Lottery Scams

by Rudolf Faix Friday, July 10, 2015 2:06 PM

Slot Machines"Congratulations! You’ve won the National Lottery! To claim your prize, just send us cash to pay the taxes in advance."

Sound familiar? It’s a classic Nigerian letter scam - originating in Spain - that bilks thousands of people around the world out of an estimated $24 million a year and opens the door to future identity theft.

How does the scam work? The names and addresses of targets - all outside of the named country - are collected through the Internet. Then you, the target, get a letter from the National Lottery claiming you’ve won about a few hundred thousand dollars in a special promotional lottery. An estimated six million letters are sent a year. The letters look legitimate, complete with official logos and contact information. They also include a form from the bank where the money is supposedly being held. You might even receive follow-up faxes and phone calls.

Then the hook: all you have to do is pay taxes from the country - between 0.5 percent and 2 percent of the winnings - to get the money. Just fax your completed claim forms with personal and banking information and wire the money within a couple of days. If you take the bait, chances are you’ll be asked to cover other expenses, too.

The Spanish National Police (SNP) has relentlessly pursued criminals in their country who has behind such a scheme. In July last year, they launched a massive crackdown that resulted in 300 arrests, 150 searches, and the seizures of nearly 2,000 cell phones, hundreds of computers and fax machines, plenty of fake documents, and $265,000 in cash.

This is truly a 21st century concept of policing: working internationally to protect you in your community.

You cannot win money or a prize in a lottery unless you have entered it yourself, or someone else has entered it on your behalf. You cannot be chosen as a random winner if you don’t have an entry.

Many lottery scams try to trick you into providing your banking and personal details to claim your prize.

You should not have to pay any fee or tax to claim a legitimate prize. Don’t be fooled by claims that the offer is legal or has government approval - many scammers will tell you this. Instead of receiving a grand prize or fortune, you will lose every cent that you send to a scammer. And if you have provided other personal details, your identity could be misused too.

A fake prize scam will tell you that you have won a prize or a contest. You may receive a phone call, an email, a text message or see a pop-up screen on your computer. There are often costs involved with claiming your prize, and even if you do receive a prize, it may not be what was promised to you.

The scammers make their money by making you pay fees or taxes, call their premium rate phone numbers or send premium text messages to claim your prize. These premium rate calls can be very expensive, and the scammers will try to keep you on the line for a long time or ask you to call a different premium rate number.

Avoid from getting scammed by these and similar frauds? Here’s an good advice:

  • NEVER give personal information over the telephone, mail, or Internet unless you initiated the contact.
  • Do NOT wire money to strangers.
  • NEVER send money to collect a prize if a fee is required.
  • If you think you’re being targeted, contact your local authorities.

 

Market Manipulation or “Pump and Dump” Fraud

by Rudolf Faix Friday, July 10, 2015 9:10 AM

Market ScoreboardThis scheme - commonly referred to as a “pump and dump” - creates artificial buying pressure for a targeted security, generally a low-trading volume issuer in the over-the-counter securities market largely controlled by the fraud perpetrators. This artificially increased trading volume has the effect of artificially increasing the price of the targeted security (i.e., the “pump”), which is rapidly sold off into the inflated market for the security by the fraud perpetrators (i.e., the “dump”); resulting in illicit gains to the perpetrators and losses to innocent third party investors. Typically, the increased trading volume is generated by inducing unwitting investors to purchase shares of the targeted security through false or deceptive sales practices and/or public information releases.

How do these scams work? In this case, the ringleaders created shell companies whose penny stock (worth less than $5 a share) was traded on the OTC Bulletin Board (not on the more widely known New York Stock Exchange or NASDAQ). They secretly issued most of the shares for themselves in fictitious names, then touted their companies’ stock through false statements in press releases, electronic bulletin board postings, online newsletters, and the like.

Often using their retirement funds, unsuspecting investors purchased the highly-touted stock - or their unscrupulous financial advisors did so without their knowledge - driving or "pumping" up the price. Then, the fraudsters "dumped," or sold, their stock for thousands or millions of dollars, causing the stock to plummet and innocent investors to lose their shirts.

In many cases, the losses were significant. And while running an undercover operation and gathering enough evidence to put the criminals behind bars, the focus has been on helping victims get some of their hard-earned money back. The FBI spent years interviewing more than 600 mainly elderly victims, painstakingly documenting their sometimes heartbreaking losses.

A modern variation on this scheme involves largely foreign-based computer criminals gaining unauthorized access to the online brokerage accounts of unsuspecting victims in the United States. These victim accounts are then utilized to engage in coordinated online purchases of the targeted security to affect the pump portion of a manipulation, while the fraud perpetrators sell their pre-existing holdings in the targeted security into the inflated market to complete the dump.

Tips for Avoiding Market Manipulation Fraud:

  • Don’t believe the hype.
  • Find out where the stock trades.
  • Independently verify claims.
  • Research the opportunity.
  • Beware of high-pressure pitches.
  • Always be skeptical.

 

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I'm since more then 35 years in the computer business (programming and technical support) and using the Internet since it has started. Since 2002 I'm programming solutions for Asterisk and since 2004 I'm in the call center industry.

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