Scams and Swindles

Traps and Scams
There are many scams in investment offers, which regularly crop up in one form or another, from time to time. The general rule of thumb to follow is; if the investment looks too good to be true, it probably is. Always remember that the higher the return, the higher the risk.

Examples of these are:

  • Nigerian advanced fee scam.
  • Prime Bank investment offers.
  • Overseas brokers with special tips.

Nigerian Scam
This scam has been around for a while but despite many warnings, continues to draw many victims. The Nigerian advanced fee scheme is generally targeted at small and medium sized businesses, as well as charities. It involves the receipt of an unsolicited letter reporting to have come from someone who claims to work for the Nigerian Central Bank or from the Nigerian Government.

In the letter a Nigerian claims to be a senior civil servant and he/she tells the recipient that he/she is seeking a reputable foreign company’s bank account to deposit funds ranging from ten to sixty million dollars, which the Nigerian Government overpaid on some trade contract.

The intended victim is reassured of the authenticity of the arrangement by forged or false documents bearing (apparently) official Nigerian Government letterheads, seals, as well as false letters of credit, payment schedules and bank drafts. Those involved with the scam may even establish credibility by arranging meetings between the victim investor and government officials in real or fake government offices.

Once the victim is confident of the potential success of the deal, something always goes wrong. The victim is then pressured or threatened to provide one or more large sums of money to save the venture. For example, an official demands an upfront bribe or an unforeseen tax, or fee to the Nigerian Government, which is to be paid before the large amount of money can be deposited into the victim’s account. Each fee paid by the victim is always described as the very last fee required.

The victim investor stands to gain a substantial fee, being 25% of the total funds that were to be deposited into his account. The funds are never deposited into the victim’s account. However, the victim usually suffers significant losses by way of the unexpected fees they were requested to pay, in order to make the final transaction take place.

Characteristics of this scam are:

  • In every case there is a sense of urgency.
  • The victim is enticed to travel to Nigeria or a neighbouring country.
  • There are many forged official-looking documents.
  • Most of the correspondence is handled by fax or mail.
  • Blank letterheads and invoices are requested from the victim, along with banking details.
  • A variety of Nigerian fees are requested for processing the transaction, with each fee promised to be the last.
  • The confidential nature of the transaction is emphasised.
  • There are usually claims of strong ties to Nigerian officials.
  • A Nigerian resident in the US, London, or other foreign venues may claim to be a clearinghouse bank for the Central Bank of Nigeria.
  • Offices in legitimate government buildings appear to have been used by impostors posing as the real occupants or officials.

The Nigerian scam comes in different forms, all based on the same principles. The only difference with other Nigerian scam forms is the type of business involved. Instead of the transfer of funds from over-invoiced contracts, other type of transactions explained include:

  • Disbursement of money from wills.
  • Contract fraud (COD of goods or services).
  • Purchase of real estate.
  • Conversion of hard currency.
  • Sale of crude oil and below market prices.

Obviously, these scams need to be avoided and authorities notified should the offers ever be made to you.