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Frauds and Scams (SCAM)     

axdpc - 20 Sep 2003 15:08

Reports of frauds, deceptions and scams keep appearing, weekly even daily, on
major news channels and newspapers. Some of these frauds seem just too big and remote to be of immediate, direct relevance to our daily lives. But, we will eventually pay for the consequences and damages, in taxes, costs of goods and services, regulations, copy-cats etc.

I hope we can collect, in one thread, frauds and scams, reported or heard. We must become more aware and more educated to guard against frauds and scams
which impact upon the health, well being, and wealth of ourselves and our families.

axdpc - 20 Sep 2003 15:12 - 2 of 631

Two guilty of $2.5 trillion swindle

"Two men have been found guilty of conspiracy to defraud in a case related to fake US government bonds worth $2.5 trillion. Graham Halksworth, from Mossley, Greater Manchester, and Michael Slamaj, from Vancouver, Canada, were found guilty of conspiracy to defraud at Snaresbrook Crown Court on Thursday.

Former Yugoslav spy Slamaj, 56, said the bonds were issued by the US in exchange for gold given by Chiang Kai-Shek's nationalist government in the 1940s.

A plane carrying them supposedly crashed on the Filipino island of Mindanao in 1948.

But Detective Inspector Roger Cook said the bonds were fake, produced on an inkjet printer with spelling mistakes and included zip codes - not introduced in the US until 1963.

He said the defendants had been "corrupted by greed" and had taken advantage of people's gullibility.
Slamaj, who claimed he had been given the bonds by Filipino tribesmen, brought them to London three years ago.

Forensic document examiner Halksworth, who had previously helped pioneer fingerprint evidence, was paid 63,000 to authenticate Slamaj's bonds and others.

The bonds were to be used as collatoral for loans.

But in May 2001 City of London Police were tipped off by the Hong Kong authorities after two Australians were arrested with bonds and a certificate signed by Halksworth. ..."
Thursday, 18 September, 2003

axdpc - 20 Sep 2003 15:28 - 3 of 631

"Fraudster jailed for two years over 123 sting"

"A British shipping fraudster who used fake documents to con a group of Middle Eastern bankers out of mor ethan 120m was sent to jail for two years at the Old Baily yesterday.

Milton Kounnou operated in London as a bogus supplier of metals. He set up two companies - Simetal and Fimetco - to produce forged invoices which were then passed to Middle Eastern front man Madhav Patel.

Patel used the forged orders to defraud 20 banks ... out of 123m in just seven months.

According to the SFO Patel cultivated a 'positive reputation with the banks as being a businessman who settled debts punctually. The companies initially generated sufficient turnover to pay the debts, so the banks became willing to extend more credits.

The invoices appeared to cover orders for around 450 tons of tin ingots, nickel scrap and lead-silver alloy shipped between northern European ports.
In reality the consignments were of low-grade metals, or did not exist at all.

Kounnou pleaded guilty to 15 counts of false accounting. The SFO says Interpol is still trying to track down Patel."

abridged from The Daily Mail. Sat, September 20, 2003.

Official Press release from the Serious Fraud Office

"Metals shipping agent jailed in $200 million letters of credit fraud

Milton Kounnou, was sentenced to two years' imprisonment today at the Central Criminal Court after admitting his part in defrauding banks in the Middle East though the presentation of false shipping documents against multi-million dollar letters of credit for non-existent cargoes of metal.

axdpc - 20 Sep 2003 16:08 - 4 of 631

Intercepted chequebook

" ... I was happily oblivious to the idea of cheque fraud until a few weeks ago when I was on the receiving end of what I have since learnt is an increasingly common scam.

The first I knew that anything was awry came when I checked my bank account online and discovered my balance was in the red due to a cheque withdrawal to the tune of 920. Like most people I only use my cheque book occasionally and then for amounts of less than 100.

Checking the serial number of the cheque against those on my existing cheque book it soon became clear that a new cheque book had been sent to me by my bank, HSBC, and was intercepted in the post.

A cheque was subsequently fraudulently written for the missing sum - and the signature had obviously never been checked against my own before it was cleared.

But this was just the beginning of a saga in which, rather than being treated as a victim, I began to feel like the criminal as I was continually passed from one call centre to another. And, almost two weeks after reporting the fraud, I have only now been able to retrieve my 920 following the intervention of the bank's press office ... ",3605,1045497,00.html
Saturday September 20, 2003

axdpc - 20 Sep 2003 16:20 - 5 of 631

Some 2003 press releases from SFO ...
17 September 2003 2 Pages

"Company directors conspired to falsify profits

Roger Eden and Geoffrey Brailey - former directors of Corporate Services Group Plc - have been found guilty today at Croydon Crown Court of charges relating to accounting irregularities aimed to overstate profits. They are to be sentenced tomorrow 18 September ..."
8 August 2003

"Three jailed for high yield investment scheme"

"At Worcester Crown Court today

John Wilfred Clark was sentenced to five and a half years imprisonment.
David John Saull was sentenced to four years imprisonment.
Jasbir Sing Mudhar was sentenced to four years nine months imprisonment.


From 1994, Clark through a number of business fronts set up by him, was engaged in the promotion of so called high-yield investment schemes to clients in the UK and Sweden. He sometimes used the name John Thomas.

In 1997, Clark entered into a similar business relationship with Saull. Together they promoted investment schemes, this time to include victims in Canada and the USA. Saull was registered as a director. Clark described himself as a consultant. Mudar, an accountant by training, played an important role as an introducer. Investments lost by clients amounted to approximately 550,000.

The defendants were not authorised to conduct investment business or act as intermediaries, as required by law relating to the financial services sector. Even so, they described themselves as facilitators; able to make special introductions for clients to financial trading houses and banks. They set out to persuade potential clients to invest money in supposed short-term, high yield investment programmes. Assurances were given that the invested monies would be secured by bonds and/or insurance or some other form of security. The individual sums invested varied hugely. One victim parted with 350,000. In some cases, clients were told that they could arrange loans for them.

Clients would sometimes be invited to participate in a pooled scheme whereby the collective sum would be large enough to leverage a short-term trading programme on the financial markets that would reap quick and substantial profits.

The reality behind these claims was that client monies were not in fact invested. There were no bank trading programmes. (See note 3). Instead clients' funds were used by the defendants and by others who introduced the clients for their own benefit. The promised risk protection did not exist. The bonds were fake and the indemnity insurance worthless.

Though they had a London accommodation address, the fraudulent operation was orchestrated in Droitwich, usually through meetings with clients in smart hotels in the area or in Birmingham. To give the impression of success, the defendants would sometimes arrive at these meetings in hired expensive cars. Once persuaded, victims would be sent contractual documents and correspondence so as to maintain the fade of a legitimate and professionally run business.

Investors who expressed concern when the promised returns were failing to materialise were fobbed off with excuses that parties on the other side of the deal were not performing adequately. Only when clients threatened to complain to the authorities, would some of the invested sums be returned. However, in September 1999, acting on a complaint from a victim, the West Mercia Police made some initial enquiries. When questioned, the defendants' explanations about the details of the investment strategy and the returns on investment were different. The case was referred to the SFO, who commenced an investigation in February 2000.

... "

MightyMicro - 20 Sep 2003 18:38 - 6 of 631

My company in the US was defrauded of thousands of dollars a few years ago by someone who printed their own checks (American spelling) with our account details on it, issued checks which were then endorsed to cash and cashed in East Bay liquor stores.

We only discovered the scam because our Bankers here return cancelled checks to the account holder. In the sea of cancelled checks all colored blue, out fell these green ones! Signed by God knows who.

The Banks's fraud department's first assumption in these cases is that it must be an inside job (same in the UK, I believe). This was clearly not the case with us. It seems that a check to one of our suppliers simply had our account details copied from it and somebody printed some new checks. In the US, checks are printed for you by private companies.

We had to change our account number to stop the problem.

In the US, "crossed" checks Payable to the bank Account of Payee only don't exist. When you receive the check, you endores it on the back "For Deposit Only" and your account details.

The only thing that amazes me is that it is not much more common in the US.


Paulismyname - 20 Sep 2003 19:02 - 7 of 631

More close to you lots own trading hearts - a girl took early retirement at Allied Dunbar in 1998 and with part of her early retirement lump sum she invested 100,000 in an investment unit linked bond.

By 2002 it was worth 1,500,000....a staggering achievment in a bear market when with this investment you could only go long....

How did she do it one asks?

The answer is that she took advantage of her inside knowedge of administrative systems at Dunbar. Essentially as a client you are able to switch investments via fax from one fund to another. The switch was actioned on receipt of the fax, however at Swindon (Head Office) they had a consistant ongoing back log of fax switch requests, therefore they depended on the fax date.

She overcame that little local difficulty by altering the fax date on her own computer at home...she also knew how to remotely hack in to the faxes at Swindon and alter the date.....

So essentially she was "trading" on the back of infomation known, the published fund prices which can alter by a reasonable margin each day.

Ah well, I almost admire her cleverness, but it could not continue. She received a suspended jail sentance of 3 years this week.

axdpc - 20 Sep 2003 21:06 - 8 of 631

"BCCI settlement costs top $1.2bn"

"Creditors of Bank of Credit and Commerce International are to receive another $1bn (600m), it was announced yesterday as it emerged that the cost of the 11-year liquidation had topped $1.2bn.
The liquidators of BCCI - still regarded as the biggest and most complex bank fraud in history - remain confident that more money will be returned to creditors, particularly if a long-running legal case against the Bank of England is successful ...
The House of Lords declared in March 2001 that the case should be heard as quickly as possible but the Bank of England is trying to win the right to appeal an order that it disclose 20 files related to the Bingham inquiry, the official investigation into the collapse.

The trial is scheduled for January 2004.

John Richards, the partner at Deloitte & Touche who has spent the last 11 years working on the liquidation, said claims were continuing to be pursued against Bank of America and State Bank of India as well as a $326m damages claim against Abdul Raouf Khalil, a former BCCI customer who was found to have participated in the fraud.

The liquidators are trying to establish whether a gold museum in Saudi Arabia thought to have been owned by Khalil recently burned down. They are optimistic about recovering some assets from Khalil following a pledge by the governor of the board of grievances in the kingdom to look into the matter, but Ralph Preece, Deloitte liquidator, admitted that the recent bombings in Riyadh linked to al-Qaida may affect the process.

'A truly gargantuan task'

BCCI collapsed in 1991 and is still being unravelled. The liquidation has involved court proceedings around the world and is likely to last at least another five years.

Its liquidation was described by the then vice chancellor Sir Donald Nicholls as a "truly gargantuan task"

Along the way:

88,000 boxes of documents have been put together and are now gathering dust. Storage payments are part of the $70.1m of premises costs run up by the liquidators.

About 100 accountants and lawyers are still working on the liquidation full-time although the number has fallen substantially from the early days in 1991 and 1992. They have their own office - Westgate House - in central London.

The government has retained $47.2m for VAT which is not recoverable by the liquidators.

The Bank of England has spent 17m in the last two years to defend itself against legal action over the way it regulated BCCI.

Abas Gokal's Gulf Group was a major borrower from BCCI. He was found guilty of false accounting and conspiracy in April 1997. He was sentenced to 14 years and must serve a further three years because he has not paid 3m to the liquidators.

Following the money

Liquidation costs ($m) to January

liquidators 296.1

lawyers 173.3

liquidators' expenses 15.4

liquidators' committee 3.6

payroll 47.8

premises 70.1

other professional fees 14.9

insolvency service fees 13.3

sundries 15.5

VAT costs 47.20

other 72.2

total 769.4

Source: Deloitte & Touche

Thursday May 15, 2003

axdpc - 20 Sep 2003 21:14 - 9 of 631

5 July 1991. BCCI closed.

" 1991: International bank closed in fraud scandal
The Bank of England has closed down UK branches of the Bank of Credit and Commerce International (BCCI) over allegations of fraud.
The bank's 120,000 UK customers were stunned by the speed of the closure.

Even BCCI staff were not prepared for the largest ever intervention of this kind by the Bank of England, as deposits worth 250m were frozen.

Over the weekend liquidators from accountants Touche Ross will be entering all 25 branches to carry out detailed examinations of their finances.

The Bank of England also intends to stay open and set up a telephone hotline to help worried investors.

They are advising that the UK Deposit Protection Fund will guarantee investments up to 15,000 but investigators need to find out exactly how much is left in BCCI coffers.

London is at the centre of a global operation to investigate the activities of Luxembourg based BCCI, which is one of the biggest privately owned financial companies in the world.

Lists of useful links

axdpc - 20 Sep 2003 21:17 - 10 of 631

"Fraud at second highest level in a decade"

"UK fraud has trebled in the past year,2002, to reach the second highest level in ten years, topped only by 1995, the year of the 700m BCCI fraud.
The total value of frauds heard in the UK Crown Court soared to 717m in 2002 compared to 244m in the previous year, according to KPMG's Fraud Barometer published this week. The firm said the hike in fraud values resulted in managers exploiting loopholes for their own gain.

The government was hardest hit as it was fraud victim in 22 cases with a combined value of 318m, nearly half of the total national fraud value.

'The huge increases in both the total and average size of fraud cases are extremely worrying, as they demonstrate that companies are failing to take the issue of fraud prevention seriously. Companies need to do more to protect themselves,' said David Alexander, fraud investigation partner at KPMG.

MightyMicro - 21 Sep 2003 20:57 - 11 of 631


Just read your tale of the lady from Allied Dunbar. Not for nothing did they used to be known as "Allied Crowbar". Must have been the influence on her of that aggressive sales training :)

PS: Did she get to keep the money?

Paulismyname - 21 Sep 2003 21:39 - 12 of 631

No MM, not to my knowedge.

Bet she felt "crowbared" as the Judge handed down the sentance

axdpc - 05 Oct 2003 14:48 - 13 of 631

"Depth of Wall Street corruption exposed" 29/04/2003

A two-year investigation into Wall Street corruption drew to a close yesterday with a $1.4 billion settlement, fraud charges against major banks and disgrace for some of the financial world's leading figures.


The harshest words were reserved for Credit Suisse First Boston, Merrill Lynch and Citigroup, which the watchdogs say issued fraudulent share research. Mr Spitzer rounded on chief executives who "shifted risk to unknowing investors while guaranteeing their own rewards".

How about the UK branch of Suisse First Boston, Merrill Lynch and Citigroup ?

Mr Euro - 08 Oct 2003 18:11 - 14 of 631

here's a current scam I beleive:

Subj: Your Order
Date: 04/10/2003 20:43:38 Romance Daylight Time
From: LWright86
BCC: My name

Dear AOL Member,
There has been a purchase added to your AOL account on September 25th, 2003.
If this order was unauthorized and you would like to cancel, please Click Here.
Below is listed information about your order:

Product - Love's Embrace Roses

32 dozen long stem red roses
Price - $29.99


Only just seen this but I havent ordered any flowers! Any ideas how I can track it down?

Mr Euro - 08 Oct 2003 18:14 - 15 of 631

If I click on the "click here" can I do any damage? Kayak?

Kayak - 08 Oct 2003 18:31 - 16 of 631

Mr E, it looks like an attempt to extract a password or PIN number from you. Clicking on the link should bring you to a page where this is requested, and I suspect it will be your credit card number and PIN. Clicking should be safe unless you get grey boxes with security warnings, in which case don't proceed. Never enter an important password or PIN unless the address at the top begins https: rather than http: and is what you expect, e.g.

Mr Euro - 08 Oct 2003 18:40 - 17 of 631

thanks kayak :-)

shogun - 08 Oct 2003 18:43 - 18 of 631

mr euro, you could always click on my favourites and go to "check your aol account" click on view current bill summery, to see what your aol bill is. if it is not showing on there then just ignore the email, better safe than sorry,

Kayak - 08 Oct 2003 18:50 - 19 of 631

BTW my wife loved the roses :-)

Mr Euro - 08 Oct 2003 19:12 - 20 of 631

:-) I clicked on the link and it was nonsense, nothing to worry about (I hope!) Shogun thanks

Nick - 08 Oct 2003 21:43 - 21 of 631


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