Story of a $10 Million Remote Scam

This is a bizarre story of an almost-happened $10 million scam. It reads like an obviously phony Nigerian 419 scam, but it actually fooled what seem to be smart people. What's amazing to me is that there was no face-to-face interaction at all.

Posted on June 17, 2014 at 2:44 PM • 37 Comments

Comments

bcsJune 17, 2014 3:26 PM

I wonder what it cost to run the operation? What kind of success rate would they need to make it pay at $10M a pop?

readerrrrrJune 17, 2014 3:46 PM

@Simon

Yes, from their perspective they clearly had this in the bag. If it wasn't for the random acquaintance of the director, the deal would go trough.

braffJune 17, 2014 3:47 PM

"There’s a lot of bad people in the world. All they want to do is destroy and vanish. They roam the world like pirates. [...]
I was shaking. We had spoken to Evil on the phone."

So a couple of guys that tries to scam a investment fund off money is Evil with a capital E? Not in my book. Fraudsters, sure. Probably not saints either. But E-e-e-evil? Nope. Had they tried to scam my dad (now deceased) off his savings, that would've been evil. Actually, that did happen - by an investment fund called Acta...

Granite26June 17, 2014 3:51 PM

One wonders if crap like this makes it hard for REAL third world 'royalty' to do business...

l0gicJune 17, 2014 4:04 PM

There are two possibilities here:

1) James Altucher is an abject moron.

2) James Altucher is providing an alibi for $15K money laundering.

The first possibility seems far more likely.

DanielJune 17, 2014 5:13 PM

Seems to me that this is what happens when people overvalue reputation--that is where the "EVIL" comes from. It's only evil when a person has zero tolerance for variation--blind trust becomes an excuse to not engage in verification. The article uses the phrase due diligence but it seems to me that the actual due diligence was the phone call and the e-mail. Trusting a name on a piece of paper just because you've seen it before isn't due diligence. Due diligence is picking up the phone.

G. BaileyJune 17, 2014 5:41 PM

This should have been an obvious fraud from the moment that "M" agreed to all the ridiculous terms with no negotiation, and it should have been doubly clear when some third party company would bother to take on any responsibility without any process or consideration.

That it got as far as it did is just proof that even people that already have $10 million in the bank can lose all reason when a "too good to be true" opportunity shows up.

Ernesto GonzalezJune 17, 2014 7:06 PM

Nothing clouds one's judgement like good ol' fashioned greed.

sitaramJune 17, 2014 8:35 PM

"Evil" with a capital E for something that did not involve anyone's life or limb? I think, when people do something enormously stupid *and* write about it, they are impelled to be very dramatic.

x1178BFJune 17, 2014 9:10 PM

@readerrrrr: I'd like to imagine that most people would notice that they never got any independent confirmation from a 3rd party, but of course, I'd be wrong.

Still, I wonder how many people who have $10M to blow are getting trapped up in this kind of thing. You'd imagine they'd be used to business deals, and for something like a letter from a business director they'd verify the guy's position and that the letter actually came from him.

I'm glad the author isn't embarrassed to tell this story, because even though it doesn't really make him look good, it's a nice cautionary tale. It feels like a bit of puffery to imagine that he stopped this thing himself, though, sounds like the other guy was hesitant, too.

DenisJune 17, 2014 10:50 PM

I've done multiple business deals for millions of dollars while never meeting anyone on the other end in person. It's rather common in a trading world.

dandrakaJune 18, 2014 3:17 AM

"Sometimes people ask me what I do for a living. I solve crimes."

Seriously ???

WaelJune 18, 2014 3:58 AM

@ dandraka,

Seriously ???

Yes! Sometimes I go play with http://thesaurus.com
lookup "solve" and follow the chain:

solve->settle->pay->reward->honor->praise

So the text is a synonym to:
"Sometimes people ask me what I do for a living. I praise crimes."

When I am bored (and there is nothing interesting here), I go there and play with the thesaurus and keep checking synonyms until I find the antonym of a the word.
Speaking of thesaurus:

Whats another word for "thesaurus"? -- Steven Wright

AnonJune 18, 2014 5:16 AM

"I was shaking. We had spoken to Evil on the phone."

Now he know how the rest of us feel when talking to finance people.

Monkey7/12June 18, 2014 6:29 AM

But look at the terms "Bill" demanded.

Greed has its price, that's why 419's still abound. Every time I read one of these "sob stories" my attitude towards greedy chancers hardens.

We get what we earn and the solidly wealthy are often so because they (directly or indirectly) scam the chancers who scam the wannabe chancers. It's probably trite to say but if a person is that dazzled by wealth they'll always be prey for someone smarter.

Watching these sharks eat one another is always life-affirming. Cooperative groups always have an edge in nature over sole organisms. It's why all the bigger life-forms in the world are based on colonies of cooperating cells.

John SchillingJune 18, 2014 9:35 AM

"...call me at XYZ phone number if you have any questions"

No, call the organization's main switchboard at the number listed in the yellow pages. Dead tree yellow pages if practical. Tell the operator who you are and why you are calling, and ask them to connect you to ABC. If you have to tell the operator that ABC is at extension XYZ, even that should raise suspicions, though there can be legitimate reasons for it.

The phone number on someone's business card, letterhead, email, or whatever, is either a convenience that will save you a few minutes dealing with an operator, or a fraud that will cost you everything you are investing in the transaction. This is Social Engineering 101, and so should be part of Due Diligence 101.

bob tJune 18, 2014 1:50 PM

Reading the article - it's easy to see the role played by greed in getting this guy hooked. Not hard to sympathize with the putative scamster.

AspieJune 18, 2014 2:43 PM

Fishing yields a hungry fish or an empty hook.
Who doesn't need to eat?

AspieJune 18, 2014 4:30 PM

@Eric
Precisely; if you can find someone "with an eye to the main chance" (how I hate that phrase
and yet how incredibly apt) you've found a willing patsy. Trick the game out with some
"irresistible" baubles, trim the mark. Endgame.

Why wouldn't anyone try to buy their way out of poverty when so many easy marks lie within
the stroke of a key? If anything the Nigerians should be (probably already are) recruited
as marketers for new kinds of penny stocks or whatever passes for same in the current climate.

If you don't like the way it is now, be prepared for some serious disappointment if you hope
things will improve. That said, people get wise and when people get wise, the grifters up their game.

Funny in a way because there are grifters at every level of society; from the mini-dollar scams to the multi-billion-dollar scams of US money in Iraq. Somebody has soap on their
face but when the dollar amount reaches a certain level they tend to keep quiet.

After all, it's only taxpayer's money. And if that runs out, they can always print more.

Monkey7/12June 18, 2014 4:55 PM

@Aspie

Hmmm, let's see $8bn missing gives you $10m each for 800 of your mates.
Now ... how big is the top brass of the Iraqi army, say 800 top people
(obviously the distribution wouldn't be on a par so weighted)
let's be generous and throw $5m each and a passport to the country
of their choice if they abrogate their sworn duty and disband all the
military obligations they currently hold without the possibility of
prosecution for treason.

I'd say that might account for some of the money. But, Gosh, that's just
hearsay - after all it might have gone to building swimming pools for
the Iraqi top-brass just prior to their dislocation from the military.
Those summer-houses can be expensive and the military bodyguard that
flows them seamlessly through "unfriendly" countries could be a tad
on the expensive side. Still, they've got enough to keep them shuttling
between Quatar and Saudi Arabia and whatever else Gulf states to keep
their newfound businesses on a profoundly (obscene) paying basis.

Bravo! I admire their impunity though I will never enjoy it or its rewards.


May they live in interesting times.


Nick PJune 18, 2014 8:33 PM

@ Aspie

"Who doesn't need to eat?"

I'd start with someone who has $15,000 to throw at various scam attempts. They could probably afford to eat instead.

Wesley ParishJune 19, 2014 1:14 AM

Well, it's advanced fee fraud. I was under the impression that NSA's Alexander's claims that the NSA overstretch is absolutely necessary to halt the rabid pterorists aiming to kill each and every one of us in our beds, falls under the definition of "advanced fee fraud" as adhered to by the FBI ...

AspieJune 19, 2014 2:29 AM

@Nick P

Heh. It was an, evidently unsuccessful attempt, at sarcasm.

It may bear repeating that, for some - particularly those who are comfortably and permanently
wealthy - money becomes less of something necessary to keep body and soul united and more a
way of "keeping score".

But your point stands and I think that their willingness to chuck $15k into the toilet to
reap the various skims off a $10m loan says a lot about these types. As I mentioned earlier
if the sharks want to eat each other, that's fine by me as long as they do it with their
own money.

AspieJune 19, 2014 2:42 AM

@Wesley Parish

You've hit a nice nail on its noggin. Never looked at it that way before but surely any
government that is not "for the people by the people" is a 419 via taxation, empty stump-speech promises and its bonkers policies of scaling back social support for the growing numbers of disadvantaged and dispossessed members of society, pumping up "defence" (which we all know means offence) and eviscerating healthcare. Throw in support for bankers who "must not (can not) fail" and you have an oligarchy or plutocracy. Nice work if you can get it.

AnnoyedJune 19, 2014 5:22 AM

Considering the author of the "bizarre story" is a writer, the "story" is an excerpt from his book and there is no supporting evidence whatsoever (eg: audio recordings), could it be the story itself is the scam?

EvainJune 19, 2014 8:33 AM

@Aspie

any government that is not "for the people by the people" is a 419 via taxation, empty stump-speech promises and its bonkers policies of scaling back social support for the growing numbers of disadvantaged and dispossessed members of society

Nah. First find a man with an opinion and make him a senator. He'll always believe his opininon counts with the people who "elected" him. What he'll never
get is that he's a mouse in a cheese maze and that his job is to find the planted
cheddar and crow about it on TV then garner votes for the next primary.

Before you know it he's under the spell of the ********** and he's looking forward to the next potato crop.

Democracy has been served.

AspieJune 19, 2014 8:49 AM

Somebody *really* finds me a pain the posterior.
I've been attacked multiple times and am now locking down.
If you're reading this and you're the perp, be aware. Be Very Aware.

To all others, best regs and will see you other side.

FPJune 20, 2014 10:31 AM

Have a look at the terms. 36% interest (2*15% plus the initial 6% kickback) over two years. Or 150% interest on default. In an age of essentially free credit, M accepts these terms without blinking an eye or at least asking for more moderate terms (asking "how about 10%" takes 30 seconds)? That should set off some red flags.

If someone came to me, asked for $100, and promised to pay me back $200 tomorrow, I would be very suspicious.

Let me guess, Bill was not using 10 million of his own money. It was probably just stupid investors money from some real estate fund that he was managing. So if the loan goes bad, the anonymous investors lose out, but Bill gets to keep his initial $600k fee (deducted from the 10M before the wire goes out, of course).

Nick PJune 20, 2014 11:26 AM

@ FP

Your point reminds me of this scene from Wolf of Wall St. The main investor is explaining to the new guy how Wall St really works. The main point is that his goal isn't to make the clients money. The goal is to keep the clients taking the risks on new ventures, appearing to make money on paper, and earning the brokers their commissions in cash form. It's one of the best scenes in the movie because potential investors might save a ton of cash if they listen closely. ;)

Leon WolfesonJune 21, 2014 1:28 PM

There are stories. Oh there are stories.

Why don't games publishers invest in Russian games companies (except the home-grown 1C), in general? Well, it has to do with the publisher (which later went bust) who managed to fund the Russian Mafia with a substantial amount of money...

DannyJuly 3, 2014 2:59 PM

Are you f***ing kidding me? Come live in Romania, where the Senators are changing laws every 4 years to meet their personal business agenda. That's Evil with capital "E", not this piece of crap simple scam. Pff, in Romania we would laugh at that "Evil" calling it "gainarie" (use google translate to get the meaning).

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