Financial Crimes: Don't get suckered by an advanced-fee scheme

jkegley@herald-leader.comJune 16, 2012 

Detective Gene Haynes Lexington Police Dept. , in Lexington, Ky., on June 14, 2012. Photo by Pablo Alcala | Staff


  • This is the first in a five-part series highlighting financial crimes investigated by Lexington police, featuring examples and tips to keep you from becoming a victim.

Lexington police handle hundreds of fraud cases each year, but one recent case stands out: that of a Lexington man who was conned out of more than a quarter of a million dollars in a foreign lottery scam.

The "elderly" man, whose identity was not released, was convinced he had won $10 million and a new Mercedes in a foreign lottery, Lexington financial crimes detective Gene Haynes said. To collect his winnings, all he had to do was pay taxes and shipping.

However, with each payment the man made, another "unexpected fee" arose. Over four months he sent about $350,000 overseas before realizing there was no lottery and that he was the victim of a crime known as advanced-fee fraud.

The Lexington man eventually contacted authorities, but there is little or nothing police and federal investigators can do once the money is out of their jurisdiction. Perpetrators are rarely caught, and if they are, the money is almost never recouped.

"Once that money is wire-transferred over, it's gone," Haynes said.

Advanced-fee schemes take many forms. Scammers often promise prize money, cash donations or investment opportunities. They might pose as potential buyers of goods or advertising services online, and they might make contact via phone, letter, text message or email.

Some national cases of the scam reportedly have resulted in victims signing legally binding contracts, or taking trips overseas where they are kidnapped or extorted. In the case of the Lexington man, scammers used his personal information to change his phone number, to reduce chances that he would be contacted by friends and family who could expose the con.

The scams originate from many countries, though most seem to come from England, Jamaica, Canada and West Africa — particularly Nigeria, Haynes said. There can be long paper trails, with money being wired to several sources before making its way overseas; this further decreases the likelihood that an arrest will be made.

The Lexington police Financial Crimes Unit's four detectives, who typically handle crimes such as forged or counterfeit checks, embezzlement, identity theft and credit card fraud, have increasingly found themselves taking reports of such scams.

The FBI defines advanced-fee fraud as any scheme that convinces victims "to advance relatively small sums of money in the hope of realizing much larger gains." Hundreds of millions of dollars were lost in such schemes nationwide last year.

Another type of advanced-fee fraud commonly seen in Lexington occurs when scammers send unsolicited checks or money orders through the mail, typically followed by a letter that says the check was sent by mistake. The letter asks the victim to deposit the check and wire most of the money back, keeping a couple hundred dollars for his or her trouble. However, days or weeks after wiring the money, victims typically find that the check has bounced because it was drawn on a closed account or because it was a forgery.

Haynes compared such schemes to fishing expeditions, with scammers sending thousands of checks without knowing where they end up. Last year, Lexington police Chief Ronnie Bastin received two counterfeit checks for about $700 apiece in his mailbox at police headquarters.

"They probably had no idea they were sending these to the chief of police of Lexington," Haynes said.

Victims in advanced-fee schemes are often stereotyped as overly gullible, but that's not always the case. Some schemes are quite convincing, Haynes said, pointing to several fliers sent by mail and email purporting to be from companies such as Coca-Cola, Yahoo! and Microsoft, informing people they have won random drawings.

Recent scams have seen scammers claiming to be FBI agents, IRS agents and bankers.

"To a lot of people this would appear to be legitimate," Haynes said of a particularly professional-looking flier claiming to be from the Heineken beer company.

With the aid of the Internet, such scams are more frequent nationwide. According to the National White Collar Crime Center, 314,246 people filed complaints about online criminal activity, including advanced-fee schemes, in 2011 — a 3.4 percent increase over 2010. Victims of Internet crime lost about $485 million.

However, the problem is likely much larger. Those numbers account only for cases reported to the Internet Crime Complaint Center, a partnership between the FBI and the National White Collar Crime Center.

"It's hard to say how many people are victimized. It all depends on whether people report it" to the Internet Crime Complaint Center, said Bill Carter, spokesman for the FBI.

The crime center's report also doesn't account for money lost in schemes conducted by phone or through snail mail. The elderly man in Lexington was contacted by phone, Haynes said.

Most victims in such crimes lose several hundred to several thousand dollars, but financial crimes detectives use the elderly man's case as an example of a worst-case scenario. Because foreign scams are rarely solved, the easiest way to stop the crime is to inform people so they recognize the scam at the beginning.

Law enforcement officials stress common sense. Be wary of sending money overseas, and never send money to a person or a business you don't know. If you have suspicions, discuss the transaction with somebody you trust.

Haynes said detectives get about 20 calls each week about lottery scams, though most callers just want to know whether the email, letter or phone call they've gotten is legitimate.

"They ask, 'Is this a scam?' Because even though they know it's a scam, they need to check and make sure that they're not really going to win $10 million," Haynes said. "That's just the nature, the curiosity of it."

Josh Kegley: (859) 231-3197Twitter: @HLPublicSafety This is an endnote here an dhdjbfv jhbdvf djfbvjd vhbdfjv jdbvf jdfjbvh jvfjkdbf

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