DON’T FALL FOR IT: A SHORT HISTORY OF FINANCIAL SCAMS By Ben Carlson

Jude Devereux, best selling writer of 30+ books that hit the New York Times bestseller list, found herself in a Bad Place after her son died in an accident and Devereux went through a divorce. A psychic then told Devereux that money attracts Evil so Devereux gave this psychic $17 million (p. 81). Ben Carlson spends much of Don’t Fall For It relating stories of people who did fall for it and lost their money.

Bernie Madoff’s Ponzi scheme cost many Big Name investors plenty of money: Steven Spielberg, Kevin Bacon, Kyra Sedgwick, John Malkovich, Larry King, and many average income people. Carlson explores the reasons why people–some very smart people–fall for financial scams. Not a day goes by without someone falling for the Nigerian Prince scam. You would think people would be more cautious with their money, but they aren’t.

We’re in the Golden Age of Financial Scams with unscrupulous people claiming they’re from Medicaid, Medicare, Social Security, and the IRS and wrangling innocent people’s Social Security numbers and banking information. Carlson shows how to avoid these scams and to protect yourself from massive losses that could result. Have you ever been scammed? GRADE: B+

TABLE OF CONTENTS

Introduction 1

Chapter 1 No One Sells Miracles 5

Goats as Viagra? 7

Radio 9

The Placebo Effect 10

Correlation Does Not Imply Causation 11

Same as It Ever Was 13

Chapter 2 How to Sell Anything 17

The Count 18

Selling the Eiffel Tower 20

Everyone is in Sales 22

Chapter 3 Fast Money 27

The Promise of Huge Returns with Minimal Effort 29

When Trust Goes too Far 32

Do Your Homework 33

Chapter 4 It’s the End of the World as We Know It 39

Cognitive Dissonance 41

The Man Who Walked on Water 43

No One Knows What’s Going to Happen 45

Why Pessimism Sells Better than Optimism 47

The Value of ‘I Don’t Know’ 48

Chapter 5 Sleight of Hand 51

Bad Brad 53

A Magician Reveals His Secrets 56

Chapter 6 When Success Doesn’t Translate 61

Defeated by Decency 62

Don’t Try to Get Rich Twice 66

Chapter 7 When Fraud Flourishes 71

When There’s an ‘Expert’ with a Good Story 71

When Greed is Abundant 73

When Capital Becomes Blind 74

When the Banking Industry Gets Involved 76

When Individuals Begin Taking Their Cues from the Crowd 77

When Markets are Rocking 79

When the Opportunity Presents Itself 80

When Human Beings are Involved 81

When Innovation Runs Rampant 82

Chapter 8 The Siren Song of New Technologies 85

The Railway Napoleon 87

The Media’s Role in a Bubble 90

The Other Side 93

The Silver Lining of a Market Crash 94

Chapter 9 The Seductive Power of FOMO 97

How to Create a Monopoly 98

The Roaring 20s 100

When the Tide Goes Out 102

Not a Ponzi but Close Enough 103

The Seductive Power of FOMO 104

Chapter 10 Type I Charlatan 109

John Law and the Mississippi Company 111

Speculation is a Hell of a Drug 113

Pop Goes the Bubble 115

Type I and Type II Charlatans 116

Chapter 11 Type II Charlatan 121

The South Sea Company 123

Type II Charlatan John Blunt 124

The Bubble Act 127

The Echo Bubble and Dunbar’s Number 128

Chapter 12 Fooled by Intelligence 131

Newton’s Mania 134

The Problem with Smartest People in the Room 135

Why Smart People Make Dumb Decisions 137

Fooling Yourself with Complexity 138

Chapter 13 How Gullible are You? 141

Ponzi versus Bernie 146

The Sacred Relationship 148

Chapter 14 The Easiest Person to Fool 153

Getting Rich versus Staying Rich 156

Shot out of a Cannon 157

The Biggest Fraud of All 158

Conclusion: Six Signs of Financial Fraud 163

1. The Money Manager Has Custody of Your Assets 163

2. There is an Aura of Exclusivity in the Pitch 164

3. When the Strategy is too Complicated to Understand 165

4. When the Story is too Good to Be True 166

5. When the Returns are Ridiculously Good 167

6. When They Tell You Exactly What You Want to Hear 168

Index 171

30 thoughts on “DON’T FALL FOR IT: A SHORT HISTORY OF FINANCIAL SCAMS By Ben Carlson

  1. Dan

    Unfortunately, since this book came out, donations to my non-profit Shelter for Abandoned Chia Pets have fallen off disastrously

    Reply
    1. george Post author

      Dan, not a day passes around here without a phone call or email or solicitation letter from “charities” I’ve never heard of.

      Reply
  2. wolf

    No, I’ve never been scammed, because I’m too careful there – and I don’t have too much money!
    But I know several cases, the one I remember best was a romance scam a few years ago. A guy in my age (mid 60s then) got a tweet/email/ whatever from a Black US lady in her 30s who claimed to be madly in love with him …
    She looked really pretty too …
    So he sent her money for all kinds of activities and the ticket to Budapest – and waited in vain for her arrival …
    Then he told the story to our friend, his ex-wife, sobbing like crazy!
    In the German media you read stories about scams every day – the latest is connected to covid19 – some official comes to your home to get your valuables to safety …
    These guys are clever – before they call you or visit you they look in the phone book for “old” names (like Adolf, Katharina, Siegmar, Rosamunde …) which aren’t commonly used any more. So it’s highly probable that the person was born in or before WW2.
    A bit OT:
    I’ve told it often that after the death of my first wife I was introduced (actually kind of forced to meet) my wonderful new partner.
    When I came back from a holiday in Hungary (was 63 years old) and went to my favourite bar my friends immediately realised I had changed and looked happier. So I told them that I had a new girlfriend and of course people would ask me about her and at some point of course about her age.
    Then I’d answer:
    She hasn’t told me yet but around forty years …
    And when their facial expressions changed I’d complete the sentence:
    … is the age of her oldest son, a very nice fellow.

    Reply
    1. george Post author

      Wolf, a friend of ours met her old boyfriend at our 50th High School Reunion. She fell in love with him again so she quit her job and travelled to Tennessee to live with him. Her boyfriend somehow managed to get access to our friend’s bank accounts and he cleaned them out…and disappeared. What a disaster!

      Reply
  3. Jerry House

    I’m lucky. Once my money comes in from that Nigerian prince I’ll be too rich to be bothered by scammers. Then, once my young, beautiful Romanian bride-to-be who is desperately seeking passion arrives, I’ll have it all. We’ll both be in our mansion on the hill laughing at the suckers below who fell for scammers.

    Reply
  4. Michael Padgett

    I’ve never been scammed and generally make myself difficult to contact. My iPhone is protected by Call Silencing, which means that callers who aren’t in my contact list or have been called by me can only leave a message which will most likely be ignored. I still have a landline, which is even more restricted. Both of my email accounts are very good at catching spam. Scammers would basically have to get to me through the mail or in person, and I’m a pretty suspicious person. Nobody is completely invulnerable to scams, but I’m sufficiently protected from them that I don’t spend much time worrying about it.

    Reply
    1. george Post author

      Michael, Diane and I have had our credit cards hacked…twice. The first time CAPITAL ONE called us about $5000 plane tickets to Malaysia that showed up on our Visa card. The second time someone bought 20 SONY Playstations from TOYS ‘R US and used our credit car numbers to pay for it.

      Reply
      1. Jeff Meyerson

        George, that happened to us too! Once was an American Express card, and it was clearly an inside job. Jackie upgraded to a better card, but they convinced her not to close the old card because it might possibly hurt our credit rating. Keep it open a year, then close it. OK. Just before the year ended, we got a bill from the old card with a $3,000 restaurant bill and another for $2,000. Needless to say, we are too cheap for that to be us. They canceled the bill and launched an internal investigation.

        The other time happened in New Orleans, scam central. Jackie used the card for the van from the airport, I think, and someone obviously copied the number. But this time was too bizarre. They ordered about a dozen cheap things, like a few dollars each, and had them sent to US! Then they signed her up to a bunch of clubs – book of the month, cigar of the month, cheese of the month, wine of the month. It took me over a month to get everything straightened out. It was just a crazy situation. Why not order stuff for yourself?

      2. george Post author

        Jeff, we’re wary of credit card scams. Bill Crider ordered some “rare” music CDs from a little company in Canada and paid with his credit card. A couple months later, a $1200 charge showed up on his credit card: VICTORIA’S SECRET in Vegas!

  5. Jeff Meyerson

    Nothing major like this. Probably giving money to a woman in Florida who claimed to need help, but I’d rather give people who need it and occasionally fall for a scam that not give at all. (It was probably $10-20.) I am amazed at the scams otherwise smart people fall for.

    My uncle used to be part of the Amway (see the DeVos family) scam. He later went to jail for other issues involving Son of Sam, but that’s another story, Then he became super religious and eventually moved to Israel (still another story). Let’s just say, if he told me the sky was blue, I would check my wallet.

    One other aside – I had to keep fighting the urge not to read the author’s name as Ben Carson.

    Reply
    1. george Post author

      Jeff, although Diane and I have avoided being scammed, plenty of our friends and colleagues have been burned. When Diane was teaching, the Principal asked Diane if she would “mentor” a new teacher. This young teacher recently married a strange guy who controlled her spending. Her husband gave her $20 a week as her “allowance” after she cashed her paycheck and gave all the money to him. Her husband claimed he was “saving” all her money for the downpayment for a house (the couple lived in a rundown trailer). Diane would buy the young teacher lunch regularly because by the end of the week, she’d spent her “allowance” and had no money for food (or anything else!). After two year of this, the young teacher come home and found her husband gone and all the money in their bank accounts, too! The heart-broken teacher quit her job and went searching for her missing husband. She never found him.

      Reply
      1. Jeff Meyerson

        That is a sad, pathetic story. Some guys are predators and they always seem to be able to pick out prospective victims.

      2. george Post author

        Jeff, Diane tried her best to help the young teacher to see what a dysfunctional relationship she was in, but she was madly in love with her conniving husband.

  6. Deb

    I initially had the same “What the hell is Ben Carson writing a book about scams for? He’s part of the scammiest administration ever!” as Jeff.

    I’ve given money to people who approached me at places when they really looked down and out. Over the years, I’ve started offering to buy them what they need (food, diapers, etc.) rather than give them money. Some have taken the offer, others have stormed off. Our local city council has urged residents not to give money to people who stand on busy intersections or at the end of freeway ramps with “Hungry & Homeless” signs because apparently this is a big con and they’re neither. I prefer to donate to charities through our church that are local and I know are helping people. We have so much need in our community, sometimes it’s hard to tell the truly needy from the scammers.

    Other than that, I don’t think I’ve ever fallen for a Nigerian Prince type scam. I’ve read somewhere that misspellings and grammatical errors are put in those emails to filter out people who aren’t going to fall for the scammers to begin with.While there’s no single scam that will con everyone, I do believe that everyone has the ability to fall for a scam that targets something specific about them. I’d probably fall for a scam that convinced me my kids were in danger.

    Reply
    1. Deb

      Of course, we’re forgetting the biggest scam of all: The Trump Administration convincing a good 40% of our population that he’s a great president who is doing great things for America! That makes ever Bernie Madoff look like a piker!

      Reply
    2. Jeff Meyerson

      Deb, that is a Palm Beach County thing! Nearly every time we get off I-95, no matter which exit, there is some forlorn looking beggar with a sign asking for money. It is well established that these people are scammers – sometimes around 5 pm you can catch the “change of shift” when one leaves and the next takes over – yet some people give them anyway. Another rule we have (back when we rode the subways) is never give money to a beggar on the subway. On certain lines (sometimes the “wealthier” ones) they will come through your car one after the other, to the point where it is almost laughable.

      I haven’t seen him since Covid, but there is an obvious drug addict who stands on 86th Street with a real hangdog look, begging. The irony is, he stands right near the McDonald’s which has a permanent sign looking to hire people. But as I tell Jackie, he doesn’t want a job, he already has one: begging on the street. He always acts humble and pathetic until someone tells him off, upon which he unleashes the anger. I’d sooner give to Ben Carson.

      Reply
    1. george Post author

      Rick, Ben Carlson makes the point that there are no Get-Rich-Quick schemes that actually work. And then Carlson provides plenty of examples to show the financial disasters that result.

      Reply
      1. Deb

        I think we’re talking about three separate issues here: scams that take advantage of the kind-hearted or concerned person (like giving money to someone with a “Hungry & Homeless” sign); scams that leverage a person’s desire to get-rich-quick and “invest” in some “too good to be true” opportunity without doing any research; and scams that simply take your money without your knowledge, like credit card fraud or ID theft. But whatever the scam, they’re all designed to separate you from your money!

      2. Jeff Meyerson

        As Deb said, there is a difference between someone greedy trying to get rich and someone being kind-hearted and trying to help someone (who turns out to be a scammer).

      3. george Post author

        Jeff, many scammers prey on good-hearted people who want to help the homeless. And, there are roving packs of “religious” groups around here who go door-to-door in hopes of getting donations.

  7. George Kelley

    Deb, the scary part of scamming today is the leverage technology gives to scammers. All those robo-calls, ransomware, hacking banking and investment accounts, etc. don’t even require the “mark” to be involved much to produce a “score.”

    Reply
  8. maggie mason

    I carry in my car packages of dollar store dog treats and granola bars. If I see someone with a dog and the person has a mask on, I’ll give both, if the person has no mask on, I’ll give the dog treats, rarely do I give just the granola bar as several times they’ve been tossed on the street.

    I have a good story about a scammer who accosted me at my house when I got out of my car, needing $ for diapers for her baby. The paper had had a coupon for a free 2 pack of a new disposable brand. My dad collected newspapers, and had cut out tons of the coupons. I and my mom redeemed them and I was giving them to a friend who’d just had a baby. I reached back into the car and gave this woman 2 packages. She was clearly unhappy and said they were too big for her newborn, and I told her she could fold them to fit.

    I was also called (prior to caller ID, years ago) by a company trying to collect on a student loan, something I never had. They said they wouldn’t stop until I gave them my soc sec #. I refused and contacted my then congressman, Randy “duke” Cunningham, who later resigned in disgrace. I never heard from them again. I now get recorded calls from various voices about debt resolution (current is a brit). I used to report to the FCC, but as far as I can tell, they never do anything.

    THIS IS IMPORTANT If you do ever talk to them on the phone, DO NOT SAY THE WORD YES. There are scams that record your voice and use it to charge things to your accounts, or order things, and manipulate taped conversations. The best thing is to never answer

    Reply
    1. Jeff Meyerson

      I like that diaper story,

      That’s the main reason we got rid of our land line. Since Verizon gave us a rate for phone/internet/television that saved us money, we did get the land line back, but we keep the ringer turned OFF at all times, so if scammers or politicians (same thing?) call, it just rings and rings and we don’t hear it. Jackie prefers the handset to her cell phone when making calls, and if she is having Amazon or someone else call her back, we turn the ringer on for the call and then turn it back off.

      Reply
    2. george Post author

      Maggie, I usually hang up on ALL robo-calls and never say anything (especially “YES”). The FCC is useless for dealing with annoying phone calls.

      Reply
      1. wolf

        Crazy stories!
        Seems again that the USA are the leader in scams – we h ave them too but these guys usually go for selected people like oldsters.
        Re landlines:
        The ISDN system we use in Germany already many years ago gave you the opportunity to have several numbers. After a few idiotic calls I let my first number which also is in the phone book be connected only to the phone in my former home office – calls there go straight to the answering machine …
        Family members, friends and business relations got another number – which isn’t in the phone book.
        And in Hungary it’s really simple:
        When someone calls me on the landline – I say in Hungarian:
        Sorry, I’m German – that’s usually the end of it.
        But I used to get those mails from Nigeria on my fax machine/teletype too – many years ago.

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