American Greed

[frayne]

I watch this show on and off during the week and I am always surprised at how seemingly intelligent people can be taken by some slick talking person with promise of a guaranteed rate of return. I am also shocked at how little oversight and regulation there is concerning so called financial advisors, counselors, wealth managers, etc. The most despicable are those who prey on older widows and retired folks who unwittingly fall for the sales pitch. The other thing that is amazing, those when caught, tried, and convicted usually get fairly light sentences.

Personally I think the death sentence would be a too lenient punishment for these reprobates.

 

[Lcountz]

I too am amazed at the light sentences the crooks get, and that people actually fall for the outrageous claims some of these cons make.....

I watched one the other night where a guy was hawking 55 gallon drums full of DIRT, claiming they were mixtures of gold, silver and other precious metals....The drums were stored in a pole barn type building with hand-scrawled numbers and letters on them...looked like something you'd see at the local scrap yard....

And when you hear the dollar amounts just handed over.....I guess the cons know that no matter how much information is available out there, there are still enough people who will believe these stories..

And as far as elderly people getting cleaned out of their savings, that just gives credence to the articles I've read that warn how when you get older, your financial acumen drops off....

Seems like all the cons need are a printing press capable of making a glossy brochure, and a hokey name....and big words with capital letters in the descriptions...

The other scary thing is that the cons appear to be SO GOOD at what they do...and to think there are ponzi schemes out there RIGHT NOW being funded by suckers.....

 

[Mulligan]

I watch this show on and off during the week and I am always surprised at how seemingly intelligent people can be taken by some slick talking person with promise of a guaranteed rate of return. I am also shocked at how little oversight and regulation there is concerning so called financial advisors, counselors, wealth managers, etc. The most despicable are those who prey on older widows and retired folks who unwittingly fall for the sales pitch. The other thing that is amazing, those when caught, tried, and convicted usually get fairly light sentences. Personally I think the death sentence would be a too lenient punishment for these reprobates.

Frayne, as a frequent watcher of that show, I too, am mystified by these light sentences. Hit them in the leg a few times with a few stray shots before you find the forehead. They destroy peoples entire lives, their whole life's fortune, and leave many vulnerable at an older age unable to recover. Yes, many people were naive and dumb to the schemes, but the bottom line is they did nothing wrong.

 

[Ready]

My parents and sister were both taken by a sleazy financial adviser that sold them funds with huge up front loads and variable annuities they don't need. I'm sure he would defend every sale if he were challenged. It's the norm to see people make bad decisions like this. The members in this forum are such outliers. Most people don't want to take the time to understand financial management, and they fall for sales pitches that sound good rather than taking the time to research and learn on their own.

 

[Major Tom]

They destroy peoples entire lives, their whole life's fortune, and leave many vulnerable at an older age unable to recover. Yes, many people were naive and dumb to the schemes, but the bottom line is they did nothing wrong.

Unfortunately, we cannot legislate good moral and ethical behavior. I haven't seen the show and have no desire to, as it would just annoy and upset me. It is a sad fact that we share this world with many who don't have the same basic values. No doubt they find ways to justify their actions to themselves (or simply to refuse to acknowledge how their actions adversely affect others).

 

[Midpack]

Interesting...same punishment?

https://www.zillner.com/insights/trust-me-do-i-have-a-deal-for-you/

 

[Walt34]

I too am amazed at the light sentences the crooks get, and that people actually fall for the outrageous claims some of these cons make.....

When I worked in the Fraud Section doing financial fraud investigations that was a never-ending source of frustration to me and everyone else in the office. The only source of consolation was saying "Well, I did my job...."

The reasons for the light sentences are simple. Prison space is limited and expensive, and what the general population (i.e., voters) are most concerned about are robbers and rapists, not fraudsters.

 

[CaliforniaMan]

None of us are as smart as we think we are

In the late 70s or early 80s I was taken in by one. He was the president of a large growing bank and had an office in an impressive high rise in our city. He had made a lot of money for people that I knew personally. There were big tax advantages then for real estate limited partnerships. The returns were large, but not outlandish, considering there were also tax losses. Unfortunately, the tax losses turned into real losses, his bank went bust, and I believe went to jail for a while. I checked out this guy as well as I could, he was indeed a successful business leader in our city. He looked like a real investor, but he was just betting on the greater fool theory of investing to get good returns, and he lost.

None of us are completely immune to this kind of tactic at some point in our life. Thankfully, my investment and stock market fiascoes happened very early in my life, and I learned my lessons. I am just so glad that I learned this lesson early. I pity the poor folks who never get involved with the markets until late in life, when they have a large pension to invest. Learning lessons early is the key. None of us are as smart as we like to think.

 

[Mulligan]

When I worked in the Fraud Section doing financial fraud investigations that was a never-ending source of frustration to me and everyone else in the office. The only source of consolation was saying "Well, I did my job...." The reasons for the light sentences are simple. Prison space is limited and expensive, and what the general population (i.e., voters) are most concerned about are robbers and rapists, not fraudsters.

I would imagine that would be very frustrating on your part, as it probably takes a lot of investigatory time and research to nail them. My solution to the prison overcrowding preventing the fraudsters from appropriate jail time would be simple.... Instead of a weekly meeting with parole officer, a weekly meeting with a expert in caning imported from Singapore. Many of these crooks go back into this "business" after release. Would serve as a painful reminder not to return to his ways of the past...

 

[Walt34]

My solution to the prison overcrowding preventing the fraudsters from appropriate jail time would be simple.... Instead of a weekly meeting with parole officer, a weekly meeting with a expert in caning imported from Singapore.

You're preaching to the choir....

 

[Chuckanut]

It would be great to see these crooks have to do some public service, the kind of stuff Mother Theresa did with India's poorest and sickest. Emptying bed pans for 8 hours on their day off would be a good start.

 

[aja8888]

I know that if I was one of those scam artists (which I am not), I would plan on hiding several million until I got out of prison. Then I could be on easy street for my retirement. I would suspect the smart ones think ahead like that.

If you watch American Greed enough you will notice that, in many cases, all the scammed funds are not fully accounted for. Wonder why?

 

[Lcountz]

I know that if I was one of those scam artists (which I am not), I would plan on hiding several million until I got out of prison. Then I could be on easy street for my retirement. I would suspect the smart ones think ahead like that.

If you watch American Greed enough you will notice that, in many cases, all the scammed funds are not fully accounted for. Wonder why?

**But you gotta wonder if people with that underlying personality trait of being dishonest can ever change....even after what little jail time they do get.....

 

[haha]

He looked like a real investor, but he was just betting on the greater fool theory of investing to get good returns, and he lost.

Isn't anyone who buys a stock without much dividend and a high PE banking on a greater fool? This investor cannot make his money and return in the normal course of business, he much count on some other 'investor" paying even more for his expensive stock.


Ha

 

[robnplunder]

**But you gotta wonder if people with that underlying personality trait of being dishonest can ever change....even after what little jail time they do get.....

I don't believe so. Recently, I ran into a crazy neighbor and family members which prompted me to study personality disorders and other relevant subject. It led me to believe that pathological liars, sociopaths, and such will remain so without proper treatment.

 

[doxiemama]

In the late 70s or early 80s I was taken in by one. He was the president of a large growing bank and had an office in an impressive high rise in our city. He had made a lot of money for people that I knew personally. There were big tax advantages then for real estate limited partnerships. The returns were large, but not outlandish, considering there were also tax losses. Unfortunately, the tax losses turned into real losses, his bank went bust, and I believe went to jail for a while. I checked out this guy as well as I could, he was indeed a successful business leader in our city. He looked like a real investor, but he was just betting on the greater fool theory of investing to get good returns, and he lost.

None of us are completely immune to this kind of tactic at some point in our life. Thankfully, my investment and stock market fiascoes happened very early in my life, and I learned my lessons. I am just so glad that I learned this lesson early. I pity the poor folks who never get involved with the markets until late in life, when they have a large pension to invest. Learning lessons early is the key. None of us are as smart as we like to think.

I don't know what your situation was but San Diego seems or seemed to be full of these scams. The "J David" one, I used to work for surgeons and many surgeons and lawyers in San Diego were scammed by him and his high investment returns. This was early 1980s.

Then there was "Pioneer Mortgage" one of my Grandmothers was getting a 14% return on mortgages for many years until that totally collapsed. She died about six months later. This sounds mean but she literally lived for money and when the money dried up, her reason for living was gone, she was 92. This was early 1990s when that blew up.

I think some says "Hey I am getting 15% returns guaranteed, or 30% or whatever, to their friends and then the greed kicks in. Hey why am I getting 2% from my "value" fund and my buddies are making so much more.

I have seen "American Greed" many times and the psychology behind the scammer and the victims is fascinating.

 

[52andout]

In many areas of life people hear what they want to hear. The big frauds like Madoff had people begging to be let into his scheme. I also love this show, it blows me away.

 

[Texas Proud]

In the late 70s or early 80s I was taken in by one. He was the president of a large growing bank and had an office in an impressive high rise in our city. He had made a lot of money for people that I knew personally. There were big tax advantages then for real estate limited partnerships. The returns were large, but not outlandish, considering there were also tax losses. Unfortunately, the tax losses turned into real losses, his bank went bust, and I believe went to jail for a while. I checked out this guy as well as I could, he was indeed a successful business leader in our city. He looked like a real investor, but he was just betting on the greater fool theory of investing to get good returns, and he lost.

None of us are completely immune to this kind of tactic at some point in our life. Thankfully, my investment and stock market fiascoes happened very early in my life, and I learned my lessons. I am just so glad that I learned this lesson early. I pity the poor folks who never get involved with the markets until late in life, when they have a large pension to invest. Learning lessons early is the key. None of us are as smart as we like to think.

Not sure if what you put down is actual fraud or just bad business...

As an example... back in the 80s many banks were failing... people would say 'these guys should go to jail'.... my response was 'stupid is not illegal'... IOW, if the person did not break a law (as you suggest, he was using the greater fool theory which is not illegal), then you just had a bad investment and were not defrauded....

Just saying there is a difference....

 

[Texas Proud]

One of the things that 'protect' a lot of us is that we are not trying to make a killing...

Investing in index funds means that you are not trying to beat the market, but just trying to match it.... a big difference in mind set...

 

[MooreBonds]

Interesting...same punishment?

Hmmm, I must object to their answer - how can just 11% be "Poor/Overpriced financial products", given how large the "financial advisor" industry is? Maybe if they only counted people with fees > 2%/year...

 

[calmloki]

Shoot - the greater fool + greed thing is working on me - after a year of having money sitting in Vanguard's MM account we bought a couple indexes last week and I pl;an to set up bi-weekly transfers from the MM account to those indexes till the MM is exhausted. Also plan on bi-weekly transfers from another savings account of smaller amounts with an aim to have about the amount we normally make in one loan "invested" in the market by year end.

Trying to move away from rentals and lending, as I don't feel my mental acuity is as good as it was and that it probably won't be improving. That said, I still don't see how the market is anything but a greater fool game - only thing is, if everybody is playing it.....

 

[frayne]

I would think it would be pretty hard to nail down accurate figures about fraud as I'm sure many cases aren't reported due to embarrassment and various other reasons. BTW, what is affinity fraud ?

 

[H2ODude]

Affinity fraud concentrates on an audience of common interests; such as a church or professional association. The word of mouth recommendation that comes from within is a powerful tool of the fraudster.

 

[Nemo2]

Affinity fraud concentrates on an audience of common interests; such as a church or professional association. The word of mouth recommendation that comes from within is a powerful tool of the fraudster.

I recall watching a TV documentary a few years ago about a (supposed) developer who defrauded many members of the same church........turns out that on his initial visit to the church he sat at the back row and was quickly up at the door talking to the minister as the parishioners departed.......when the minister exchanged goodbyes/handshakes, etc, the fraudster emulated his actions, giving the impression that he was somehow affiliated with the church and thus 'vouched for'........lots of chutzpah.

 

[Major Tom]

I watch this show on and off during the week and I am always surprised at how seemingly intelligent people can be taken by some slick talking person with promise of a guaranteed rate of return.

Don't underestimate the power of a few simple lines, repeated often. In this sense, it's not that much different from the appeal of simplistic political and religious ideologies to some folk.

In the world of personal investing, some more sophisticated investors may look down on the passive index fund approach but even this methodology requires the practitioner to understand the difference between short-term risk (i.e. volatility) and long-term risk. When attempting to figure out what will happen with our investments, both in the accumulation and withdrawal phase, we are learning to live with a wide range of possible outcomes, of which no single one is possible to predict. Some people, intelligent as they may be, cannot handle this type of risk assessment, and there is nothing like a knowledge void to provide a fertile breeding ground for loopy "investment" scans (15% returns guaranteed! You cannot lose!)

False certainty can be very attractive when you don't understand the waters you are swimming in.