Word: scammed
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Count Barry Minkow as one of the more unlikely people ever to be a law-enforcement lecturer. A felon, he was busted in his early 20s by the FBI for engineering one of the biggest frauds in U.S. history. His ZZZZ Best carpet-cleaning scam, a mid-1980s securities caper, was worth $300 million before it went up in smoke. That rap landed him in a federal pen on a 25-year sentence. After serving seven years and four months, he got out in 1995 and, like the con man portrayed in the hit movie Catch...
...promise higher rates of return. At the same time, the national run-up in real estate prices gives many people a way to tap extra cash, often through second mortgages. "When the value of your house goes way up, you can access that money at the behest of scam artists," he says, "and many of them will suggest you do exactly that...
Some of the smartest scam artists, Minkow explains, target groups united by religion, race or ethnic origin. From 1998 to 2001, at least 80,000 people lost $2 billion in religious-investor frauds, according to the North American Securities Administrators Association, a group representing state regulators. In fact, most of the eight major frauds Minkow helped uncover in the past year have involved hustlers trying to sell investments to church groups...
...took yet another case to the office of New York attorney general Eliot Spitzer, who was in the midst of a spree of high-profile fraud prosecutions. Spitzer's experts contacted the FBI, and after Minkow agreed to wear a wire and record phone conversations with the purported scam artists as they solicited new money, the agency verified that the suspects were using an offshore shell company to bilk hundreds of millions of dollars from investors by pledging annual profits of more than 38% and an eight-year rate of return in excess of 1,000%. TIME has confirmed that...
These days, when he isn't preaching or scam busting, Minkow delivers speeches on fraud to corporate officers, insurance companies, accountants and law-enforcement groups, often appearing in a bright orange prison jump suit. At Quantico, as his 150 student FBI agents scribbled notes, he walked through Fraud 101, explaining the psychology of the scam. "A lot of con men just want to please everyone," he says. He stresses that in a successful con game, appearances are everything. "After all," says Minkow, "fraud is nothing more than the skin of the truth stuffed with a lie." Spoken by the master...