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Confessions of a Con Artist

A veteran scammer reveals how he made millions ripping off unsuspecting investors

Most people who get emotional quickly will fall every time. And if they don't get worked up, I won't waste my time with them. If prospects are asking a lot of questions or tell me they want to think it over or talk with their lawyer, I will hang up the phone. Victims don't ask a lot of questions; they answer a lot of questions. Victims don't read paperwork; they wait for you to tell them what it says. Victims don't look for why the offer is a scam; they look for why the offer will make them money. They want you to make them feel good so they can pull the trigger.

Early on in my career I was selling bogus oil and gas units to investors. We were selling units for $22,500 for a quarter unit, or $90,000 for a full unit, promising a 10-to-1 return. Sure, we had a well, but it was a dry hole, and we knew it — there was no chance of hitting oil. Every so often when I was pitching these deals, an investor would ask if I was registered with the U.S. Securities and Exchange Commission. I would always say, "Of course we are, and I want you to verify that the minute we get off the phone." The truth is, we were never registered, but 98 percent of the people who ask that question never check. They just want to hear me say it.

Scams to Watch Out For

If I were still in the scam business, I would focus on reverse mortgages and precious metals. Home-equity and reverse mortgage scams are attractive now because a lot of seniors have paid off their house, and that's like an untapped bank account. If your home is worth $300,000 and you paid off your mortgage a couple of years ago, you have $300,000 sitting in the bank, waiting for me to steal it. A lot of TV and direct mail advertising tells you how to get money out of your house while you are still living in it. Some of these ads are legitimate; many are not.

My ma asked me once how her friends could avoid these scams. I told her two things. If someone is pitching a deal, ask yourself, "What's in it for him?" A common ploy is to get you to take out a loan on your house, then invest the proceeds in a long-term annuity or some other investment in which they make a huge commission. It may not be a fraud, but it may be a lot better deal for the salesman than for you. I also told Ma that when it comes to your house, never sign any paperwork until your attorney — someone you choose, not someone the salesman refers you to — reads the fine print.

As for gold and silver scams, I worked in several coin rooms in the 2000s. We would sell gold coins at a 300 to 500 percent markup. So the victims would pay $25,000 for a bunch of coins, which they would receive, but years later, they would take them to a coin shop and learn they were worth only a few thousand dollars. This is a great scam, because the coin industry is largely unregulated. Plus, because the victims receive the coins, they don't realize until years later that they've been taken. With the bad economy, these scams are huge now.

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