Book 11, Prime Bank Fraud

If You Have Been Scammed or Have Been Approached by Promoters of this Scam
Call your local FBI branch immediately, and tell them how you have been approached. Call also your state's securities commission. Contact the SEC at their Online Complaint Center. Cooperate with law enforcement -- maybe you can help them to catch the promoters! If you have signed one of the "Secrecy and Confidentiality" agreements (however it may be titled) please be advised that the agreement is NULL AND VOID because it is part of an illegal agreement -- that is, you CANNOT be successfully sued because you signed one of these hokey forms and later went to law enforcement to lodge a complaint. Promoters often try to threaten people when they want their money back that they will be "sued" for violating the agreement, but the plain fact is that these agreements have no effect as a matter of law because the underlying scam transaction was invalid. Note also that if you are a VICTIM of this scam, you have done nothing wrong and will not be prosecuted for cooperating and assisting authorities. Therefore, there is NO REASON NOT TO CONTACT THE AUTHORITIES to at least help prevent someone else from being scammed. Finally, the BEST WAY that you are going to get your money is by way of a Victim's Restitution Order. That is, if the person who has scammed you is convicted, they will have to pay you your money back before they will be released from parole. This is another reason which you should immediately go to the authorities and disclose the fraud.
THE END GAME
Once a victim has figured out that he or she won't be getting their money back, they are then often lead into the "end game" where they will essentially assist in the fraud. The line the promoter will give is this: "Look, I can't give you your money back unless you bring someone else to me. Bring someone else to me, and I will give you a cut of their money." If the victim goes along, the victim is now also a promoter, and is guilty of fraud, securities fraud, embezzlement, and aid & abetting fraud, securities fraud, and embezzlement -- so don't go along: Turn the promoter in to the authorities instead!As mention above, the BEST WAY to get your money back is to file criminal charges against the promoter, and seek a Victim's Restitution Order. Not only does this offer you your best hope of getting at least a portion of your money back, but it will also take the promoter off the street and hopefully save somebody else from being sucked into this scheme.Please note that when someone tells you that they have made these astronomical returns off the program, it usually means that they have already been scammed, and are trying to get you into it so that they can re-coup part of their investment. Well, turn these folks in to the authorities, too, because they are no better than the original scam artist.
DENIAL
Like any other scam, people who have been scammed with these programs go into denial that they even have been scammed.Many people can't get over the mental barrier that they have lost everything. The only thing they have to live for is the hope that their money might come back, and we have seen people wait for years even after the scam artist has completely vanished and they don't even know who to call to check on their investment. But they still sit around, thinking that someday, somehow, a check for millions will somehow miraculously appear in their mailbox.Many people are embarrassed because they have been scammed. They've told their family and friends about this great investment, and simply can't face them to say that they did something stupid.Many people are culpable because they have also gotten their family and friends to invest in these programs, and even if the scam artist can't be found, they will go to jail for aiding and abetting the felony sale of securities without a license, embezzlement, etc.Well, all you folks who fall into these categories NEED TO WAKE UP AND SMELL THE COFFEE. Your money is gone, vamoosed, and you will never, ever get it back. The least you can do is report your losses to the police and to the FBI so that at least they can stop the scam artist before they hurt someone else.
STUPID ARGUMENTS
About twice a month, we get actually get calls from the scam artists themselves, posing from everything from an interested investor to an attorney acting on behalf of one of the roll programs. These idiots offer all sorts of B.S., arguing that their program is somehow "different" or that they have "guaranteed returns" or other such nonsense. Notably, they almost all hang up when we suggest that if their program is so good, that they should take it to the U.S. Securities & Exchange Commission and register it!Again, we have seen literally hundreds of these programs over the last several years but we have YET to see even a single legitimate one. Not one!
THEY DO NOT EXIST
Every couple of weeks, some sucker who is about to be scammed calls us and says essentially "I've read your website but isn't it possible that some of these might be for real?"
No! Hell No!
None of these are for real, period. This scam has been going on for years, and to date NO program has been legitimate. If you can't find the proposed program investment in either the Wall Street Journal or the London Financial Times, and if it has not been registered with your State Securities Commissioner, then it is a scam. Any and all reasons why it is not so listed are the purest of lies.During the course of the last several years, we have seen hundreds of these programs, but we have yet to see a real one! If there is a real one out there, we'd like to know because it would be the first. We're not holding our breath, however.[Please do not send us information to evaluate these programs, unless you also send us the U.S. address of the promoter so that we can forward this information to law enforcement for them to check against their records.]

© 2002-2005 by Financial & Tax Fraud Associates, Inc.. All rights reserved. No portion of this website may be reprinted in whole or in part without the express, written permission of Financial & Tax Fraud Associates, Inc. This site is http://www.quatloos.com. Legal issues should be faxed to (877) 698-0678. Our attorneys are Grobaty & Pitet LLP (http://grobatypitet.com) and Riser Adkisson LLP (http://risad.com).


Office Supplies Frauds & Scams
Material provided with the permission of Les Henderson & crimes-of-persuasion.com

Highly Recommended! Les Henderson's Crimes of Persuasioncrimes-of-persuasion.com
A comprehensive look at schemes, scams & frauds
Book available from Amazon and other retailersISBN 0-9687133-0-0
Bogus Invoices / Office Supplies
Businesses, churches, and fraternal and charitable organizations are being bilked out of millions of dollars by bogus office supply firms. You can protect yourself by learning to recognize the scams and understanding your rights.
The typical office supply scam involves goods or services that you routinely order: copier paper, toner and maintenance supplies, equipment maintenance contracts, or classified advertising. When fraudulent telemarketers call, they often lie to get you to pay for items you didn't order, or to get you to pay more than you agreed to.
They take advantage of holes in your organization's purchasing procedures or of unsuspecting employees who may not be aware of office practices. What's worse, the office supplies peddled by these bogus firms are often overpriced and of poor quality and the services are usually worthless.
Phony-invoice Scams
Schemers know that a business sometimes makes mistakes or can be careless in its accounting, so they prey on these weaknesses. Lifting names from mailing lists, business registers, the Yellow Pages or published advertisements, swindlers send "pro-forma" invoices for supplies and services. However, the invoice may be a solicitation in disguise and in very fine print contain the following disclaimer:
"This is a solicitation. You are under no obligation to pay unless you accept this offer."
Although the law states that it is illegal to send such a solicitation without the disclaimer being conspicuous and in large print, there are those who flout the regulations and send disguised solicitations.
Authorized Buyer
One goal of the phony-invoice scam is to get the name of an employee before your organization is shipped and billed for unordered goods or services. They use various ploys to do so such as asking for help completing an order, claiming that "the accounting department lost the name of the person we should send these supplies to," or they may ask for the name of the person in charge of your advertising or purchasing.
The phony invoice, which includes the employee's name as the "authorized" buyer, arrives a week or so after, for two reasons.
First, the inflated price, as much as ten times what you'd pay for the same goods from a legitimate supplier, is less obvious if the invoice arrives after the merchandise has been received and stocked.
Second, the chances are good that you've used the merchandise before the invoice arrives. Many organizations mistakenly believe that they must return unordered merchandise or pay for unordered merchandise before they've used it.
The Pretender Scam
In the pretender scam, the caller may pretend to be your regular or previous supplier, a replacement, or an "authorized" supplier. By convincing you that the goods or services and prices offered are the same as before, the caller hopes you won't bring up prices, quantities, and brands. Even if you do, the seller may try to brush you off by saying, "We've supplied you in the past, but it's been a while," or "The price is the same as last time."
If you insist on a price quote, the seller may give a price that sounds reasonable for one carton but is actually for a single unit, such as "$19.95 in a carton of 10," meaning the carton price is 10 times $19.95, or $199.50.
They can misrepresent the quality, quantity, type, price, or brand name. For example, the toner for your Xerox copier may not be Xerox brand toner. Some scam artists try to duplicate brand name packaging; others sell half a carton of merchandise at the full-carton price.
In another twist, the caller uses high pressure tactics to rush your purchase decision and dodge questions about price, quantity and brand names. The seller may falsely claim that prices are going up soon, someone was forced out of business, a warehouse is overstocked, or a limited inventory of government surplus is available. Or that a computer glitch delayed notification of a price increase, but, as a courtesy, an order has been reserved for you at the "regular" or "old" price.
He may misrepresent the purpose of the call, saying that he's calling to send you a promotional item such as a cordless screwdriver, free samples, or a catalog so you'll "think of him next time you order."
If you send back the single toner cartridge they sent uninvited, they may call up and say you kept one of the two they sent, so pay up.
Or the seller may claim that he's conducting a survey of office equipment or updating company records, leading you to believe that he's the regular or previous supplier. Before hanging up, the caller may mention, in passing, actual merchandise. "I'll send that screwdriver to you right away … and while I'm at it, I'll throw in a few deodorant blocks." Soon, a shipment arrives, matching your equipment supplies, followed by a bill.
The Gift-Horse Scam
The gift-horse scam tries to create mistrust within an organization. The scheme starts when the caller tricks an employee into accepting a gift or a free promotional item, with a passing reference to merchandise or services. You then receive overpriced, unordered merchandise, followed by an invoice with the employee's name.
When the organization questions the employee, the fraudulent seller is betting that the employee will be nervous about the gift when he denies placing the order. The hope is that the organization will doubt the employee. When this scheme works, the organization believes that the employee blundered into ordering something that must be paid for.
They may also target a person with the authority to sign cheques, then work on their fear of job loss, while sending escalating and persistent invoicing, despite continued "last one" promises. They may even threaten to notify higher-ups of the personal gifts if the false bills are not paid.
Though they rarely blackmail people in this fashion, one scammer's efforts eventually had several bookkeepers charged with embezzlement with the continued use of the phrase "You still have a balance due on your account!"
24 Hour Scamming
One group was charged for sending invoices to organizations, including churches and non-profit organizations, for unordered computer repair service contracts. Their mailings indicated that they were "renewals" or "upgrades of service" to previous contracts, or warned that an account was "past due." Their solicitations also provided an 800 number for consumers to call for "unlimited maintenance and repair services" including assistance by telephone. The FTC alleged that the defendants rarely, if ever, provided the promised services to consumers.
Paper Pirates and Toner Phoners
One "toner bandit" scheme defrauded numerous medical and dental providers who were induced to pay false and fictitious invoices for high priced, unordered and undelivered copy machine toner.
Supply Distribution Center set up customer service telephones and mail boxes through which to operate the false billing scheme. Fictitious invoices charging $274.95 or $283.92 for one carton of unordered copy machine toner were printed and mailed out to various businesses and institutions. About $14,000 in victims' checks were deposited into their account while about $140,000 worth were cashed at a liquor store.
Victims who complained about the invoices to them or to consumer protection agencies had their invoices canceled in an effort to reduce complaints and hide the scheme. No toner was ever shipped to victims who paid the initial invoices. Instead, they simply received another invoice billing them for another shipment of unordered toner.
Willing To Clean You Out
Perpetrated through a company that used the names of Sharp Industries, Saturn Industries, Polaris Industries, Trans-America, and Chem Tech, one telemarketing scheme defrauded thousands of victim companies including nursing homes, churches, hotels, schools, hospitals and other organizations nationwide out of over $12 million during a five year period.
They caused the victim companies to pay exorbitant prices for maintenance supplies such as penetrating oil, silicone spray, trash bags, and other products they ordered. For example, a case of penetrating oil (12 cans per case) was commonly charged to the victims at approximately $420 for one case (12 cans - $35 per can), when the same product was purchased wholesale for approximately $30 ($2.50 per can).
In addition to charging grossly inflated prices to unsuspecting customers they would also send gifts or kickbacks to the home addresses of purchasing agents to induce them to pay the exorbitant prices charged on the sales invoices.
We Have To Keep Moving
Complaints from a real estate firm, a trucking company, a hospital, a school district, and a non-profit agency describe phone calls from a young woman, claiming that her father is closing his office supply business in a nearby town and moving the business. She claims the supplies are offered "at cost" or "very cheap," and quotes specific prices.
The supplies are shipped, but the invoice amounts are higher than expected. Totals have been reported of $292 to $1,922. In some cases the original price quoted turned out to be "per item," rather than "per box" and did not reflect the price quoted over the telephone.
After the Invoice Arrives
Scam artists can spend significant time and energy on collection efforts. They will send as many invoices as it takes to get your money. Invoices often are stamped "Past Due." In extreme cases, they'll resort to real or bogus collection agencies and threats of legal action, preceded by dunning letters.
An organization that pays for unordered goods or services also may be targeted for additional scams or "reloaded." For example, the seller may send a second shipment of "back ordered" merchandise and another bill, or bills for service upgrades.
Additional invoices follow as long as you continue to pay. The con artist also may sell your organization's name to other scam operators, or convert to another bogus operation and target you with a new scheme.
The Brush-off
When organizations complain that they didn't order the merchandise or services or that the price is too high, the scam seller reacts in some predictable ways:
· Bullying. The seller argues with you if you express any uncertainty about whether the supplies or services were ever ordered: "They were ordered. We have a recording of Mr. Jones. If you don't pay, we can take you to court."
· Negotiating. Here, the seller agrees to accept a lower price. After all, the goods and services are so grossly overpriced that almost anything the seller gets is profit. If you complain about price, the seller may say, "You were charged what? They must not have given you the discount for ...." The seller then tries to negotiate "a better deal." Sometimes, the seller appeals for sympathy: "We really need the business. I'll let you have it for...."
· Charging for returned merchandise. The seller claims you can return merchandise if you pay a "restocking fee." In fact, the fee is often more than the goods are worth. Similarly, the seller may try to get you to pay shipping charges to return the items.
How To Avoid Supply Scams
You can protect your organization from paying for unordered goods and services. Here's how:
1. Know your rights. If you receive supplies or bills for services you didn't order, don't pay, and don't return the unordered merchandise. You may treat unordered merchandise as a gift.
By law, it's illegal for a seller to send you bills or dunning notices for unordered merchandise, or ask you to return it, even if the seller offers to pay for shipping.
Further, if the seller sends you items that differ from your order, you may treat the substitutions as unordered merchandise. Unordered services are treated the same way. However, first consider the possibility that the seller made an honest mistake.
2. Assign designated buyers and document your purchases. For each order, the designated employee should issue a purchase order, electronic or written, to the supplier with an authorized signature and a purchase order number.
The order form should instruct the supplier to note the purchase order number on the invoice and bill of lading. The buyer should send a copy of every purchase order to your accounts payable department. Keep blank order forms secure.
3. Check your documentation before paying bills. When merchandise arrives, the receiving employee should verify that it matches the shipper's bill of lading, paying special attention to brands and quantity, and your purchase order. Refuse merchandise that doesn't. If everything's in order, the employee should send a copy of the bill of lading to your accounts payable department.
Bills for services should be reconciled the same way. A supplier should not be paid unless the invoice has the correct purchase order number and the information on the invoice, the purchase order and the bill of lading match.
4. Train your staff. Train everyone in how to respond to telemarketers. Advise employees who are not authorized to order supplies and services to say, "I'm not authorized to place orders. If you want to sell us something, you must speak to that person and get a purchase order."
Buy from people you know and trust. Authorized employees should be skeptical of "cold" or unsolicited calls and feel comfortable saying no to high-pressure sales tactics. Legitimate companies don't pressure you to make a snap decision. Finally, consider asking new suppliers to send a catalog first.
Ten Million Reasons Not To Realize
Edward Tunick, who faces seven to 10 years in prison for his January conviction on nine counts of mail fraud in federal court, was involved in telemarketing maintenance supplies for 12 years. By his own admission, his companies, which ran under multiple names, tallied gross receipts of more than $10 million in that period.
Suggesting that it took a jury trial to make him realize the error of his ways, Tunick said he did not realize until after his conviction that what he was doing was against the law.
He and his employees would call businesses offering products -- in his case, light bulbs and janitorial supplies, while avoiding the subject of price during their calls. Posing as longtime suppliers to the victim companies and often offering gifts to employees to help persuade them to place an order, Tunick then would send the products to one address and the invoice, with marked-up prices, to another.
The scam works because large companies often fail to question invoices below a certain dollar value, usually $500. Fraudulent telemarketers know this so they keep sending bills for $200 or $300.
Office Supply Outrage
27 Apr 2001
Thank you for having this web site!
I just got hit with this again today, and it's prompted me to write, warning everyone about this telemarketing scam.
Several years ago, I was working as an office manager for an architectural firm. One day I received a phone call from a guy who asked me if I could confirm the model number of the copier in my office. He acted very casual, as if he had been dealing with our company for years. Not knowing any better, I gave him the information.
Shortly thereafter, boxes upon boxes of copier toner arrived at my office. I had never authorized the purchase, but they had my name, and sent the product anyway. The boxes weren't marked distinctively, so I opened them to see what was inside. Mistake. As soon as you open a box, you cannot refuse it to the shipper. So I was stuck with a bunch of high-priced toner that I didn't want or need.
Let anyone who answers the phone for your company know about this telemarketing scam. There are two approaches the scum-suckers usually take:
1. A person will call and say something like, "Hi. This is Brian from the office center. Could you confirm the model number of your copier for me?
2. A person will call and say something like, "Hi. This is Jen from your supply center. I wanted to let you know that we just got a major price hike on your copier toner. But since you're such a good customer of ours, I'll make sure you still get it at the old price. Do you still have the Canon M217 (they'll just make up a copier model)?
As soon as you reply with, "What is the name of the company you are calling from?" or "What information do you have on our copier?" or anything that requests information of them, they will hang up on you.
I've tried to bust these people, but have not yet been successful. I've tried to do a "*69" (call back) on the phone, but they always have their number blocked. I've also checked my caller ID, but again, the number is always blocked.
When I got the packages that time, I tried tracing the return address - it was a fake address. They must have gone into a postage service center, used cash to pay for the shipping, and given a false return address. And what about the invoice? A P.O. box.
Not sure what would have happened if I hadn't paid the bill, but I DID give them my name and I DID give them my copier model number. They could have argued that it was an authorized sale.
My point is, don't get yourself into this situation. If anyone calls you asking you for ANY information - personal, business or otherwise - DO NOT GIVE IT TO THEM! Ask for them to put their request in writing. If they're legit, they'll do it. Please forward this to anyone who works in an office. I think this is important and could save people a lot of money and hassle (and possibly save someone their job!).
Let's beat these scumbags at their own game!
Melissa Hertzler
No Fixed Address
Vermont Attorney General William H. Sorrell announced that his office has settled a consumer fraud lawsuit against Merchant Product Services (MPS)(3522318 Canada, Inc.), a telemarketing company based in Montreal, Quebec run by its president and director, Misha Artzy.
MPS, a seller of paper and ribbon for credit and debit card machines, had solicited orders by telephone from businesses all over the country, using the Vermont address of a mail handling facility in the town of Derby.
The Attorney General alleged that the defendants violated the Vermont Consumer Fraud Act by:
· failing to disclose important terms of MPS' offer, namely, the price and quantity of the supplies that the defendants wished to sell.
· failing to provide required disclosures of customers' three-day right to cancel their purchase over the telephone.
· charging unconscionably high prices for their products-between 5.4 and 11.0 times the prices of comparable products sold by others.
· misrepresenting that MPS was affiliated with the manufacturer of credit/debit card machines or served such machines, rather than that it was actually a seller of machine supplies.
· misrepresenting the purpose of the defendants' telemarketing sales calls by creating the impression that their calls were intended to check on how potential customers' credit and debit card machines were working.
Although the defendants denied these allegations they agreed to a permanent ban on doing any business in or into Vermont, including using a Vermont address.
They are also required to pay $21,000 in full refunds to all of their Vermont customers; full refunds to all non-Vermont customers who have filed-or who may in the future file-a complaint with the State; $60,000 in civil penalties to the State; and $12,500 to reimburse the State for its fees in litigating the case-for a total of at least $93,500.
For further information on the settlement, businesses can contact the Attorney General's Consumer Assistance Program at 1-800-649-2424. October 9, 2001
Free Can Be Expensive
02/02 - James W. MacDonald, pleaded guilty to mail and wire fraud conspiracies involving a $6 million dollar fraudulent telemarketing company in Boca Raton and New Jersey and was sentenced to nearly 10 years in prison.
He told his telemarketers to offer businesses free samples of cleaning and lighting supplies then later billed the companies for the supplies at prices inflated up to 4,500 percent, according to the U.S. attorney's office.
While the companies operated from 1989 to 1994, MacDonald was arrested in 1999. Three others, Darren Sturtevant, Philip Lynch, and Steven Green also pleaded guilty to the scheme and are awaiting sentencing.