and by asking a number of complicated questions so the checkout line stacks up with angry customers who preoccupy the cashier.

  Modern Money

  We have all seen in the movies the master engraver. The typical scene is a small, dimly lit room, perhaps tucked away in a basement or to the rear of a small curio shop in a seedy part of town. The engraver sits on a stool, hunched over a small wooden bench table. One light fixture hangs over the table. His sleeves are rolled up and a visor is on top of his head shading his eyes from the harsh light. A tiny razor-sharp chisel is used to precisely and meticulously carve into a metal plate the image of a one hundred dollar bill. Once both sides of the bill are complete, the plates are placed into a press and one at a time these one hundred dollar bills are reproduced.

  This is not the norm today. Small-time hoods duplicate currency on high-quality color copy machines that cost in excess of $80,000 each, or computers with laser printers. Unlike the master engraver, anyone with little or no art skills can make a high-quality reproduction of U.S. currency. Counterfeiters use high-tech software programs to accomplish this. Not all the counterfeit monies produced today are from professional criminals. School-aged children use their library copiers to reproduce money to buy items from their cafeteria vending machines. More gutsy juveniles will attempt to make purchases at a local convenience store with photocopied money.

  Worth the Paper and Ink

  The paper used to make genuine U.S. currency is 100 percent cotton rag that holds a unique textured surface. This texture can be easily observed and felt when it is han-died. Small red and blue fibers arc embedded in the paper. The paper used for currency is very tightly controlled, making it almost impossible to obtain. One enterprising counterfeiter, knowing of the tiny red and blue fibers, attempted to duplicate the paper by carefully gluing tiny bits of red and blue fiber onto his counterfeit money.

  The United States government is now taking steps to stop the ease of duplicating its currency. Beginning in 1996, United States currency will contain a number of new security characteristics. Some of these characteristics will be kept secret for security reasons, but basically they are going to have some of the same features found in currency in European countries. The currency will contain watermarks that will only be visible when looked at with lighting behind the currency itself. This is designed to eliminate the possibility of copying currency with a copy machine, because these watermarks will not transfer. Another protection from copiers or high-quality laser printers will be the introduction of microprinting. Microprinting is impossible to reproduce through photocopying because the tiny characters blur when photocopied.

  The standard red and blue fibers will be placed in different locations that will indicate the denomination of the currency. The green ink, which is also a tightly controlled product, will still be used, but this new currency will have an additional ink that will change colors when viewed at different angles.

  Credit Card Fraud/Counterfeiting

  It's actually pretty simple to get credit card numbers. A search of apartment building dumpsters for sales receipts or billing account statements will yield a motherlode of information. Carbon copies thrown in retail outlet dumpsters is another method, and, of course, a salesman looking to make a fast buck is also a good source for charge card numbers.

  Credit card information is also easily obtained through telemarketing scams. Basically, you receive a telephone call stating that you won an outstanding prize or the vacation of your dreams. The only problem is that for you to receive your prize, you first have to satisfy your tax obligation or a shipping fee for your prize to be delivered. One method suggested to you is paying with your Visa or MasterCard. Once the number is obtained, it is then imprinted on a bogus charge card.

  These bogus charge cards are either manufactured, usually in a well-organized and equipped print shop, or stolen with inside help from the company of issue. The charge card can now easily be used for at least thirty days, which is the usual billing cycle, without threat of apprehension.

  Counterfeit losses have generally represented a small percentage of volume loss for the major bank credit card companies—Visa and MasterCard International. These credit card vendors paid the problem scant attention until the involvement of organized crime and the rising losses. MasterCard lost $172,000 to counterfeiters in 1979, but $9.3 million in 1983 on a total of $41.8 billion dollars in sales. The $9.3 million is not tremendous, but the growth is alarming. According to Visa, 93 percent of U.S. counterfeiting occurs in twelve states, and card fraud operations appear to coincide with the locations of major, known organized crime families. It has been determined that 82 percent of all counterfeit and altered card transactions took place in New York, New Je
rsey and Florida.

  Lost or stolen cards are used first for large purchases by criminals. Counterfeiting and alterations are usually the second step for a stolen card. When the issuer finally hot-lists the account number, counterfeiters recycle their cards using methods ranging from the crude —cutting the numbers off and pasting them on another card —to the sophisticated—$140,000 embossing machines.

  Today, there are basically three types of counterfeit cards being used: Kimble Stolen Plastic, Silkscreen and Lithographs.

  Kimble Stolen Plastic

  Kimble cards are the Bank of America cards that were taken in an armed robbery in 1981; they are named after the executive who made the cards at Bank of America. These cards are perfect because they are embossed with valid names and account numbers, and are difficult to detect as counterfeits because the card is flawless. These cards can be detected as counterfeit after they are embossed by the following irregularities:

  1. Some will have small square outlines around the letters or the name. This is because the same embossing pressure was applied on the letters as the numbers.

  2. All Kimble stolen cards counterfeited to date have no star. The Bank of America star has five points, but counterfeiters are embossing a six-point star that looks like a daisy flower. Some cards have been recovered with a dot in place of the star.