Trista Joy Lathern: one bad apple. Image from openphoto.net.

People have all kinds of excuses for not donating to charity. Most of the people I know and I don’t hand out money to people asking for change on the streets because we all agree that unless we know what they’re going to use it for, we might be hurting instead of helping. We don’t have money to lend for furthering someone’s drug habit.

When it comes to charity organizations, people often have reservations because they worry that they’re being scammed or that the organization won’t use the money responsibly. How do thought patterns like this arise? Because of people like Trista Joy Lathern. For every legitimate charity organization and individual seeking much-needed help, there are despicable scammers like Trista Joy Lathern who ruin things for everybody.

What did Trista Joy Lathern do?

According to Texas authorities, Trista Joy Lathern held benefits in her home state of Texas to raise money to help pay for her medical bills, saying she had breast cancer and had lost her insurance. Her bald head made it appear as though she was going through chemotherapy. The benefits in her honor raised more than $10,000.

Turns out she shaved her head. She even lied to her husband about having cancer. She took the money from donations at the benefit and spent $6,800 on, drumroll please … breast implants for her perfectly healthy breasts.

Why fake breast cancer?

A police affidavit says that “Trista said she and her husband had been (having) marital problems and she thought telling him she had cancer would bring them closer together.” A lot of others are reporting that Trista thought the breast implants themselves would save her marriage.

Trista Joy Lathern is 24 years old and had been married for seven months. In case you’re wondering whether it is illegal to lie about having cancer and collect money from people for said case of fake cancer, yes it is. Trista Joy Lathern has been arrested for doing this. It is called fraud. Also, in case you are wondering whether lying about having cancer and getting breast implants saved her marriage, Zimbio reports that “Lathern’s husband filed for an annulment on the day of her arrest.”

I know, shocking, right?

The plight of the giver

Trista Joy Lathern and all of the other scammers out there who dupe people into donating their hard-earned money to fake causes should be very ashamed of themselves. Because of people like Trista Joy Lathern, there are individuals out there who are really in need of help and can’t get it because others are rightfully untrusting.

What would you do if you donated money to someone in your community and later found out that person used it for totally unnecessary cosmetic surgery? Bearing in mind that two wrongs don’t make a right, I would probably not seek revenge on that person. However, it would take a lot to get me to donate money to a cause again. I have had people lie to me about why they wanted money and refuse food before, and that has caused me to never give handouts to strangers.

People like Trista Joy Lathern don’t just stop at lying about why they want the money. They take it a step further and spend it on things that the donaters could very well be vehemently opposed to. Trista Joy Lathern is no better than a street person who spends his handouts on meth. How can people be generous and giving when they can’t trust others?

IRS building. Image from Flikr.com.

If you have gotten a “notice of unreported income e-mail,” delete it and do nothing else. And if you do get a notice of unreported income e-mail or any e-mail from the IRS that asks for a response in the future, do not respond.

Don’t panic if you’ve gotten a notice of unreported income e-mail and opened it. Replying is the part that will get you in trouble. It’s a phishing scam from someone who is trying to get your IRS login ID and password, so just don’t respond. Giving out your password online is the first step toward identity theft, and you don’t want some scammer taking out online cash loans in your name and running off with the money.

IRS does not use e-mail

OK, so the IRS does use e-mail, but not for getting personal information from you. Any transfer of personal information between you and the IRS online will happen via your online IRS account, which you must log in to, using your password.

Don’t e-mail your IRS login information and password to anyone. The IRS will never ask you to do this. In fact, this is a good rule of thumb for any password you want to keep a secret: don’t put it in an e-mail.

Why would someone do this?

If the phishers are successful at getting your IRS login information, they will be able to attempt to change your tax filing to show that you are owed a tax refund. Of course, they will arrange for the tax return to be sent to them, not you.

Once the IRS catches the mistake, you will have to pay back the money. Even though it was the person who stole your identity and not you who ended up with the cash, you will be held responsible. And you don’t want to be on the IRS’s bad side.

Same old story

This “notice of unreported income e-mail” isn’t the first time scammers have tried to get people’s tax information. Back in 2005 some scammers started an e-mail campaign, saying they were the IRS, asking for taxpayers to give their social security number and credit card information.

The IRS will never need your credit card information. If you choose to put taxes owed on a credit card, you can do so. But the IRS will never solicit your credit card information from you. Also, never give out your social security number unless you are absolutely positively certain you know where it’s going and who you’re giving it to. Don’t e-mail your social security number to someone you don’t know.

Avoid IRS e-mail scams

The most important thing to remember is that the IRS does not send unsolicited e-mails. That means that the only time the IRS will ever e-mail you is when you e-mail them first and they respond. If you are going to get an e-mail alert informing you that your taxes have been filed or that your refund has been deposited into your account, you will be warned in advance when you file your taxes.

In the case of e-mail alerts, the IRS will not ask you to respond, and in fact you can’t respond. The IRS won’t ever ask you for personal information in an e-mail, and they will not communicate with you by e-mail unless you request it. So don’t get scammed by the “notice of unreported income e-mail” or any other IRS scams!

Reuters reports that the FTC Capital Markets offices in New York have been searched by U.S. postal inspectors. FTC Capital Markets is suspected of investment fraud, and the postal inspectors were looking for evidence.

An anonymous source, who wished to remain so because of the ongoing investigation, says the allegations involve hundreds of millions of dollars.

Details from Reuters:

Officers from the U.S. Postal Inspection Service were looking into whether two FTC Capital executives misled companies over purported investments.

One of the executives, Lina Lopez, was arrested in Miami, the source familiar with the case said.

No further details were immediately available about the search, which took place on Tuesday night.

Criminal charges have not been filed. The case stems from a civil lawsuit by Citgo Petroleum Corp and PDV Holding Inc in March that accused FTC, several related entities and two executives of fraud.

Lawsuit

Apparently investors with FTC Capital Markets would have been safer getting no fax payday loans with no credit check. FTC Capital Markets might end up needing installment loans for bad credit when this whole thing is over.

This investigation has been launched in response to a civil lawsuit that was filed March 9. From Reuters:

In a civil lawsuit … Citgo and PDVH alleged that FTC executives Lopez and Guillermo David Clamens “diverted and misused” the plaintiffs’ investment funds. … The lawsuit charges the two with creating a “slush fund to finance self-interested, unauthorized and speculative trading in unregistered, risky, illiquid investments in which they had financial interests, the full extent of which remain unknown.”

Clamens and Lopez made undisclosed and unauthorized purchases into the Citgo account of $10 million worth of bonds issued by Venezuela, the complaint said. It said they diverted $19.3 million of Citgo’s $100 million investment to “self-dealing, risky and unauthorized note and bond purchases.”

It said that in April 2008, FTC opened accounts at BNP Paribas bank in the name of Citgo and PDVH. The complaint said that instead of investing $200 million into 7-day BNP CD’s for Citgo, Clamens and Lopez deposited the money into a daily income money market fund.

Scam after scam

Strange that as soon as the public’s and officials’ attention became focused on the economy, and thus money, scams started to come to light. Big ones. Bernie Madoff bilked customers out of an estimated $65 billion in his Ponzi scheme. He was convicted of fraud this year and will get his sentence in June.

Wikipedia states that Madoff’s scheme “has been called the largest investor fraud ever committed by a single person.” Madoff doesn’t need to worry about losing his title to FTC Capital Markets, though. At least two people are accused of being involved in the alleged investment fraud. Also, sources say the case involves millions, not billions.

Small but dangerous

Also, take proper precautions to avoid identity theft. Don’t give out information online, including passwords and credit card numbers, unless you’re on a trusted web site. Shred your credit card offers and other mail that has personal information on it.

Don't let a bug into your computer through Facebook.

I have lost count of how many Facebook scams have been conducted in the past couple of weeks. Facebook users, news readers and anyone who likes a good scam knows already that ponbon.im, 121.im, 151.im and other similar variations are dummy web sites looking to steal your Facebook login information.

This time the scam is personal

I had never gotten a Facebook scam message until today. Someone who I know from a former job, but who has never sent me a message on Facebook before, sent a message to my inbox today. All it said was “Check 121.im.”

It was obviously a fake, a fraud, a scam. I found myself with a strange curiosity and an urge to click on the link anyway, just to see what would happen. But I resisted.

If there’s one thing I do not want to mess with, it’s the possibility of identity theft. While these Facebook phishers won’t have direct access to my credit card numbers, letting someone know your login name or password is never a good idea. Next thing you know, some con artist is taking out installment loans in your name.

Fraud recap

For those of you who don’t use Facebook and thus are unfamiliar with this recurring scam, here’s a clip from my first article about this series of fraudulent Facebook facades:

Reports have been flooding in about phishing site fbstarter.com. The dummy web site poses as a Facebook login page to get users to type in their usernames and passwords.

We all know that online scams set to steal personal information such as passwords are the first step on the road to identity theft.

Phishers keep changing lure

You may recall just a couple of days ago when fbaction.net pulled exactly the same password-stealing scheme. Therein lies the problem. Facebook blocked fbaction.net and it has blocked fbstarter.com, but these scams were likely conducted by the same people.

That means these phishers are changing their scheme slightly and launching new attacks after one is thwarted.

New attacks indeed

I don’t know what kind of schemes they’ll come up with next, but there’s one thing I do know: I am glad I did not click on that link in my Facebook inbox.

According to the International Business Times:

If you receive an email like check ponbon.im, check 121.im or check 151.im, just delete the email and DO NOT click the link, because it may compromise your account too, give you viruses and may even delete some of your friends.

Whew, I’m glad I didn’t let my curiosity get the best of me.

Niel Barofsky

So there’s good news and bad news. Obama is making good on his promise of transparency when it comes to distribution of TARP funds via Inspector General Neil Barofsky. The bad news is Barofsky has opened 20 criminal investigations to see whether tax dollars are being misused.

Barofsky is also conducting six audits. He says his goal is to “to inform, bring transparency and make appropriate recommendations.”

Job description

Barofsky has been appointed special inspector to oversee the Troubled Asset Relief Program. He says he wants taxpayers to understand where their money is going. He has detailed his concerns in a 250-page report.

Barofsky says he will expose any weaknesses in the TARP that could invite fraud.

TARP overview

TARP is mainly used to buy up defaulted personal loans and other bad accounts and assets that are hampering financial institutions. The 20 investigations Barofsky has opened could potentially lead to criminal charges if they find tax dollars are being pilfered or wasted.

What are the charges?

The investigations specifically address whether decisions about how TARP funds were awarded were influenced by people who stood to benefit from them. He is also looking into whether companies that received bailout funds are adhering to the policies regarding executive pay caps.

Additional duties

Barofsky has also compiled a list of recommendations for Treasury Secretary Tim Geithner and other officials involved with implementing the TARP.

His recommendations include requiring companies to report their usage of TARP funds. To me, this is a bit confusing because I thought they were already required to do that. Let’s hope this is just a reminder. Another recommendation is that officials should “safeguard a new mortgage rescue effort against scams.” Amen!

As is the case with mortgage loan modification, any time there is an increased demand for a financial service, scam artists come out of the woodwork. There is always someone looking to prey on desperation and anxiety if it can help them make a buck.

Debt consolidation is no different. There are plenty of legitimate, reputable debt consolidation companies out there who will act as your counselor, advocate nd stress reliever. However, there are also people who want to take your money and run.

How scammers operate

Generally, debt consolidation scammers represent fake companies, pose as debt counselors, pretend they’ve gotten  your debt reduced and consolidated and ask you to write them a check or wire a certain amount every month.

You can probably see where this is going. The scammer keeps the money, the creditors don’t get paid, and you are left even worse off than where you started.

Here are some ways to avoid debt consolidation scammers:

1. Do your homework

Ask your debt consolidation counselor a lot of questions about the company. If counselors are not willing to give you thorough information about the company, the process and what exactly they do, this is a red flag. If a counselor isn’t upfront about answering your questions, you may want to try another company.

2. Can’t expunge credit flaw

If a supposed debt consolidation counselor says he or she can get something removed from your credit report, it is a lie. Credit can be repaired, improved, perfected and negotiated, but you can’t get something taken off your credit report.

3. Hefty fees

Debt consolidation counselors do charge fees. Hey, they’ve got to make a living, too. But the fees shouldn’t be alarming. You should still be able to save money on your debt while paying a debt consolidator’s fees. If this isn’t the case, shop around for a better deal.

Don't Be Fooled!

Rip-off artists relieve us of millions of dollars a year. They are smooth, clever and very accomplished at what they do.

Have you been taken by a scam artist?

We’ve all been taken and perhaps some of us don’t even realize what happened. It was a new car battery or generator when we didn’t need one, a charity collector who collected money for himself or a health freak who sold us expensive vitamins that we didn’t need. We are surrounded by con artists who hover around like moths around a light bulb. No one is immune. The odds of becoming a scam victim are greater than the chance of being mugged.

It would take a major book to expose the many tricks and hoaxes con artists have used and it’s important to learn to recognize some of the more common warning signs of scams.

Online Payday Loans are completely legitimate and work in your favor and to your advantage every time. Here are a few simple rules that everyone should know about the real scams.

There is no pot of gold at the end of the rainbow!

• No one gives away something for nothing,
• There is no quick way to riches unless you inherit it.
• Anyone who dangles a diamond-studded chain in front of your eyes is certainly a con.

Don’t be greedy – it destroys your normal thinking process; be cautious and skeptical. Watch out for the sales pitch that distorts the truth and don’t be shy to ask a million questions – it’s your money on the line.

Two recent scams will be back in one form or another in the coming years and we should watch for them. The Enron collapse was about the investments that a company was selling on the commodity markets that are extremely speculative and carry a great risk. This was the largest bankruptcy in US history and hurt thousands of people and investors. Then came Bernard Madoff’s Ponzi scheme which hurt thousands more people.

Be alert

If you are offered an investment and it doesn’t make sense to you or you feel you don’t understand it, let it go. Many people said no to Madoff because they didn’t understand or weren’t sure about what they were getting into. They are smiling today. So they got a couple of percent less on their investments. So what?

Many of these types of scams begin by convincing a few important people in the community to invest. The con artist then uses their good names to convince others to invest. Once he’s earned the people’s trust, he can easily swindle the entire group as well as the community.

Recognition

It’s important to learn to recognize a Ponzi scam, a commodity fraud and a high-tech fraud.

The bait-and-switch games

These are the games that are the normal way of doing business in many so called respectable stores. You come in for an advertised item only to be told that it is no longer available or that there is a much better article at a higher price.

Watch out for the contractor who takes money upfront then leaves you hanging in the middle of the job. This is a common scam nowadays. And remember that you are not rich enough to afford a cheap contractor.

The worse the economic situation, the more scam artists emerge from the woodwork. Be alert. It’s better to get a few less percentage points on your money.

We can make our fortunes in Nigeria. The call was from my lawyer. I am a geologist specializing in the analysis of oil exploration results. So at the smell of this oil rag, I was in my car zooming across town at a high rate of knots. I burst into his office and without a word he tossed a letter across the desk.

FROM: Mr. Ben Ahore
Central Bank of Nigeria
Lagos, Nigeria

Dear Sir:
I have been requested by the Nigerian National Petroleum Company to contact you for assistance in resolving a matter. The Nigerian National Petroleum Company has recently concluded a large number of contracts for oil exploration in the sub-Sahara region. The contracts have immediately produced moneys equaling US$40,000,000.

The Nigerian National Petroleum Company is desirous of oil exploration in other parts of the world; however, because of certain regulations of the Nigerian Government, it is unable to move these funds to another region.

Your assistance is requested as a non-Nigerian citizen to assist the Nigerian National Petroleum Company, and also the Central Bank of Nigeria, in moving these funds out of Nigeria. Etc., etc., etc.

The only thing not suggested is taking a Cash Advance to pay for a ticket to Nigeria.

The Great Nigerian Scam

“Let’s examine the letter,” I say.
“What for? Let’s phone for tickets to Nigeria! Where exactly is it?”

The letter is pretty standard. The Nigerian scammers are consistent.

• There is a sense of urgency
• Travel to Nigeria or some other country is required.
• Blank letterheads and your bank account numbers are requested.
• There are a variety of processing fees (read bribes) which must be paid.
• The transaction must be kept confidential.
• A Nigerian residing in the US or the UK will act as an intermediary to close the transaction.
• There is a connection to someone of Nigerian royalty, often the “the son of the President of Nigeria”

Why we need you to help us

The reasons for outside help vary from time to time.

• My father left me $40 million in his will, but I have to bribe government officials to get it out.
• The Nigerian National Petroleum Company has discovered oil, and we as officials of that company want an insider acquire the land, but we need a US front man to purchase it first for us.
• We just sold a bunch of crude oil in Nigeria, but we have to bribe the banker to get it out.
• The Nigerian government overpaid on some contract, and they need a front man to get it out of the country before the government discovers its error.

How the scam gets money

The Nigerians try to make you think that you are going to scam the Nigerian Government, the Central Bank of Nigeria, etc., when in fact they are going to scam you out of what they are going to charge you to get in the scam, or what portion of the scam you are going to pay to make it work.

What you should do

• Rip up letter into small pieces.
• File scraps in nearest waste bin.
• Smile, you have just avoided being scammed.

The Stimulus Scam

This is Age of the Scam. We tried honest business and look where that got us. So let’s try something a little different. If you can’t beat ‘um, join ‘um. No, it’s time to fight back!

The fight begins

I was at the Consumer Federation of America conference in Washington, DC last week, and I listened to consumer protection regulators speak about the current increases in financial and consumer scams. Listed below are some of the scams, some of the things these scammers will say to you and tips to avoid them.

The Get-A-Stimulus-Grant Scam

There is 787 billion dollars out there for the taking. Let us help you get your hands on some of this loot. Our fee includes getting your website up and running, offering advice (for a fee) on how to get government grants on everything from small business initiatives to paying off your son’s student loan debt.

We will show you how to bill unsuspecting consumers $70 a month on their credit cards for information they thought was free.

The Mortgage Foreclosure Consulting Scam

This one is a no-brainer. As the number of home foreclosures rise, so the business of Foreclosure Rescue leaps to the fore. Ignore the number of foreclosure rescue companies that have already been shut down and concentrate on the potential.

Here is a quick overview of what is involved:

• Signing over the title of the home.
• Negotiating with the lender for an upfront fee.
• Pocketing the money.
• Instant disappearance southwards across the border.
• Secrets of the cold-call system.
• Building a convincing story to help stop a foreclosure.

The Great Auto Repair Fraud

Auto repair fraud is a staple of our society. The minute you have your greasy hands deep in the belly of some poor sucker’s engine, his wallet is open to you. This one is easy.

• Times are tough and money is short.
• New cars are expensive.
• Keep using the old car.
• Get regular routine maintenance for unnecessary repairs.

The Property Tax Reassessment Fraud.

Home prices are still tumbling but cities and towns are being super-slow in decreasing property taxes. Let us re-assess the value of your property for tax purposes. We guarantee to get the property taxes lowered on your house in exchange for a steep fee or cut of whatever is recovered. Do not think about taking a lawyer or third-party to fight your assessment. We can handle it without a team of Super Duper Assessors. You can then file an appeal on property taxes at no cost.

The Retail Closeout Scam.

Retail fraud is a winner. As the number of retailers going bust rises, the number of phony sales with false prices and low quality merchandise in the final “going out of business” sale is on the rise. There are retailers who are taking deposits on big ticket items like furniture and appliances. They then shut down and re-open a few days or weeks later for business under another name. Customers’ deposits are not returnable under any circumstances.

The Sting

Rent the DVD and watch the movie a few times. Call Robert Redford and offer him a partnership.

One thing that is not a scam is using a No Fax Cash Advance for the financing of a new business or for emergencies. Thankfully, there are still legitimate businesses out there.

It never ceases to amaze me. We send food aid to Somalia or Gaza and the delivery is picked up by terrorists, criminals or black marketers. President Obama sends a stimulus package to the American people and the delivery is picked up by terrorists, criminals or black marketers.

Beware of the web

Unscrupulous businesses are already flooding the internet with ads claiming you can get thousands of dollars in stimulus cash. There are websites offering to help you qualify for stimulus money or suggest they can get you an inside fast track to a stimulus check. Still others see the stimulus package as the latest in marketing tools, using the draw of stimulus cash as a way to get you to buy a debt-reduction plan or other financial services you probably don’t need.

As far as I can make out, the best stimulus package going around today is a Personal Loan from the Personal Money Store.

The email scamsters are here

The ever-present band of criminals is hanging around like a flock of vultures, saliva dripping at the thought of all this money. They are intent on using the lure of free government cash as a way to worm their way into your financial accounts and steal your money. Don’t be surprised if you get an email from a “government agency” asking you for bank account info so that your share of the stimulus funds can be conveniently deposited into your account.

Don’t give out your bank account numbers!!

The Federal Trade Commission has issued a press release warning consumers specifically about scams tied to the stimulus package. Better Business Bureaus in several parts of the country have also warned about these kinds of come-ons, as have the attorney general offices in several states.

You will get it all by yourself

If you are in line for a stimulus package, you do not need a middleman to get you whatever you may have coming to you. Here’s an example: If you qualify for the $400 ($800 married couples) Make Work Pay credit, you will most likely get that money by having less withheld from your weekly, biweekly or monthly paycheck. Otherwise, you would claim it as a credit on your tax return. You do not have to apply for it.

Don’t pay someone to get you money

No one else and no service that you pay is going to get you any more than the credit allows, nor will any person or service get you the money any sooner except, of course, if they offer to lend you the money upfront, in which case, make sure it’s a legitimate company.

But how do I get Social Security money?

The same applies to the $250 checks to Social Security recipients. These will be sent out by the government. You don’t need to apply for the funds. Anyone who tells you that you must apply is either trying to sell you a service you don’t need or otherwise trying to get their hands on your money.

First time home buyer and new car credits

The first-time homebuyer’s $8,000 tax credit, the new sales deduction for new car buyers and other goodies all operate in the same way.

Unemployment, Cobra

Check with your local unemployment office to see what you’re entitled to by way of expanded unemployment benefits. And check if you qualify for subsidies for Cobra coverage for the jobless; contact your former employer or check out the Department of Labor’s site on extended Cobra assistance, which includes a toll-free number for contacting a benefits adviser.

Ignore websites, usually with photos of President Obama, that say stimulus cash is yours for the asking. They are scams.

Bob thought he was doing a clever thing when he invested $50,000 in a viatical contract. He was told he would be making a humanitarian investment by purchasing the life insurance policy of a terminally ill person and that he could expect a large profit for himself.

Can you say scam?

But the insured person wasn’t really sick at all and Bob ended up paying the policy premiums to avoid losing his investment. Bob became a frequent flier at Payday Loans in order to meet the premium paydays.

What is a Viatical?

A viatical insurance settlement is an agreement in which a third party buys a life insurance policy from an insured person and thus becomes the legal beneficiary of the policy. The insured person receives an immediate cash payout and in most cases the buyer of the policy agrees to continue to pay the premium on the life insurance policy until the death of the insured.

How Viaticals Are Supposed to Work

When you buy a viatical, you purchase the life insurance policy of a terminally ill person at a discounted price from a viatical broker who takes a commission. The ill person gets a chunk of money to help pay expenses or take a cruise and the investor gets the full face value of the policy when the person dies. Brokers also sell a spin-off of viatical settlements, called life or senior settlements, in which the investor is offered the life insurance policy of an older, healthy person.

Helping others?

The investors are told they are helping older people stay financially secure in their golden years. The pitch is based on a high rate of return—often 20 to 40 percent—and a humanitarian opportunity to help a sick person, a combination appealing to older investors.

Watch out

Viaticals can end up costing investors a lot of money. It is known to be one of the top ten investment scams. Securities regulators are “concerned that the inherent risk of viatical investments – gambling on when someone will die – aren’t being adequately disclosed, and second, many investors have been outright defrauded by some viatical companies or their sales agents.”

Action taken

A Florida Grand Jury in 2000 found as much as 40-50% of the life insurance policies viaticated by viatical settlement providers may have been procured by fraud. The Securities and Exchange Commission has taken action against one company that allegedly defrauded 30,000 investors of $1 billion.

Here’s how the investor can lose money:

• With improved medical care, the ill or older person may live longer than expected. As the new owner of the policy, you have to pay the premiums to keep the policy in force. You tie up your money longer and your profit declines the longer the person lives.
• Sometimes the insured person is not ill at all, so the investor will need to make insurance payments, maybe for years, or the investment is lost.
• There may be some technical problem with the insurance policy or it may be fraudulent and the insurance company will later refuse to pay the settlement.
• The insurance company or viatical settlement company may go out of business along with your invested money.
• Some brokers have sold the same policy to multiple investors.
• The insured’s heirs may challenge changes made to the policy.

Protect Yourself

It is important to learn all you can about a viatical before you invest. Failure to research the investment could result in financial disaster.

Benjamin Weiser of the New York Times proves beyond a shadow of a doubt that even large organizations fall for those fly-by-night Internet scams and need quick loans to dig their way out. But, come on, seriously? You were taken in by a Nigerian con artist, Citibank?

That’s right. A con artist by the name of Paul Gabriel Amos worked with a team to create documents that fooled Citibank into wiring them money in transactions totaling about $27 million. The money came from a Citibank account in New York held by the National Bank of Ethiopia. The con artists posed as Ethiopian bank officials and approved the transactions. They could quickly get loans from the bamboozled financial megalith that never required them to repay.

Not-as-famous Amos has been arrested

He was charged with conspiracy to commit bank and wire fraud. If the Nigerian scammer is convicted, he could spend 30 years in prison.

According to Weiser, the prosecutors traced the scheme back to September of 2008, when Citibank received documents instructing them to accept instructions by fax from the Ethiopian bank. Included was a list of officials who would confirm the requested transactions (each of them a member of the con team, of course). The signatures of the officials on these documents even appeared to match those in Citibank’s records, so it was all accepted.

In October, Citibank received the faxed requests for money to be wired, and it transferred $27 million to accounts in Japan, South Korea, Australia, China, Cyprus and the United States. After the ruse was discovered, Citibank credited all lost funds. However, the damage to the bank’s already teetering credibility had long since been done. Now, with banks like Citibank nationwide crying to the government for quick loans to help them remain solvent, it makes you wonder why President Obama and his team continue to put up with bank leadership that fall for schemes like this. If it’s because the verification process itself is flawed, then FIX IT!

Related articles

• Citibank Sends Nigerian Scammer $27 Million [Whoops] (consumerist.com)
• DOJ: Nigerian Scammed Citibank Out of $27 Million (gothamist.com)
• 419 scammer impersonates the nation of Ethiopia, takes $27 million from Citibank (boingboing.net)

Graffiti of President Obama

A recent Associated Press article by Stephen Ohlemacher entitled “Despite Obama’s Election, Stubborn Racial Disparities Exist” brings to mind a common misconception banks, credit unions and the media have about companies that specialize in payday loans: that they target poor people and minorities.

Witness America in its post-Obama election glow

(As a means of setting the scene for the racial group pay day loan companies supposedly exploit…)

Now that a black president has been elected, has racism or racial discrimination been wiped away, as if a magic wand was waved on November 4?

Certainly, Obama’s election has generated excitement among black Americans. After generations of struggling for equality, many see a light at the end of the tunnel. Yet when the facts are absorbed, it becomes clear that racial disparities persist.

Ohlemacher cites Kari Fulton, a 23-year-old black activist who worked to register and turn out young black voters in the presidential election. Fulton admits that “Election Day was just the beginning. People don’t expect President Obama to be a superhero. We have to solve our own problems.”

The problems are indeed significant

Here are some sobering facts the AP reporter relates about the current playing field for African-Americans… similar numbers hold true for other minority groups in America:

• About a quarter live in poverty – nearly three times the rate for whites
• Black adults are less likely than whites to have college degrees and more likely to be in prison
• Blacks are less likely than whites to have health insurance and, on average, they don’t live as long as whites
• The income gap between black and white has barely changed in 30 years, with a typical black household making only 62 percent of the income of a typical white household

National Urban League President and CEO Marc Morial is well aware of the disparity. His civil rights group publishes a book called “The State of Black America” that points this out in cold, hard numbers each year. He told Ohlemacher that “a mere election does not change the abject conditions for African-Americans or the 230-plus years of racial injustice.”

Obama himself has admitted that “we have a long way to go.”

It is true that Obama’s campaign inspired young blacks to vote and get involved in the campaign. The efforts of young activists like Kari Fulton play no small role in this. Lobbying government for more jobs in poor neighborhoods and better, more affordable health care are not only issues that Obama is deeply concerned with for all people, but issues that he encourages everyone to work toward.

Are African-Americans or other minorities targeted by payday loan companies?

Socioeconomic equality for African-Americans is not yet the standard in America. That being the case, critics of payday loans are quick to jump on the idea that consumers in economic straits such as theirs supposedly will have low credit scores. Consumers with low credit scores, critics assume, will jump at the chance to obtain unsecured credit when financial need comes knocking. Thus, they also assume that payday loans are aimed squarely at such consumers, in order to trap them in a “cycle of debt.”

Yet the evidence does not support this. Groups like the Community Financial Services Association (CFSA) have brought together clear outside research which indicates that no fax payday loan customers come primarily from America’s middle class. In other words, hard-working adults who may fall just short of having savings or disposable income to fall back on in an emergency.

Here are some of the findings presented to the CFSA:

• Most no faxing payday loan customers earn between $25,000 and $50,000 annually
• Sixty-eight percent are under 45 years old; only 4 percent are over 65, compared to 20 percent of the population
• Ninety-four percent have a high school diploma or better, with 56 percent having some college or a degree
• Forty-two percent own their own homes
• The majority are married and 64 percent have children in the household
• One hundred percent have steady incomes and active checking accounts, both of which are required to receive a payday advance

If you’re curious who reported these findings to the CFSA, just click the link below. It’s The Credit Research Center, McDonough School of Business, Georgetown University, Gregory Elliehausen and Edward C. Lawrence. Payday Advance Credit in America: An Analysis of Customer Demand. April 2001.

When it comes to payday loans, critics frequently miss the mark. Consumers from all walks of life who appreciate quick, discreet, convenient cash assistance during a financial snafu use them. If anything, the media should turn their attention to organizations that badly take advantage of the public trust and defraud consumers, like this well-known bank. That’s where media outrage should be directed.