Posts Tagged ‘fraud’
“When I consider Life, ’tis all a cheat / Yet, fooled with hope, men favour the deceit”*…
We live in a time of extraordinary grift. In an excerpt from his book, Spam: A Shadow History of the Internet, Finn Brunton shares the history and explores the culture of an OG, the 419 (or Nigerian Prince) scam– and reminds us that fraudsters have long told stories of imprisoned nobles and hidden fortunes, with desperate pleas for help. The internet and email simply gave their messages a perfect medium….
A message arrives: a panicked plea referencing a desperate situation in an exotic location. It might be a wealthy refugee family trying to make it out of Zimbabwe, or the widow of an aide to Saddam Hussein in a hospital in Chiang Rai, or a Russian oligarch’s daughter hiding in the Czech Republic and communicating through her London solicitor.
They are looking for a compassionate soul — “whom God will use to assist me and my family” — who can help them get themselves and their assets — “US$45,000,000.00” — out of this difficult moment in geography and history. The phone and fax numbers work, and the web addresses point to real news sites — “You can go to google in internet and check my clients name and information” — and many of the government bureaus and banks check out online.
This is what’s known simply as the advance-fee fraud, or the 419 scam. It is so unmistakable that it embodies its own parodic genre, casually appearing as a gag in television comedies like “30 Rock” and “The Office.” It always starts with the same canonical line, trotted out in conversation over the phone, or perhaps over email: “Hello! I am a Nigerian prince.”
It is easy to see 419 merely as a tired cliché — and to mistake that familiarity for understanding. But doing so often leads to facile assumptions about the risks, motives, and imagined rewards on both sides of the exchange. To see the scam clearly, we need to treat it not simply as spam, but as a cultural myth, or even a motif. These scams are not ads for products — for porn or mortgages or relief for masculine anxiety. They are part of an enormous web of narratives, running back centuries, about corruption, politics, and the failures of globalization, from which you, the reader, can allegedly profit.
Advance-fee fraud dates back to at least the 19th century, with the emergence of the Spanish Prisoner confidence trick. It goes like this: There is a beautiful, rich woman incarcerated by the cruel King of Spain for complex political reasons. You have been contacted because you could help her escape. In return, she will give you a portion of her fortune (and possibly more). The escape is complex: There need to be bribes for the guards, hired guides, supplies for the trek through the mountains, and help for the inside man. You receive pleading notes from her and letters of credit that will make you wealthy once she and her assets have been reunited.
You choose to assist. However, things do not go smoothly because Spain is a far-off foreign country in turmoil, politically confusing, and corrupt. Perhaps there’s a change of authorities and a new set of bribes is needed; the muleteers have to be paid off. Or maybe negotiations have broken down, or the prisoner has fallen desperately ill and needs a doctor, which the prison won’t provide — but you can help.
It is a persistent con, changing to suit the times and political circumstances…
[Brunton recounts some historical examples…]
… While all advance-fee scams share the same narrative contours, they have, over the centuries, been seamlessly retrofitted to the technological platforms and practices of spam. From letters and telegrams in a world of newspapers to email messages in a 24-hour news cycle, 419 works where the spammer’s capacity to generate evidence exceeds our individual capacity to evaluate it — given some willful suspension of disbelief.
Not too much suspension is required, though, for reasons anthropologist Daniel Jordan Smith has described. After all, the structure of 419 messages is predicated on a general understanding of how a profoundly corrupt society operates. This is apparent to both the sender and the receiver.
From the perspective of the senders, working in internet cafés at 70 cents an hour (or $2 for a full night’s use), the messages are a natural enough business practice in a society that is, in fact, profoundly corrupt. It is common knowledge among them that the country’s elites do actually move millions, and even billions, of dollars out of the country covertly, in collusion with Western business partners and banks; there are plenty of African industrialists and dictators who cut deals with people overseas to send money abroad in return for a kickback. Furthermore, the countries these elites run are so thoroughly corrupt that any significant advancement — any construction of a building, resource extraction project, even getting a phone line or a lease — involves some palm-greasing and “additional costs.” If that’s the case, how do you expect to make any real money without following their lead?
On the recipient’s side, it takes a deeply cynical (if ill-informed) understanding of politics — not necessarily Nigerian, as the messages are often set in other presumably chaotic and corrupt environments — that views the world as including these covert machinations from which you are finally in a position to profit. This cynicism is combined with an almost touching naïveté on the part of the Westerners responding to these messages: Not only are they taking it for granted that someone would actually work with them to smuggle millions in gold or launder some huge sum in dollars, but they are also laboring under the assumption that their sudden windfall would not attract the attention of Interpol, the Economic and Financial Crimes Commission, the IRS, or the FBI.
All told, this strange dynamic between sender and receiver in 419 messages contains a perverse kind of brilliance: They turn the very fact of Nigeria’s history of exploitation by Western interests and its own leadership into a resource that can itself be exploited — as a place in which outsiders can be convinced that they, too, can take advantage and make a fortune.
But who is actually doing the exploiting? Not the writers of the messages themselves; they are merely fishing for marks, who are then passed up the chain to a smaller group of bosses. Rather, it is the kind of people with the resources and expertise to procure fax messages, letters, credit cards, time-stamped photos of gold bars, and so on. As Smith — who has lived in Nigeria for a number of years and is married to an Igbo spouse — quotes a young 419 writer he interviewed: “The people getting rich from this are the same people at the top who are stealing our money. I am just a struggle-man.”
These low-level, somewhat educated scammers, like the one Smith interviewed, live in a society largely bereft of opportunity for those without connections by birth or patronage. They have ended up as components in a strange kind of writing machine. This machine is made up of young people and old computers telling and retelling stories from templates circulated by email and thumb drives, with names changed and details updated with fresh material from the news: U.S. soldiers have found a cache of Saddam Hussein’s gold; a natural-gas oligarch needs to spirit his money out of Vladimir Putin’s Russia. Meanwhile, the higher-level bosses — with their stolen or manufactured stationery from Nigeria’s U.S. embassy, NGO offices, and central banks, and the money to arrange settings for plausible overseas meetings — are drawn from the ranks of white-collar professionals such as attorneys, accountants, and engineers…
[Brunton further explores the ethnography of scamming, recounts the history of the mail fraud that immediately preceded spam, then considers some of the higher-profile examples of 419 frauds…]
… Thanks to these — and other — high-profile incidents of skullduggery, the international cultural impact on Nigeria has been striking. No other country has become so synonymous with spam, even though the vast bulk of the volume has come from the U.S. and (much less so) from China, Russia, the United Kingdom, and Brazil. As Smith points out, 419 messages have only added to the deep unease among outside investors toward Nigeria, reinforcing the perception of a country of thieves. Within the country, “419” has a much broader meaning, referring to general fraud, much of it directed against other Nigerians. 419 can mean the vast frauds perpetrated against the population by political and business leaders working hand in glove with foreign corporations, small-time quack medical experts, and everyday scams like selling or renting homes under false pretenses.
An entire subgenre produced by the thriving and astonishingly creative “Nollywood” — a portmanteau of Nigeria and Hollywood — industry has devoted itself to 419 videos, featuring the many travails, disasters, and moral turpitude of the scammers who prey on one another and their own people. “The Master” is a representative example: Its star, actor and comedian Nkem Owoh, wrote the song “I Go Chop Your Dollar” for the soundtrack, emphasizing the thrill of winning at 419, which is “just a game” that everybody plays (“Everybody dey play am.”).
To be sure, Owoh’s song is not an endorsement of scamming, as he himself has made clear. It is simply an illustration of the world as it is. It is a vision of a society of institutionalized corruption in which everyone — from the lowest hustler to the highest official — has been made a part of the game…
Crime as a symptom (of larceny in the system, fed by larcent in the heart): “A Brief History of the Internet’s Favorite Scam,” from @mitpress.bsky.social.
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As we dwell on Diogenes, we might recall that it was on this date in 2009 that Irving Picard, trustee of the assets seized from Bernie Madoff when he was convicted of a $69 Billion Ponzi scheme, sued Madoff’s wife Ruth in an attempt to recover from her $45 million in Madoff funds that were being used to support her “life of splendor” on the gains from the fraud committed by her husband.
On November 25, 2008, she had withdrawn $5.5 million, and $10 million on December 10, 2008, from her brokerage account at Cohmad, a feeder fund that had an office in Madoff’s headquarters and was part-owned by him. In November she also received $2 million from her husband’s London office. She has been seen riding the N.Y.C. subway, and did not attend her husband’s sentencing. In May 2019, 77-year-old Ruth Madoff agreed to pay $594,000 ($250,000 in cash, and $344,000 of trusts for two of her grandchildren), and to surrender her remaining assets when she dies, to settle claims by Irving Picard. She is required to provide reports to Picard about her expenditures often, as to any purchase over $100, to ensure she does not have any hidden bank accounts. The case is Picard v. Madoff, 1:09-ap-1391, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
– source
“It is a most extraordinary thing, but I never read a patent medicine advertisement without being impelled to the conclusion that I am suffering from the particular disease therein dealt with in its most virulent form”*…
We Americans spend over $60 Billion a year on dietary supplements and herbal remedies; to the extent that the market is regulated here in the U.S. it is (essentially exclusively) by the FDA– which treats the category as “food,” not “medicine” and “oversees” the industry/market very lightly. Indeed, while the extent of fraud in the supplement/remedy market (ineffective, mislabeled, or dangerous products) is estimated to be in the billions of dollars per year, the introduction to the FDA’s data base of “Health Fraud Products” reads:
This list includes unapproved products that have been subject to FDA health fraud related violations. These products have been cited in warning letters, online advisory letters, recalls, public notifications, and press announcements for issues varying from products marketed as dietary supplements claiming to cure, mitigate, treat or prevent disease, to the use of undeclared ingredients or new dietary ingredients.
This list only includes a small fraction of the potentially hazardous products marketed to consumers online and in retail establishments. Even if a product is not included in this list, consumers should exercise caution before using certain products…
That said, over half of us make those choices based on health and wellness information from social media influencers or podcasts… and too often these days, even the ostensibly qualified pitch-people are being faked by AI.
As Matthew Wills reminds us, we’ve been here before…
Never more than seventeen thousand people, the Shakers are today best remembered for their handsome furniture. In their own time they were renowned for their homemade medicinal remedies. They might have had a dubious reputation for their outlandish dancing, celibacy, gender equality, and for believing that their founder, “Mother” Ann Lee, was a manifestation of Christ’s Second Coming, but their guarantee of purity in their botanical products was generally accepted as given.
So much so that as Shaker communities dwindled through the nineteenth century, others wanted the cachet of their name in the patent medicine world. Amid all the fakery and flimflam of the pre-regulated drug market, the Shaker brand was the best.
It was worth stealing, and defending.
The Shakers, or more properly the United Society of Believers in Christ’s Second Appearing, arrived in North America from England in 1774. They established their first communes in New York and New England, then farther into the continent as the European frontier expanded. Kentucky, Ohio, Indiana, Georgia, and Florida also boasted Shaker outposts, mostly shorter-lived than the original ones.
At first, Shakers funded their separation from the “world” by selling furniture and housewares to non-Shakers. But as the number of Shakers dwindled and America’s industrial capacity increased, Shakers typically turned to selling seeds, simples [here], and botanically-based remedies. These were easier to produce, and, imbued with the Shaker reputation for purity, were as good as gold.
Medical historian J. Worth Estes quotes an 1881 almanac advertising Shaker remedies on the basic principles of Shakerism:
innocence, temperance, virgin purity, love, peace, justice, holiness, goodness, and truth. The almanac further explained that Shakers are “just and honest in all [their] dealings with mankind,” and that they “eschew every species of falsehood: lying, deceit and hypocrisy.” Such statements helped “guarantee” the purity and high quality of Shaker-made drugs in the nineteenth century struggle for the American drug market.
Shakers provided ingredients for “worldly” producers, and, in some cases, they even provided start-up capital for non-Shaker manufacturers. The A.J. White company of New York, New York, made Shaker Extract of Roots and Mother Seigel’s Curative Syrup with Shaker-sourced botanicals and capital. This remedy was advertised as “a cure for impurities of the blood” and “a cure for dyspepsia and liver complaints.” A.J. White’s company successfully expanded overseas, and when he died in 1898, his English branch bought out his American branch; in various guises the company existed until 1957, when it was purchased by Smith, Kline & French, whose successor entity is today the world’s tenth largest pharmaceutical company.
In the 1880s, Smith Bros. & Co. of Montreal started producing a product called Shakers’ Blood Syrup. This had a label similar to A.J. White’s Shaker Extract, except it said “Cures completely scrofula, cancer, rheumatism, catarrh, ulcers & skin & blood diseases.” The Shakers of New Lebanon, New York, sued for patent infringement and Smith Bros. agreed to stop pirating the Shaker name.
Shakers also produced their own remedies on their communes. Corbett’s Syrup of Sarsaparilla, for instance, was made in Canterbury, New Hampshire for about half a century until 1896. In 1886, it was one of the few Shaker products to be awarded a U.S. patent. Promoted as “a blood purifier and therefore, by implication, as a panacea,” it was made of “an aqueous mixture of sarsaparilla root, pipsissewa, yellow dock root, dandelion, thoroughwort, black cohosh, elder flowers, Epsom salts (magnesium sulfate), juniper berries, blue gentian, pokeweed root, sugar and alcohol.” At some point potassium iodide was added to “ensure the remedy’s ‘purity.’”
Estes provides a checklist of some 80 other proprietary medicines made in Shaker communities. The names are marvelous: Brother Barnabas Hinckley’s Compound Concentrated Syrup of Bitter Bugle, Eclectic Live Pills, Larus Eye Water, Vegetable Family Pills, Young Shakers’ Grand Catholicon. As Estes notes, more than a few of these products had active ingredients that were cathartic or purgative, a fact rarely noted on labels. Cathartics are generally defined as working faster than laxatives.
After the Food and Drug Act of 1906, products like the 75% alcohol (sanitizer strength!) Norwood’s Tincture of Veratrum Viride, made by non-Shakers with Shaker-sourced botanical ingredients, had to be labeled “Poison” on their instructions for use. Patent medicines, and the Shakers, didn’t survive the twentieth century…
Amid the fraud and flimflam of early drug markets, Shakers stood for purity, creating a brand others were eager to exploit: “A Trusted Name in a Dubious Drug Market” from @jstordaily.bsky.social.
* Jerome K. Jerome, Three Men in a Boat
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As we hear history rhyme, we might recall that it was on this date in 1626 that Peter Minuit, the new director of “New Netherland” for the Dutch West India Company, in what we now know as Manhattan, “purchased” the island from the the Canarsee tribe of Native Americans for a parcel of goods worth 60 guilders: roughly $24 dollars at the time, now just over $1,000.
In the event, Native Americans in the area were unfamiliar with the European notions and definitions of ownership rights. As they understood it, water, air and land could not be traded. So scholars are convinced that both parties probably went home with totally different interpretations of the sales agreement. In any case, the Carnarsees were likely happy to take payment in any meaningful amount pertaining to land that was mostly controlled by their rivals, the Weckquaesgeeks.
1626 letter from Pieter Schaghen (a colleague of Minuit) reporting the purchase of Manhattan for 60 guilders [source]
“The violence of positivity does not deprive, it saturates; it does not exclude, it exhausts”*…
Scheduling note: your correspondent is hitting the road again, so regular service will be interrupted; it should resume on Friday the 7th…
Author and psychoanalyst Josh Cohen on Byung-Chul Han’s critiques of digital capitalism…
I came across Byung-Chul Han towards the end of the previous decade, while writing a book about the pleasures and discontents of inactivity. My first researches into our culture of overwork and perpetual stimulation soon turned up Han’s The Burnout Society, first published in German in 2010. Han’s descriptions of neoliberalism’s culture of exhaustion hit me with that rare but unmistakable alloy of gratitude and resentment aroused when someone else’s thinking gives precise and fully formed expression to one’s own fumbling intuitions.
At the heart of Han’s conception of a burnout society (Müdigkeitsgesellschaft) is a new paradigm of domination. The industrial society’s worker internalises the imperative to work harder in the form of superego guilt. Sigmund Freud’s superego, a hostile overseer persecuting us from within, comes into being when the infantile psyche internalises the forbidding parent. In other words, the superego has its origin in figures external to us, so that, when it tells us what to do, it is as though we are hearing an order from someone else. The achievement society of our time, Han argues, runs not on superego guilt but ego-ideal positivity – not from a ‘you must’ but a ‘you can’. The ego-ideal is that image of our own perfection once reflected to our infantile selves by our parents’ adoring gaze. It lives in us not as a persecutory other but as a kind of higher version of oneself, a voice of relentless encouragement to do and be more.
With this triumph of positivity, the roughness of the demanding boss gives way to the smoothness (a key Han term) of the relentlessly encouraging coach. On this view, depression is the definitive malaise of the achievement society: the effect of being always made to feel that we’re running hopelessly behind our own ego-ideal, exhausting ourselves in the process.
The figure of the achievement subject gives rise to some of Han’s most vivid evocations of psychic and bodily debilitation:
The exhausted, depressive achievement-subject grinds itself down … It is tired, exhausted by itself, and at war with itself. Entirely incapable of stepping outward, of standing outside itself, of relying on the Other, on the world, it locks its jaws on itself; paradoxically, this leads the self to hollow and empty out. It wears out in a rat race it runs against itself…
… Han’s critique of contemporary life centres on its fetish of transparency; the compulsion to self-exposure driven by social media and fleeting celebrity culture; the reduction of selfhood to a series of positive data-points; and the accompanying hostility to the opacity and strangeness of the human being…
… Under the rule of digital capitalism, time itself is severed from any ‘narrative or teleological tension’, that is, from any discernible purpose or meaning, and so, like the digital paintings in an immersive show, it ‘disintegrates into points which whizz around without any sense of direction.’ In such a regime of time, there is no possibility of Erfahrung, which depends on a sense of narrative continuum and duration. There is only the proliferation of its pale counterpart Erlebnis: the discrete event that ‘amuses rather than transforms’, as Han would later put it in The Palliative Society…
… Because power so often involves coercion, Han argues, there has been a tendency to see them as inextricable. But it is only when power is poor in mediation, felt as alien to our own lives and interests, that it resorts to threatened or actual violence. Whereas when power is at the ‘highest point of mediation’ – when it seems to speak from a recognition of its subjects’ needs and desires – it is more likely to receive those subjects’ willing consent. One could conceive of a power, therefore, that has no sanctions at its disposal, but which is nonetheless rendered absolute by its subjects’ full identification with it.
The less it relies on the threat of punitive measures to back it up, the more power maximises itself. ‘An absolute power,’ writes Han, ‘would be one that never became apparent, never pointed to itself, one that rather blended completely into what goes without saying.’ This is precisely what happens in digital capitalism’s burnout society, where the power of capital consists not in its power to oppress but in the voluntary surrender of its subjects to their own exploitation.
Han draws on the German-American theologian Paul Tillich’s conception of power as ipsocentric, that is, as Han puts it, centred around ‘a self whose intentionality consists of willing-itself’, cultivating and bolstering its own status. God is the ultimate embodiment of power because, in the words of G W F Hegel, ‘he is the power to be Himself’. This will to persist in one’s own existence, to cling to one’s own selfhood, is the basic premise of the Western mode of being. We can discern it at work in the empty narcissism of social media and the culture of self-display in which we’re all enjoined to participate. Self-exploitation is, in a sense, a twisted variant on the Cartesian cogito: I am seen therefore I am. In making myself perpetually visible, I may empty myself out, lose the last vestiges of my interiority. But, in cleaving to the bare bones of a self-image, some form of my existence survives.
The fundamental basis of this erosion of meaningful experience, argues Han, is felt at the level of temporality. The accelerated time of digital capitalism effectively abolishes the practice of ‘contemplative lingering’. Life is felt not as a temporal continuum but as a discontinuous pile-up of sensations crowding in on each other. One of the more egregious consequences of this new temporal regime is the atomisation of social relations, as other people are reduced to interchangeable specks in the same sensory pile-up. Trust between people, grounded in both the assumption of mutual continuity and reliability, and in a sense of knowing the other as singular and distinct, is inexorably corroded: ‘Social practices such as promising, fidelity or commitment, which are temporal practices in the sense that they commit to a future and thus limit the horizon of the future, thus founding duration, are losing all their importance.’…
Consumer culture, with its compulsion for novelty and perpetual stimulation, likewise erodes the bonds of shared experience that engender meaningful narratives. The fire around which human beings would once have gathered to hear stories has been displaced by the digital screen, ‘which separates people as individual consumers.’ Time, love, art, work, narrative; these are the key zones of experience hollowed out by the disintegrative logic of digital capitalism. Each is a rich store of transformative encounter, or Ehrfahrung, which the ‘non-time’ of the present has reduced to empty instances of Erlebnis…
How the “suffocating system” of digital capital creates hollowed-out lives: “The winter of civilization,” the thought of @byungchulhan.bsky.social in @aeon.co. Eminently worth reading in full.
* Byung-Chul Han, The Burnout Society
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As we analyze ambition, we might send careful birthday greeting to Charles Ponzi; he was born on this date in 1882. A con artist, he swindled his way across Canada and the U.S. in the early 1920s, promising clients a 50% profit within 45 days or 100% profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the U.S. as a form of arbitrage. In reality, Ponzi was paying earlier investors using the investments of later investors. While this type of fraudulent investment scheme wasn’t invented by Ponzi, it became so identified with him that it now is referred to as a “Ponzi scheme“. The scam for which he’s known ran for over a year before it collapsed, costing his “investors” $20 million (over $300 million at current value).
Ponzi schemes have grown since Ponzi’s time (Bernie Madoff‘s version is estimated to have totalled around $65 billion) and are alive and well in the U.S.
“We cannot reason ourselves out of our basic irrationality. All we can do is to learn the art of being irrational in a reasonable way.”*…
Classical economists posit that investment decisions are driven by rationality — a clear-eyed evaluation of risks and rewards… but then, meme stocks.
Kwabena Donkor, an assistant professor of marketing at Stanford Graduate School of Business has just unveiled some new research that suggests that identity distorts our financial choices, leading us to overvalue investments that reinforce our sense of self…
People don’t just invest with their wallets — they invest with their identity,” says Donkor, a faculty fellow at the Stanford Institute for Economic Policy Research.
In a novel field study involving soccer fans, Donkor and several colleagues uncover evidence of how identity can skew economic thinking. The researchers ran a series of experiments focused on fans who placed nearly 40,000 bets on English Premier League matches during the 2021-22 season. Participants — nearly 800 from Kenya and 1,600 from the United Kingdom — were given a budget and asked to place bets on upcoming matches. They received winnings based on the outcomes of randomly selected games.
Most of the participants were longtime supporters of a particular team. (Manchester United was their top favorite.) They were more optimistic about their favorite teams, betting 20% more on them. They rated their teams as having a 10% to 18% higher chance of victory than other teams, even when presented with forecasts from professional oddsmakers suggesting otherwise. These results persisted even after accounting for factors such as personal beliefs and appetite for risk.
The study also finds that participants placed a lower value on gains not aligned with their identity — what the researchers referred to as an “identity tax.” Fans effectively devalued these neutral bets by 17% to 27%. For poorly performing teams, this “tax” could soar as high as 47%, reflecting a strong emotional impulse to support their favorite team even when the odds were against it
The research, detailed in a paper cowritten with Lorenz Goette of the National University of Singapore, Maximilian Müller of the Toulouse School of Economics, Eugen Dimant of the University of Pennsylvania, and Michael Kurschilgen of UniDistance Suisse, shows that identity-driven preferences explain much of the gap in bettors’ behavior. Simulations showed that distorted beliefs due to identity account for as much as 44% of the difference in fans’ betting behavior. The remainder stemmed from preferences rooted in identity itself — people were willing to sacrifice potential gains to support options that aligned with who they are…
… The study’s findings have far-reaching implications for understanding economic behavior, particularly in areas like consumer finance, brand loyalty, and even political decision-making…
… the research hints at how consumers view different products. Items that align with a person’s identity are likely to be seen as complements rather than substitutes. For example, Donkor says a consumer who identifies strongly with sustainability might view eco-friendly products as essential enhancements to their lifestyle, even if they’re similar to comparable, less expensive goods.
Ultimately, these findings could improve our thinking about the biases that influence our financial lives. As the researchers point out, acknowledging the role of identity in decision-making is one key to designing better policies, creating more effective financial products, and ultimately improving individual welfare. “If we ignore identity,” Donkor concludes, “we miss the bigger picture in decision-making.”…
Understanding the choices that we, and those around us, make: “What Soccer Fans Can Teach Us About Making Irrational Decisions,” from @SIEPR.
* Aldous Huxley
###
As we ponder the price (and as a reminder that there are other kinds of irrational decisions and that sometimes returns do matter to investors), we might recall that it was on this date in 2008 that Bernard “Bernie” Madoff was arrested and charged with defrauding investment clients of as much as $65 billion. A pioneer in electronic trading and chairman of the Nasdaq stock exchange in the early 1990s, he had turned to money management. By 2008, Madoff was running a huge and growing fund that promised its investors high and stable returns… the problem: it was a Ponzi scheme, the largest known Ponzi scheme in history.
“It’s morally wrong to allow a sucker to keep his money”*…
Rachel Browne with the telling story of how a Montreal copywriter swindled victims out of $200 million by pretending to be a legendary psychic…
Patrice Runner was sixteen years old, in Montreal in the 1980s, when he came across a series of advertisements in magazines and newspapers that enchanted him. It was the language of the ads, the spare use of words and the emotionality of simple phrases, that drew him in. Some ads offered new products and gadgets, like microscopes and wristwatches; some offered services or guides on weight loss, memory improvement, and speed reading. Others advertised something less tangible and more alluring—the promise of great riches or a future foretold.
“The wisest man I ever knew,” one particularly memorable ad read, “told me something I never forgot: ‘Most people are too busy earning a living to make any money.’” The ad, which began appearing in newspapers across North America in 1973, was written by self-help author Joe Karbo, who vowed to share his secret—no education, capital, luck, talent, youth, or experience required—to fabulous wealth. All he asked was for people to mail in $10 and they’d receive his book and his secret. “What does it require? Belief.” The ad was titled “The Lazy Man’s Way to Riches,” and it helped sell nearly 3 million copies of Karbo’s book.
This power of provocative copywriting enthralled Runner, who, in time, turned an adolescent fascination into a career and a multi-million-dollar business. Now fifty-seven, Runner spent most of his life at the helm of several prolific mail-order businesses primarily based out of Montreal. Through ads in print media and unsolicited direct mail, he sold self-help guides, weight-loss schemes, and, most infamously, the services of a world-famous psychic named Maria Duval. “If you’ve got a special bottle of bubbly that you’ve been saving for celebrating great news, then now’s the time to open it,” read one nine-page letter that his business mailed to thousands of people. Under a headshot of Duval, it noted she had “more than 40 years of accurate and verifiable predictions.” The letter promised “sweeping changes and improvements in your life” in “exactly 27 days.” The recipients were urged to reply and enclose a cheque or money order for $50 to receive a “mysterious talisman with the power to attract LUCK and MONEY” as well as a “Guide to My New Life” that included winning lottery numbers.
More than a million people in Canada and the United States were captivated enough to mail money in exchange for various psychic services. Some people, though, eventually began to question whether they were truly corresponding with a legendary psychic and felt they had been cheated. In 2020, after being pursued by law enforcement for years, Runner was arrested in Spain and extradited to the US on eighteen counts, including mail fraud, wire fraud, and conspiracy to commit money laundering, for orchestrating one of the biggest mail-order scams in North American history…
Read on: “The Greatest Scam Ever Written,” from @rp_browne in @thewalrus.
* W. C. Fields
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As we tread carefully, we might spare a thought for Meyer Harris “Mickey” Cohen; he died on this date in 1976. After a career as a boxer, Cohen joined the mob, moving around the country and rising through the ranks until he was a close associate of Benjamin “Bugsy” Siegel in Los Angeles. In 1950, Cohen was investigated along with many other underworld figures by a U.S. Senate committee known as the Kefauver Commission. As a result, Cohen was convicted of tax evasion in June 1951, and sentenced four years in prison.
On his release in 1955, Cohen became an international celebrity. He ran floral shops, paint stores, nightclubs, casinos, gas stations, a men’s haberdashery– he even drove an ice cream van on San Vicente Boulevard in the Brentwood section of Los Angeles. In 1957, TIME magazine wrote a brief article about Cohen’s meeting with Christian evangelist Billy Graham. Cohen said: “I am very high on the Christian way of life. Billy came up, and before we had food he said—What do you call it, that thing they say before food? Grace? Yeah, grace. Then we talked a lot about Christianity and stuff.” Allegedly when Cohen did not change his lifestyle, he was confronted by Christian acquaintances. His response: “Christian football players, Christian cowboys, Christian politicians; why not a Christian gangster?”
In 1961, Cohen was again convicted of tax evasion and sent to Alcatraz. He was the only prisoner ever bailed out of Alcatraz– his bond signed by U.S. Supreme Court Chief Justice Earl Warren. After his appeals failed, Cohen was sent to a federal prison in Atlanta, Georgia. In 1972, Cohen was released from the Atlanta Federal Penitentiary, where he had spoken out against prison abuse. He had been misdiagnosed with an ulcer, which turned out to be stomach cancer. After undergoing surgery, he continued touring the United States and made television appearances, once with Ramsey Clark.
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