Shady Dealings

Shysters and con artists are out to get us. Learn how to spot 'em - and stop 'em - before they get you.



Glenda Peete has lived in her three-bedroom, one-bath home since she was 13. Though she has struggled and faced foreclosure more than once, the 47-year-old cabinet assembler has managed to hold on to the property in Mason, Tennessee, where she lives with her 10-year-old son. "My mother died in 2007 and that was hard to cope with," she recalls. "But I'm the last surviving member of my family to live here and I'm grateful to have the house."

Two years ago, however, she came close to losing it when she heard about a company called Taurian Worldwide Inc (TWI), which at the time had two Memphis-area locations. According to one of Peete's relatives, that company would help her consolidate her debts so that her monthly payment to them would be "hundreds less" than what she'd been paying for two mortgages and a car note.

In May 2008, Peete met with a TWI representative, paid $750 in cash for what the company billed as debt-resolution services, and was told to stop making her house and car payments. "I told them I'd been in foreclosure several times," says Peete, "but they said not to worry, their attorneys would handle that if it came up."

Two weeks after she shelled out the money, she received a foreclosure notice in the mail. Frantic, she contacted TWI, but got little more than talk. Over the next couple of months creditors were calling left and right. "I blew up Taurian's phone leaving messages," Peete remembers. "All they'd ever say was, 'Give the creditors our number.'"

The evening before her house was set to go on the auction block, a TWI employee called and told her there was nothing they could do unless she paid them $1,700 in attorney's fees. "If I had that kind of money, I wouldn't need their help," says Peete.

Bottom line, Peete was able to negotiate with her mortgage company to halt foreclosure and save her house, but she never received assistance from TWI. She adds that representatives would only accept cash or a wire transfer of funds and her "receipt" didn't even include the company's name. "[TWI] quit returning my phone calls and I filed a complaint with the Better Business Bureau. My advice to others is, it might sound promising, but be cautious."

"Crooks follow the headlines."

Glenda Peete is among countless Mid-Southerners who fall victim to scams that range from foreclosure "rescue" and other phony loans to bogus lotteries and sweepstakes, to fraudulent websites and jobs that don't exist. In 2007, the last year a survey was published, the Federal Trade Commission (FTC) determined that 30 million Americans were bilked by con artists — many of whom are never caught — and that number reflected an increase of 5 million from the previous survey.

Locally, no statistics are maintained, according to Randall Hutchinson, president and CEO of the Better Business Bureau of the Mid-South, and many incidents are never reported because people are embarrassed to admit they fell for a spiel. But "numbers are going up," says Hutchinson. "Crooks follow the headlines. People are desperate for jobs, foreclosure rates are high. They're out there just waiting to take advantage."

Some of the most common scams involve loans that require advance fees, as in the case of Peete and TWI. A person looking for help may Google-search "loans for people with poor credit." Up will pop the names of companies eager to help — if they get a fee from you first. "You wire the money," says Hutchinson, "and it's gone and so are the scammers."

Besides Peete, seven other individuals filed complaints with the BBB against TWI. But thousands more made inquiries — 3,093 in 2009 and more than 1,000 this year. In March, a federal grand jury indicted TWI's owner Charles A. McKuhn Jr. for fraudulently representing his company as a legitimate debt-reduction service. The FBI Mortgage Task Force alleged that McKuhn and his firm took individuals and churches for more than $900,000 in advance fees — many of whom wired funds to TWI. McKuhn, who at the time was living in the Bartlett area and owned a $90,000 Mercedes and a Chevy Tahoe, argued that his allegiance to his Moroccan-African heritage put him above U.S law. Calling the argument "gibberish," a judge jailed him on $50,000 bond. In July, however, that bond was suspended on grounds that McKuhn is a flight risk; he's currently awaiting trial.

"It was like I took $3,000 and set it on fire."

A more recent scam — one that involved local used car dealer America Auto Sales — also required wiring funds in advance. "A crook set up a phony website appropriating that company's name and address," says Hutchinson. "It advertised repossessed cars at significantly reduced prices. People saw this wonderful deal, called the number, were instructed to wire their deposit to an individual, and were told when they could pick up their car." But the cars weren't in the dealership's inventory and the contact person had no affiliation with the company.

Among those responding to the website was Mike Stahly, 46, of Potterville, Michigan. Employed in the auto industry for 10 years, Stahly lost his job 19 months ago and has become "Mr. Mom" to his two small children. He and his wife, a schoolteacher, were looking for a used car, either to drive themselves or fix up and sell. In June 2010, after searching on Craigslist and eBay, Stahly saw the website, www.americautosales.com, which claimed a connection to the dealership. "I found a 2004 Passat that interested me," says Stahly, "sort of a dream car." He checked the car's appraised price on the Kelly Blue Book online (KBB.com), which listed it at $17,000 retail. The website was only asking $7,500 plus $250 for shipping to Michigan. "I figured I could fix it up and maybe sell it for $15,000," says Stahly.

Prior to buying the car, Stahly called businesses located near America Auto Sales — which has an A rating by the BBB — and got nothing but good reports about the firm. "This bogus website sent me links to the dealership. Little did I know they had hijacked the name of that company."

On a Friday, he wired a $3,000 deposit — to an individual because, according to the website, "that helps us avoid taxes legally" — with the balance to be paid upon delivery. Stahly was advised he'd be contacted the following Tuesday to confirm shipping. By Thursday, he'd heard nothing. "But I figured if it was a scam," he says, "I could go to MoneyGram [the wire service used by the website] to recover my money." When he did, officials there told him he'd need a court order to trace the wire transfer. When he called the FBI in Detroit, they told him to file the information on their Internet Crime Complaint Center at www.ic3.gov — but indicated that Stahly could probably kiss those bucks good-bye.

"It was like I took $3,000 and set it on fire," says Stahly, who has run out of unemployment benefits and cashed in his IRAs. I hope my experience keeps someone else from falling for this."

Also taking a hit was America Auto Sales, located in Whitehaven, which was slammed with thousands of calls from around the country about the scam — "at least 300 a day," says manager Jacob Johnson. "Since then business has slacked off. That may be partly due to the economy but this time of year we usually have lots more sales."

In an effort to protect consumers and reputable businesses from unscrupulous wiring practices, the FTC took action in 2009 against MoneyGram International, the second-largest money transfer service in the nation. MoneyGram was ordered to pay $18 million to settle charges that it allowed its system to be used by fraudulent telemarketers and con artists. The settlement also required MoneyGram to implement a comprehensive anti-fraud and agent-monitoring program.

But Hutchinson warns that the program and its safeguards aren't foolproof, and "they need to be supplemented by common sense on the part of the consumer." The BBB warns against wiring advance fees to web-based businesses or individuals unless you have an established relationship with that business. "You may never receive the purchased item," says Hutchinson, "and will have absolutely no recourse to recover the funds." He adds that the masterminds behind this website fraud have worked in 25 cities and are still at large.

"You really have to know who you're dealing with."

At the Memphis Police Depart- ment's Economic Crimes Bureau, Lieutenant Dennis Toll cautions consumers against agreeing to use "third-party websites" in making purchases. "We hear of situations where people are claiming to work through eBay Motors when in fact they're not. They'll tell a potential buyer, 'Yes, I have the car posted on eBay,' but suggest that they communicate through personal emails," says Toll. "What happens is, when you go outside the eBay site and its safe parameters, you're much more susceptible to fraud. You really have to know who you're dealing with."

Toll also stresses the importance of prompt reporting if you think you've been bilked. "The scammers will keep you going back and forth, claiming their delay in sending a product is because their wife has been sick or they've had a death in the family," he says. "By then, weeks have gone by with the victim trying to get their product — or their money back. For us, the rule of thumb is, if you can't lay hands on an item and make a simultaneous exchange with the so-called seller, you don't need to be giving them money."

"Make lots of money for very little work . . . "

Even as consumers learn the pit- falls of advance fees, the crooks stay one step ahead. For instance, job scammers will send substantial checks — some worth as much as $4,000 — to candidates luring them to become mystery shoppers. "Say you post your resume on legitimate websites such as Monster.com or CareerBuilder.com," says Hutchinson. "You'll get a call from someone saying you can make lots of money for very little work." With the check will be instructions to spend a certain amount to dine at a restaurant or shop for clothing and rate the experience. "Then they'll tell you to take $3,000 to Walmart to test the wire transfer system," says Hutchinson. "The money's gone, and the check they sent you bounces."

Some mystery shopper jobs are valid, Hutchinson emphasizes, but beware one that comes with big bucks in advance: "A lot of people don't understand why the bank accepted the check. We tell them just because the bank makes funds available for withdrawal, doesn't mean the check is good. More people are calling us when they get these checks, asking if they should cash it."

Job seekers should also avoid most "work from home" ads — whether it's stuffing envelopes or assembling crafts. "When you call the number on the ad or go to the website, you'll be told to send money for supplies and a list of leads," says Hutchinson. "All you'll get are instructions on how to run ads to get more people to do the same thing. I've yet to see one of these work-from-home ads that's legitimate."

"People still fall for these things."

Some scams grab the emotions. Imagine, if you're a grandparent, receiving a call from a person who claims to be "your favorite grandchild" stranded outside the U.S., needing money to repair a wrecked car, to be bailed out of jail, or because his credit cards won't work. Perpetrators of these calls may have blocked their phone number or used technology that allowed them to misrepresent their identity. At any rate, they scammed two elderly DeSoto County residents, who wound up wiring some $4,000 to con men in Canada.

"The scammers randomly call numbers till they hook someone," says Hutchinson, and while the majority of people don't bite, he says, the callers can count on a few folks to let panic for their grandchild override logic. The Canadian Anti-Fraud Call Center reported almost 400 cases in the first nine months of 2009 — and 88 of them were successful, adding up to $318,000 in losses.

Also imagine getting an urgent message on your Facebook account that a friend has been robbed in London and desperately needs help. That happened to several local people who responded to the plea by wiring money — while the friend in question was sound asleep in Memphis. A scammer had hacked her Facebook account and stolen her online identity. To make it harder for hackers, experts advise changing passwords every three months and reporting suspicious activity to the Internet Crime Complaint Center.

Then there's the "Nigerian letter" hoax that, with the advent of the Internet, has landed in innumerable email accounts. Hutchinson himself recently got such a letter. Its author claims that his father was poisoned by evil enemies, but on his deathbed informed his son of stocks worth $9 million that he should invest in schooling. "I fasted and prayed to God," says the letter writer, "that you will be a kind person and assist me to secure my inherited funds and save my life from my bad uncles . . . . "

Of course these letters dangle a carrot to recipients — in this case 20 percent of the $9 million — but first the victims must wire thousands to cover taxes, legal fees, even government bribes, and provide their bank name and account numbers to the scammer. "It's unbelievable," says Hutchinson, "but people still fall for these things, at all levels of education and income. These crooks are business-savvy. They wouldn't offer a product if people weren't buying it."

"I have been paid to kill you . . ."

One of the most alluring products scammers sell is hope — to rake in big bucks fast. In March, a retired schoolteacher from Bartlett, who asked not to be identified, told The Commercial Appeal how he'd lost $38,000. It started when he received a letter telling him he was runner-up in a New York sweepstakes. To collect the $500,000, he had to wire $16,500 to cover the taxes. Then the perpetrator reeled him in again, telling him the first-place winner was disqualified so now he was the big winner. But first, he should wire more money to cover more taxes. Finally, the day came when he was supposed to meet "Maria" at a Bartlett bank where the winnings would be deposited. No Maria. No money. A representative of the Shelby County Sheriff's Office described it as one of the largest fraud losses he'd seen in this area.

Phony sweepstakes and lotteries are near the top of the BBB's list of common scams and number two on the FTC's survey. "People lose millions in this every year," says Hutchinson.

Not all scams prey on our hopes of making a fortune. Some just go for the throat. Consider the "hit man email" that a Memphis woman received in July. A person wrote, "I am Mr. Majeed Varan . . . I am a murderer. I have been paid to kill you by one of your friends and the date has come." And, yep, wiring a chunk of money would save the recipient's life. The BBB says these threats, which started about four years ago, are not from hit men but Internet extortionists. The agency advices people to contact police about these emails and to forward them to the FBI through its Internet Crime Complaint Center at www.ic3.gov.

Gone phishing

Toll at MPD's Economic Crimes gets numerous reports of Internet scams. Far from being heavy-handed like the hit man email, most appear deceptively legitimate. We see lots of 'phishing,'" he says, "from scammers sending hundreds of thousands of emails in hopes of response. They'll make it look as if their correspondence is coming from a valid institution, when really all they have is a link to it," says Toll. "If you don't know who you're dealing with, don't give out personal information. Always deal directly with your bank, not a stranger on the Internet."

But some "strangers" are so sneaky and sophisticated, victims don't see them coming. That's what happened to Jason's Deli and its customers this past August, when several hundred diners at the popular restaurant on Ridgeway complained of identity theft after using their debit cards at Jason's. Online thieves racked up bogus charges in the thousands of dollars from New York City to Eastern Europe. Economic Crimes referred the case to the Secret Service Electronic Crimes Task Force, whose investigation determined that an international computer virus sparked the fraud. Secret Service Special Agent Rick Harlow says, "Malicious software installed on the company's computer system sent customer information to a server in Russia. We have a request in to Russian authorities to find out who's behind it. Not surprisingly, these international cases take time but we're confident we'll find out who's responsible."

Harlow emphasizes that neither Jason's Deli nor any of its employees were at fault and said such a rip-off could happen anywhere to any business and its customers. He advises customers that it's safer to use a credit card than a debit card as it takes a little longer for money to be deducted from your account.

Storm chasers

While many shysters work the phone, the mail, or the Internet, others come knocking at your door. A person will offer to clean your gutter, trim your trees, fix your roof, or repave your driveway. "These scammers follow storms — and often they target the elderly."

One woman, whose daughter reported the incident to the BBB, took the bait when a man said her roof was littered with branches and he'd remove them for $90. Ultimately he bullied her into writing a check for $900 and went with her to the bank so he could get the money and run.

Hutchinson also tells of a woman in Atoka who responded to a "really good deal" from a guy offering to repave her driveway. He had just repaved a neighbor's driveway, and had some leftover asphalt. She took him up on his "deal," and with the first rain, the asphalt washed away.

"And of course the guy quickly moved on," says Hutchinson. "One thing I advise people to do before they fall for such an offer is look at the vehicle's tags. Is it local? Is there a company name on the truck? And by all means, get a job estimate in writing before you hire anyone."

Hutchinson figures a scam of the future will involve health-care reform. "Con artists will knock on doors saying, 'If you want to get all the benefits of the new legislation, you need to sign up now, pay the enrollment fee.' We've already seen some of these, and as reform ramps up over the next few months and years we'll see more. People have to protect themselves — pay attention and stay informed."        

"If it sounds too good to be true . . ."

Local scam stories in 2010 have run the gamut. In addition to those mentioned in the main article, we've also seen, to name just a few:

◗ The 60-year-old man who rented out a Cordova house he didn't own. He was nabbed and arrested.

◗ The 28-year-old woman who took money from dozens of friends promising to obtain MLGW payment vouchers. No such vouchers existed and she's on probation.

◗ The Mississippi man who set up a fake off-shore drilling company and advertised jobs that required advance payment of union dues. He's been indicted.

"People are always out there waiting to take advantage," warns Randall Hutchinson of the Better Business Bureau.

To avoid being duped, Hutchinson's advice is simple: "If it sounds too good to be true, it probably is." As for the scammers themselves, he likes to quote Groucho Marx: "The secret to success is honesty and fair dealing. If you can fake those, you've got it made." And apparently, for many, faking is a way of life.

Safe in Cyberspace

One of the easiest places to get scammed isn't really a "place" at all. We're talking about cyberspace, and thousands of predators lurk there, just waiting to get your personal business info.

A good defense against these cybercrooks is encryption software for your computer's hard drive. One such product, Pretty Good Privacy (PGP), can protect your desktop email, digital signatures, instant messenger security, whole disk encryption, file and folder security, self-decrypting archives, and secure "shredding" of deleted files.

"Users have a responsibility to ensure that their version of PGP is not only the latest version available," says Dexter Harried, network engineer at NexTek, an IT solutions provider based in Memphis. During his three years in this position, Harried has kept a close eye on the evolution of the online security industry.

In addition to PGP, he recommends "cloud computing," an Internet-based system of protecting information by storing it in an off-site, secure location, rather than your own computer system. For businesses that deal in large amounts of sensitive information — say, hospitals and law firms — cloud computing is especially valuable. "The concept is really catching on," says Harried. "People appreciate that their business or personal information is absolutely secure."

Just as we have options in cell phone and Internet providers, the same is true of cloud computing providers. "They're not all created equal," says Harried. "It's a large umbrella concept right now, and users need to know what services fall under it."

For more information on PGP, go to symantec.com. For info on cloud computing providers go to cloudcomputing.techtarget.com.

Protect Yourself

◗ Don't provide personal or financial information in response to an unsolicited email or phone call, no matter how urgent the story. Financial institutions and government agencies are not going to ask for information in this manner.

◗ Don't click on links or open attachments in unsolicited emails. They may contain viruses.

◗ Don't pay an advance fee to get a loan, win a prize, or get a job.

◗ Don't accept a check if you are advised to deposit it and wire the money somewhere else. The check will likely bounce.

◗ Do be wary of anyone who knocks on your door and wants to sell you a product or service.

◗ Do take your time when discussing an offer. The faster the seller talks, the slower you should go.

◗ Do get all estimates in writing and never sign a contract with blank spaces.

◗ Do check out any unsolicited offer and all businesses with the Better Business Bureau.

Courtesy Randall Hutchinson, BBB president and CEO

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