Helping companies do the best possible due diligence

Part Two

Read Part One.

From Part One: There are countless financial instruments, business documents and corporate/financial structures which are legitimate and have value. However, the con man, huckster, fraudster and scammer will use everyone and everything to part you from your money. Part One also contains a few recommendations to try to stay away from frauds and scams.

Part Two

Business-Related Frauds & Scams

1. Advance Fee Financing Scams (aka Up-Front Fee Scams): These are those wonderful brokers offering incredible financing for any and all purposes, including paying off all debts, erase bad credit, buy a gold mine, acquire a company, etc. Advance fees range from $10 to hundreds of thousands (even millions!) to cover anything from processing fees, first payments, "I'll hop a plane tonight to Zurich to get your money," etc., etc.
2. African-American Reparations: Quoted from the IRS Website: “The Internal Revenue Service today cautioned African- Americans not to be misled by anyone offering to help them file for tax credits or refunds related to reparations for slavery. There is no such provision in the tax law. Those who pay to have reparations-related tax claims prepared are being deceived. IRS centers nationwide have received a growing number of such slavery reparations claims this year, repeating similar experiences in 1994 and 1996. The IRS has seen two principal reparations schemes. In one, the person claims a credit for "black investment taxes" or "reparations for African-Americans." In the other, the person attaches a form listing thousands of dollars in tax withholding that, in fact, never occurred.”
3. Alaskan Trusts and Delaware Trusts: Supposed asset protection tools. The lawyers, trust companies and banks in these states are making money, but, sister state judgments are still enforceable in both Alaska and Delaware.
4. Annuity Abuse: Variable annuities can be good investments, but this arena is fraught with cons, misrepresentations, and what is worse, naive financial industry professionals who have not done their homework. And, only get into these investments if you are really careful, and really know what you are doing.
5. Anti-IRS theories (aka 16th Amendment): Run, do not walk, in the opposite direction.
6. Assembly /Craft Work at Home Scam: Just send in your money and you too can earn 100s and 1000s per month. All you have to do is purchase the kit/samples/equipment/training manual.
7. Asset Protection Experts with False Credentials: Countless people are presenting themselves as experts in asset protection. Legal and tax training is critical for professionals who provide valid asset protection services.
8. Asset Protection to Save Income Taxes: While asset protection plans will usually reduce estate taxes, no asset protection plan will reduce income taxes.
9. Asset/Revenue Understatements: Countless variations. Use a competent auditor, and if you smell something, use a forensically trained auditor.
10. Bait and Switch: Get excited by that super special low price, find out the product is junk, let the salesman talk you into the high price product.
11. Bank Examiner Swindle.
12. Bank Guarantee Frauds.
13. Bank Paper.
14. Bankruptcy Fraud.
15. Blocked Fund Programs: Just put up some dough and you too can get that money out of that third world or former eastern block country.
16. Bulk Email Scams.
17. Captive & Self-Insurance: If you create your own insurance company, you can pay yourself deductible premiums. Of course if you let the IRS in on the secret, they will tell you that there never was any chance that you could deduct anything, and by the way please pay the back taxes, interest, and those penalties that you owe.
18. Chain Letters.
19. Charging Order Protection: Often incorrectly used with Family Limited Partnership vehicle.
20. Child's Name Scam: Just give your money/assets to your child as a gift, and nobody can get it if they're trying to get it from you.
21. Concealed Liabilities and Expenses.
22. Constitutional Trusts and Pure Trusts: Wonderful idea. The Constitution must have given all us plain citizens magical protections against the evil government. Just don't let the IRS in on it, because these vehicles provide absolutely no benefits or protections at all.
23. Continuity Plans: Book of the month style, but they don’t send anything ahead of time for you to tell them don’t ship.
24. Corporate Fiefdoms: Watch out when some key employee or manager does everything in and out of his little fiefdom, especially where they have independent budget or purchasing authority.
25. Cyber Casinos.
26. Delayed Charge Offerings: You buy something, and you also find out later you have to buy another.
27. Diplomatic & Consulate Titles: Now you too can be a famous international diplomat, and nobody can ever arrest you, give you a speeding ticket, parking ticket, etc., and of course you never have to pay taxes again.
28. Dirt-Pile Scam (aka Gold Mining Scam) You get to invest in a gold mine. They even look legitimate, because it's quite easy to file a mining claim on land, often Federal land, but there isn't a real mine there, although you might find a few specks of gold in the fake assay you get when you try to check it out. Most often, the different parts of the scam, the mine, the sales operation, the assayer, corporate headquarters, etc. are in different states. Of course there's an impressive document to help convince you it's all legit, with pictures of the firm's executives, the mine, maps, assays, etc. If you are stupid enough to put in your money, you'll get pretty reports tolling the wonderful progress of the raw ore mining, refining operation, buying more mines, etc. These are also known as lull letters. In the end, the weather was bad, the labor force disappeared, equipment broke, the local officials screwed everything up with their big brother government requirements, or those silly environmentalists forced too much additional costs onto the operation.
29. Dominion of Melchizedek: A magical country in the South Pacific. Set up your bank or your offshore corporation, or participate in any number of incredibly wonderful financial programs. The magic is that there is no such country.
30. Employees whose lifestyle is beyond their compensation.
31. Envelope-Stuffing Work at Home Scam.
32. Fax Scam. Countless variations. Under the new laws, you can tell them not to send you any further unsolicited faxes offering office supplies/long distance telephone/vacations/etc.
33. Fictitious Revenues.
34. Foreign Trust Company: Let's see if we have this straight. You give somebody else your money and power of attorney so you can claim it's not yours and you don't have to pay taxes. Then, you don't have the money, and the IRS thinks you still have to pay them.
35. Former Eastern Block Banks: Here we go again, pyramids, or advance credit card fees, advance debit card fees, only this time those former Eastern Block countries have become capitalists, but their stupid, and therefore will pay you 1000's of percent on your money.
36. Free Seminars: They will tell you how to do amazing things that your accountant and attorney never heard of, and would never tell you even if they knew. Don't forget to buy all the books and tapes for hundreds and thousands of dollars.
37. Health Care and Health Insurance Fraud.
38. Health Magical Pill Scam.
39. Identity Theft (aka Impersonation Fraud, Account Takeover Fraud): Credit cards, checks, id's, etc. are stolen, and the identity is assumed, new credit is established, checks are forged, and bank accounts are accessed.
40. Improper Asset Valuations.
41. Improper Disclosures.
42. Incomplete Audit Trail.
43. Indian Banks & Trusts: Take advantage of Native American sovereignty and set up a bank or a trust that does not have to conform to US Federal and State laws.
44. Insurance fraud.
45. Intellectual property fraud. Copyright and trademark infringement violations, and trade secret theft.
46. Internal Audit: Right after the audit, the employee activates their fraud, since everyone thinks everything is all right.
47. International Chamber of Commerce (ICC) Scams that claim to use ICC documents and procedures, such as letters of credit or other special forms from the International Chamber of Commerce.
48. Home Lien: Your general contractor neglects to tell you that he didn’t pay his sub-contractors, so you end up with a lien on your home. Get a lien waiver from the general contractor and all sub-contractors and vendors, before you put out any money.
49. Letter of Credit Frauds.
50. Living Trusts: While a completely valid and legal vehicle, these have been seriously abused by the promoters and scammers.
51. Loaded Investments: Pay the financial planner the extra fees built in when they sell you "loaded" products.
52. Long Distance Telephone Scam: The target receives an official-sounding telephone call from a supposed telephone company employee, who says they are testing the line, and the target has to punch in 90# to complete the test. This gives the fake telephone employee the ability to make long distance telephone calls on the target's account.
53. Loss Leader: Put the competition out of business by selling below cost, then when you have the market all to yourself, charge whatever price you want. Sometimes also used with bait and switch tactics.
54. Magazine Subscription Sale: See Postage and Handling.
55. Management Claims: Everybody on my staff is honest, you don't have to check on them.
56. Medical equipment fraud.
57. Medicare fraud.
58. Missing Documents (aka Documents Accidentally Destroyed)
59. Missing Heir Scam.
60. Money Laundering.
61. Multi level marketing frauds.
62. Multiple order proposals: Buy your product, and find out later you ordered more products which will come later.
63. Negative Option Billing: You bought the product without even knowing, because the seller requires a rejection from you. Of course you probably didn’t notice because it was buried in the fine print.
64. Nevada Corporations: Over the years, we've seen more scams come out of Nevada then any other state for some reason. Maybe because of the corporate tax laws and so-called corporate secrecy. Who knows. In any event, if something smells wrong and it's from Nevada, even more reason to walk away.
65. New Credit: Now you too can instantly have a new credit file, and magically eliminate all your bad credit and all those nasty creditors who think you owe them money will disappear.
66. Nigerian Scam (aka Nigerian letter, Nigerian National Petroleum Company scam, Fax Scam, 419 Scam) An offer is received from an important-sounding person in Nigeria, sometimes other countries, with claims ranging from government over throws to murdered spouses who were high government officials, house arrest, etc. Assets are frozen by the new regime, hidden in a trunk, wrongly moved to another bank, etc. The dupe can make anywhere from large amounts to amazing amounts of money, by providing a bank account, form a new corporation, become a relative, etc. The dupe has to put up cash via wire transfer, or bring it to the country, and the assets will be miraculously unfrozen, the high government official will escape to a free country, etc. Reality includes money laundering, double invoicing oil or other commodity contracts (send the oversupply to another country outside Nigeria), bequests, etc. Cash is sent for collateral bonds, performance bonds, advance fees, transfer fees, credit, cod privileges. According to many sources, the Nigerian Scams are the third or second largest industry in Nigeria, and the government officials themselves are the bad guys. Another variation is that real or fake government officials contact victims of previous scams and offer the get the money back. Of course there are fees involved. Any such scheme should be sent to local authorities, who should refer the case to the INTERPOL National Central Bureau, who should then notify the Nigerian Federal Police. Over the years since I first started alerting people to this scam back in the early eighties, the variations of this scam have become ridiculous! I now have over 1,000 variations of these scams on file!
67. Obituary Hustle.
68. Offshore Bank Accounts: Nothing wrong with it. But you won't avoid any taxes, and if you follow the scammers' recommendations that you just have to keep the money offshore, be prepared to get a knock on the door some day from the IRS.
69. Offshore Bank: (aka Offshore Personal Bank, Offshore Private Bank) Go ahead and create your own bank in whatever country is popular with the scammers this year. Spend lots of money. Give it to the scammers, but don't expect to ever make a dime.
70. Offshore Credit Cards: Just put up the (processing, application, facilitation fee), and you too can have an unsecured offshore credit card with a great credit limit. Don't hold your breath waiting to receive the card.
71. Online Investment Scams.
72. Ponzi scams: Countless variations. The first investor gets part or all their money back from the next investor(s), and so on and so on, until the fraudster has built up enough cash to skip town, and probably start over again in a new location.
73. Postage and Handling: What a wonderful deal! Get that magazine, or whatever, without cost. Just pay the postage and handling, which turns out to be ridiculously high. AKA Magazine Subscription Sale scam.
74. Pre-Approved, False Credit Cards: The so-called credit card company offers preapproved credit cards, typically with a sizeable limit such as $5,000 or $10,000. There is a charge, typically $10-30 to get the card. When the card is received, the new cardholder learns that the credit card cannot be used to buy products anywhere but directly from the company.
75. Premium Stock Sales (aka Pump and Dump): You too can sell stock at a high price and then the stock takes a dive all the way to the ground. Just wait for the SEC Enforcement people to show up.
76. Pre-Notification Plans: See Negative Option Billing.
77. Prime Bank Instrument (aka Bank Trading Program, Bank Roll Program, Bank Debenture Trading Program, Bank Paper, Blocked Fund Program, Irrevocable Letter of Credit Program): Somehow, enormous profits will show up in days/weeks, and keep on repeating. The mark is offered to become part of a highly secret group that can make more money than anyone in the world. All the mark has to do is put money with other investors into a large pool, anywhere from millions to billions. The pool will then purchase large bank notes from the banks with the biggest names or countries' central banks or organizations such as the IMF, Federal Reserve, World Bank, and these notes are resold over and over again, within a short times, even within days, and everyone will get huge returns. No one can tell anyone about it, even their attorneys or accountants, because only a few people in the entire world are supposed to know. Variations include adding a wonderful tax haven domicile so that no one pays any taxes, or everything is guaranteed by a another bank instrument such as a letter of credit, or the mark puts up collateral to lend against and therefore the principal is never touched, etc. The mark cannot contact the bank, because they will only talk to people already in the know. Complex and impressive documents are available to mystify the naïve mark. The mark is often invited to an exotic location to attend an invitation-only private seminar. Banks, brokerage houses and law firms are sometimes involved, often fake organizations, but sometimes real firms are unwittingly involved.
78. Property Encumbrance: Somebody puts out fake loans that encumber your assets, so that you can protect those assets from whoever.
79. Publications Work at Home Scam.
80. Pyramid scams.
81. Quiet Price Increases: You are in a monthly contract, and the price goes up without telling you.
82. Religious scams.
83. Renewal Billing: After your first contract has expired, all of a sudden you get invoices for renewal, even after the service has been completed.
84. Rolling lab scams.
85. Sales Commissions: Financial planners who charge sales commissions have an inherent conflict of interest.
86. Secret Tapes or Books: Buy tapes or books to learn how to do anything from setting up an offshore bank, become your own country, pay no taxes, etc.
87. Securities and Commodities Fraud: Countless variations.
88. Self-Liquidating Loans (aka Self-Liquidating Walk Away Loans): The scammer charges 100s or 1000s for you to be convinced that there is no such thing as a loan for millions or billions that disappears.
89. Slave Reparation Fraud: Quoted from the IRS Website: “The Internal Revenue Service today cautioned African- Americans not to be misled by anyone offering to help them file for tax credits or refunds related to reparations for slavery. There is no such provision in the tax law. Those who pay to have reparations-related tax claims prepared are being deceived. IRS centers nationwide have received a growing number of such slavery reparations claims this year, repeating similar experiences in 1994 and 1996. The IRS has seen two principal reparations schemes. In one, the person claims a credit for "black investment taxes" or "reparations for African-Americans." In the other, the person attaches a form listing thousands of dollars in tax withholding that, in fact, never occurred.”
90. Sovereign Entity (aka Independent Sovereign Entity or Private Sovereign Entity) Become your own country, don't pay any taxes to anyone, including the country you live in. Variations include tax laws, 14th amendment, becoming a citizen of just your state of residence and not the Federal government.
91. Suspicious Documents: Usually accounting documents, including invoices or payment vouchers, which have no other referenced documents.
92. Sweepstakes Scam: You have won a brand new car/TV/house/motor home/boat. All you have to do is pay for the transfer/registration/preparation/transportation costs.
93. Tax Avoidance Programs.
94. Telemarketing Fraud.
95. The "Don't Tell Anybody" Scam: This is where your magical asset protection plan is so secret that you can't tell anybody.
96. Transfer Payments: Watch out if one of your trusted employees make a wire transfer or other payments to some exotic place, especially right before a holiday.
97. Up-Front Fee Scam: (see #1)
98. Wife's Name Scam: Just give your money/assets to your wife as a gift, and nobody can get it if they're trying to get it from you.
99. Work Backlogs: Keep an eye on employees for purposeful records confusion.
100. Yellow Pages Invoice Scams.

Help me keep this list current.

Please email me any business-related scams and frauds not shown here, and I will update this list. Thanks. 

Charles F. Bacon, CEO & Keeper of the Vision
email
Due Diligence, Inc.