The Corporate Observer Blog : Consumer Protection, Corporate Abuse : Class Action Lawyer & Attorney : Steven Berk Law Firm

Gretchen Morgenson yet again brings attention to a case of Main Street getting the short end of the stick.  She was sanguine in her appraisal.  In case you forgot, this was the case where banks flagrantly failed to comply with the most basic requirements governing mortgage foreclosures:

If you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.

Though no details are official, Morgenson reports that banks will only be on the hook for $5 billion in cash reimbursements.  (The remaining $20 billion would come in the form of credits to existing mortgages, which could end up benefiting the banks in the long run.)  Roughly $1,500 would be paid to each debtor who lost his or her home.

First, I know settlements are the product of tough negotiations, but this is frankly an insult.  The States and feds had far more leverage to achieve a much stronger result.  Significantly and inexplicably, the relief fails to differentiate between rightful and wrongful foreclosures, meaning many of the recipients would get money for nothing—even more insulting to the victimized families.

Moreover, the $5 billion cash settlement represents nothing more than a slap on the wrist to the big banks.  Throwing a $50 parking ticket on the Rolls Royce parked in front of the fire hydrant isn’t exactly going to change its owner's parking habits.  But tow the thing, maybe put a few scrapes on its side, and suspend the driver’s license for 90 days.  You can bet it won’t be parked there again.

$5 billion—split among a dozen institutions—is a mere parking ticket.  Consumers need more than money.  They need a fundamental shift in the way banks do business.  Banning executives from the industry, imposing suspensions on others, taking licenses away from banks themselves and dare I say sending a few people to jail, it should all be considered.

It is popular to repeat Cuba Gooding Jr’s scream in the movie Jerry Maguire: “Show me the money!”  But sometimes—and this is one of those times—it is not about the money.

Assisted by David Martin

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Yes, this is America and everyone is entitled to make a living.  But pushing risky bonds on five Wisconsin school districts while failing to disclose the risk crosses the line.  Even the often silent (and slow to react) SEC agrees and has filed a civil complaint against Mr. Noack and his firm.

That famous phrase (“Have you no sense of decency?*”) was delivered to the infamous Wisconsin Senator Joseph McCarthy by Army General Counsel Joseph Welch, as McCarthy tried to accuse yet another patriotic American of being a Communist.  Historians say the uttering of that phrase and the disdain in Mr. Welch’s demeanor sparked the downfall of the Senator.  He had simply gone too far.

And so too has David Noack and Stifel Financial gone too far.  Yes, this is America and everyone is entitled to make a living.  But pushing risky bonds on five Wisconsin school districts while failing to disclose the risk crosses the line.  Even the often silent (and slow to react) SEC agrees and has filed a civil complaint against Mr. Noack and his firm claiming they committed fraud.  Yes, fraud; directed no less at schools in need of every dollar.

How low can we go Mr. Noack?  Although the schools (and the children they serve) lost tens of millions on the bonds, Mr. Noack and his employer netted commissions totaling a cool $1.6 million.  Let’s say Mr. Noack personally received 15% of that commission, or approximately $250,000.  That’s a lot of money in Wisconsin (or anywhere) but is it enough to justify depriving students and teachers of badly needed resources?

Gretchen Mortensen highlighted this case, where Noack convinced a risk-averse, inexperienced school district to invest $200 million in AA- rated notes.  He did so by assuring them that they were sure-thing investments.  According to the SEC's Complaint he promised that "15 Enrons" would have to occur to put the investment at risk; that, or a default level worse than that during the Great Depression.  Of course, neither occurred, but Mr. Noack collected his commission while the school district's investment collapsed and millions in public funds went with it.

While Noack is no Joseph McCarthy, he is sadly indicative of a generation of bankers that place profits above ethics and ahead of their clients’ interests.  When will see a change in ethics?  It may be a while, and in the interim, Michelle Bachmann, Rick Perry and Sarah Palin be damned, we need more regulation and more regulators to ensure that the Noacks and Stifels of the world at least have some deterrence in place to temper what seems like an insatiable appetite for profit.  And let’s hope long term that those Wisconsin kids whose schools were robbed learn ethics and are mindful of the need to put what is right before what is profitable.  Otherwise my children may be writing this same blog post one day.

*This post originally read, "Have you no shame," misquoting the historic line from Mr. Welch.  It has been corrected with the correct quote.  TCO apologizes for the error.

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Don’t get me wrong, I don’t blame folks for this innovative way to hedge exchange rate dependency, but they are lambs to the slaughter for the bevy of shady dealers out there.

As the economy becomes more global, it’s not just Fortune 500 companies that have a presence or connection with overseas markets and currencies, but it’s businesses as small as a local travel agency specializing in Australian travel or an online retailer selling products made in France that are vulnerable to swings in the value of the U.S. dollar.  These mom and pop shops (and I use that phrase with the utmost respect) have increasingly taken on a dangerous new business venture: Forex trading.

Increasingly, and particularly since 2008, these businesses have been hit hard by the decline in the value of the U.S. dollar. In an attempt to soften the fluctuations in the market and counteract their dependency on the dollar, they have followed the lead of behemoths (such as Google) into the Forex markets.  By buying foreign currency using U.S. dollars, these entities can profit when the dollar’s value drops relative to the other currency.  Sounds simple enough, right?

Hear me please: it is not worth it.

The Wall Street Journal reported this trend among small businesses but they forgot to mention that you can lose every penny.  One small-business-owner-tuned-Forex-trader warns to “make sure you don’t take a bath” when the U.S. dollar drops, not realizing your other option (Forex trading) may be drowning in the ocean.

Don’t get me wrong, I don’t blame folks for this innovative way to hedge exchange rate dependency, but they are lambs to the slaughter for the bevy of shady dealers out there.  Even for an experienced Forex investor it can be difficult to identify the wolves among the sheep.  A company like Google, which has its own department devoted to Forex trading, can afford to take the risk (and has famously made over $700 million in Forex trading since 2008).

Hoping to make a few thousand dollars in the event of a drop in the dollar isn’t worth the risk of running into a shady broker, and trust me there are plenty.

What’s more, if the Journal has caught on, you can bet that the sharks are circling in the Forex pond. I’m no criminal mastermind, but if I’m seeking out naïve investors to scam, there is no more appealing group than small business owners just entering the world of Forex.  They have little time to devote, little experience, and there are millions of them.

Small business owners, especially those dependent on the international value of the U.S. dollar, I can see the allure of Forex trading.  But I assure you, the drastic risks outweigh the modest rewards.

Assisted by David Martin

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TCO is pleased to once again feature our Partner in Austin, Texas, Gouri Bhat.  Please enjoy.

Here in Austin, Lance Armstrong is more than a world-renowned cyclist and one of the greatest athletes who ever lived—he’s a hometown hero.  Armstrong lives and trains in the hills outside the city, and the headquarters of the Lance Armstrong Foundation and its Livestrong brand, which has raised more than $325 million for cancer research, is in downtown Austin.  So it pains me to put this prediction on the record, but here goes: Armstrong’s growing legal problems, stemming from accusations that he participated in systematic doping while riding to seven consecutive Tour de France titles, are going to overtake him in the end.  He’s going down.   

As reported yesterday in the Austin American-Statesman, in response to a recent 60 Minutes interview with his former U.S. Postal teammate Tyler Hamilton, Armstrong lawyered up and fired off a four-page letter to CBS, accusing the network of shoddy reporting and demanding an on-air apology.  60 Minutes stands by its story.  Hamilton, who testified before a federal grand jury, said he saw Armstrong use performance-enhancing drugs on many occasions.  Hamilton’s statements echo similar accusations by Floyd Landis, another U.S. Postal teammate who was stripped of his 2006 Tour de France title for doping, and by George Hincapie, a long-time and loyal teammate whose grand jury testimony is also reported to implicate Armstrong in doping.  Armstrong has always denied using performance-enhancing drugs.       

Watching Hamilton come clean about routine doping in the upper echelons of competitive cycling on 60 Minutes, I was struck by two pieces of information that I did not fully appreciate before.  First, CBS reporter Scott Pelley noted that all the second and third place finishers in each of the seven years that Armstrong won the Tour de France (1999-2005) were at some point implicated in doping, except for one.  That’s an astounding statistic that illustrates the degree to which doping pervaded the sport and, indeed, became a virtual necessity to compete and win. 

Second, the U.S. Postal Service, which sponsored Armstrong and his teammates for so many years, is a government agency, and its sponsorship contract included a “moral turpitude” clause and likely required various representations that U.S. Postal riders were drug-free and not engaged in illegal activities.  Receiving money from a U.S. agency based on statements that are false is called fraud on the government. 

The U.S. Postal Service invested about $40 million in Armstrong’s team from 1998-2004.  Government sponsorship of U.S. Postal makes a federal doping investigation of Armstrong more complicated and potentially much more consequential than the cases against Barry Bonds, Roger Clemens, Marion Jones and other athletes, who have mainly been indicted or convicted on perjury or obstruction of justice charges – essentially lying to federal investigators or Congress.  If the accusations of illegal doping on U.S. Postal are proven, Armstrong and team management are potentially vulnerable to many more serious charges, including fraud, conspiracy, money laundering, racketeering, and drug trafficking.  Not surprisingly, Floyd Landis has already filed a federal whistleblower lawsuit claiming that U.S. Postal defrauded the U.S. government.  Filed last September, the lawsuit remains under seal while the U.S. Justice Department decides whether to intervene.                   

One of Armstrong’s new lawyers, John Keker of Keker & Van Nest LLP, who previously won a major Ninth Circuit victory against federal investigators in a doping case involving Major League Baseball players, has called the whole doping investigation of U.S. Postal a waste of time and money: “That the government is spending tax money investigating long ago bike races in Europe is an outrage.”  But investigating $40 million of fraudulently obtained funds does not seem like a waste of resources to me – it is, in fact, something the federal government should be doing a lot more of. 

Maybe with his peloton of high-powered lawyers, Armstrong will somehow win this race.  But regardless, his yellow jersey won't be looking so sunny anymore.

Guest post by Gouri Bhat

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Best I can tell, it sells its seal of approval and helps businesses bury potentially valid complaints.

I was intrigued by David Segal’s Sunday piece in the New York Times Business Section, entitled “Complaint Resolved?  Well Not Exactly”.  It critiques the work of the “Better Business Bureau” (or “BBB”).   Like most people, I’ve heard the name, but really haven’t focused on who these guys are and what they do.  But after reading Mr. Segal’s piece, I was incensed.  This multimillion-dollar nationwide operation claims to promote ethics and trust in the marketplace when in fact it is merely a public relations arm of corporate America.  It does not fairly call “balls and strikes.”  Best I can tell, it sells its seal of approval and helps businesses bury potentially valid complaints.

Consider the example of Empire Today, a company that installs custom flooring in 35 states.  Since a consumer may not buy new flooring on a regular basis, an “independent rating” from an organization with a strong brand like the “Better Business Bureau” is important.  Sure enough, Empire received an A+ rating from the BBB.  Pretty darn good.  Can’t do better than an A+.  The problem is Empire received complaints from 1,166 consumers.  Think about that: in just one reporting period, that many customers bothered to lodge a written complaint.  My intuition tells me that the total number of dissatisfied customers is easily ten times that amount.  How can they be an A+ company; how many complaints would it take to get a B or B-, one hundred thousand?

It seems that BBB is hardly an objective third party rating agency.  Instead, for $550 a year they clean up those complaints.   They are “resolved” according to the BBB, but as Mr. Segal points out in his article, “well not exactly”.  Resolved would suggest the consumer received some due process and perhaps, if appropriate, a concession from Empire Today.  Nope, resolved should be viewed from the perspective of the company.   The BBB  makes them go away – while keeping  the company’s rating in the deceptive range of A +.

No doubt consumers may rely on those BBB ratings and spend hard-earned money on a product or service that not only doesn’t deserve an A+, but one that they wouldn’t purchase if they knew the truth.  How does that foster trust in the marketplace?  Finally, what’s the incentive of  Empire Flooring to do a better job when they can get an A + without even going to class?

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Forget the theatrics of the opening statement.  Most cases are won or lost before trial.

As trial lawyers (I was an Assistant United States Attorney in Washington, DC from 1990-1994), we like to think its going to turn on our ability to charm the jury; command with the eloquence of Daniel Webster and folksiness of a young Abraham Lincoln (sans beard) appearing in a small-town courthouse somewhere in rural Illinois with a quote or two from the Bible and a story at the ready.  Nope.  Most cases turn on a legal ruling pre-trial.  This case is no different.

Over the strenuous objections of Mr. Rajaratnam’s attorney John Dowd, Judge Howell allowed the prosecution to introduce 2700 taped conversations.  Those conversations will put Mr. Rajaratnam in the center of a web of corporate corruption and arrogance that the jurors will not be able to wash from their minds.  He will more than likely be found guilty of something.

Mr. Dowd and his cast of subordinates (when you represent a billionaire facing prison you can’t possibly bill enough hours) will try mightily to argue the technicalities of what constitutes criminal insider trading -- but my money is on the government and its young team of prosecutors.

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 Neil Barofsky, Special Inspector General for the controversial Troubled Asset Relief Program (TARP) officially resigned his post yesterday. In 2008 Barofsky accepted what he calls “a dream job”, but what most others would call a nightmare. Barofsky’s job was to monitor the TARP program and to ensure that federal dollars were spent responsibly and on worthy programs. Curtailing and prosecuting corporate greed was Barofsky’s greatest challenge – one he met with an impressive degree of ability and resourcefulness.

The Washington Post reports that Barofsky’s supporters saw him as a much needed cop monitoring for waste and fraud within TARP. His detractors, on the other hand, couldn’t stand how often he was in the way and how tough he seemed to act on the job. But in the end, Barofsky’s work is nearly unanimously praised and his positive effect on the nation, though largely unnoticed by the public, has been profound. Barofsky opened offices in New York, Atlanta, San Francisco, and Washington to investigate, audit, and prosecute fraud and misconduct related to the TARP program. Though Barofsky is leaving the post he has held since its inception, his legacy as a tough overseer will endure as the quasi-agency he built from the ground up monitors the final stages of TARP’s implementation.

Barofsky took on a job that few would have had the courage to accept and at which fewer still had the ability to succeed. Even the Wall Street Journal, a champion of deregulation, gave Barofsky his due in a short interview-styled article today. (click here) A tough warrior against corporate greed, Barofsky maintained his resolve and took on the industry at every turn. For this we congratulate him on a job well done and wish him well.

He serves as a model for the kind of person needed when the government gets in the business of giving away taxpayer money and lots of it: someone who has the character and credibility to be taken seriously and who will work doggedly to protect our money.

Assisted by Zachary Kady

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Let’s look at some of the details of JPMorgan’s acquisition of Washington Mutual from the FDIC. Warning: these new details may not be safe for children.

JPMorgan’s Purchase and Assumption Agreement dated September 25, 2008, contains a SIX PAGE INDEMNIFICATION SECTION. Indemnification shifts the risk. Guess who the risk was shifted to? Yep, the good old FDIC. They agreed to indemnify JPMorgan against virtually all risk involved with the deal.

Click here to read the entire Purchase and Asset agreement. For example on page 24 the FDIC promises to insure JPMorgan against practically all liabilities resulting from any WAMU misconduct…even costs for attorney’s fees. And don’t think for a moment JP Morgan is ignoring those provisions. As investors clamor for justice, JPMorgan hides behind the FDIC’s FIRREA process  while asking for billions of additional funds under the indemnification agreements (click here for a recent WSJ article on the subject). Is it too much to ask for JPMorgan to take responsibility; to take the good with the bad? Instead they appear to be gaming the system.

Franklin Roosevelt stated,

The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it comes stronger than their democratic state itself

While Mr. Hochberg has claimed no “bad faith” he has not claimed “justice”. The WAMU stakeholder deserve justice, not a back alley deal designed to benefit one entity – JP Morgan – to to the detriment of all others.

Assisted by Zach Kady

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Does the local drug dealer take Visa?  Well the one online does.

Visa, MasterCard, American Express, and Discover; payment for that Harry Potter DVD from Amazon.com or tickets to a Redskins game from StubHub and many more legal products and services.  But lucky you: The reach of “plastic” can also be used to purchase counterfeit and illegal products.  Yep.

Notably, credit cards can be used to purchase online “prescription” drugs without so much as a phone call to a doctor.  No exam, no consultation, no discussion of risk factors, heck no need for a prescription.  Just type in a credit card number and you are good to go.  Try it now: Google “online drugs no prescription” and you’ll find dozens of ways to purchase Percocet, Klonipin, Zoloft, Hydrocodone, Vicodin and just about any other prescription drug imaginable.

This should be no surprise to anyone with an email account.  Online pharmacies seem to be the biggest “spammers” on the Internet.  Their ads seem to defy the best of spy filters.  Are these drugs real?  Are they safe?  Too strong, watered down?  Who knows, most people just click delete, but too many people take the risk and buy their medication online.  Sometimes their motives are pure: convenience, they cannot afford a doctor, and without insurance the drugs they need are too expensive.  But in the main this is a dangerous, illegal endeavor that should be stopped.  There is a reason prescription drugs are restricted and can only be legally purchased with a doctor’s prescription and dispensed by a licensed pharmacy.

Sure law enforcement can go after the “pharmacies” directly but what are they: a warehouse or an apartment somewhere in the world with a few people filling bottles.  They can be found and shut down.  But the next day they will just have a new location.

What about the banks that allow them to have merchant accounts so they can accept all those credit card payments.  Easy access to money; a cheap and reputable partner to the most illegal of enterprises.  Does the local drug dealer take Visa?  Well the one online does.  That’s right, they turn a blind eye to the source of the money.  And who is harmed?  Sure the users of the drugs risk their health and lives buying illegally online.  But what about community pharmacists?  These largely family-owned businesses with a reputation for honesty are under assault by not only the big chains, but also these online gangsters.  And the merchant banks are complicit in that effort. 

Without the legitimacy accorded the words and symbols saying “we accept Visa and Mastercard,” these online drug dealers might just suffer a mortal wound.  And we’d take a small but important step in the right direction and give the community pharmacist a fighting chance at survival.

Too often we ignore the banks’ role in transgressions such as this.  During the ongoing wave of Ponzi scheme prosecution, banks have largely been let off the hook for their similar role in aiding and abetting the defrauding of investors.  The same cannot be true of the banks that facilitate the operation of websites such as Pillsgate – and the time to hold them accountable has come.

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WAMU’s complicity in the scheme resulted in the defrauding of millions of dollars from thousands of investors.

Berk Law, the Law Offices of Keith L. Miller, in tandem with Cotchett Pitre & McCarthy filed an action in the United States District Court for the Northern District of California on behalf of victims of a $150 million Ponzi scheme involving thousands of defrauded investors and the promise of safe, high yield CDs. The scheme, centered in Napa, California, was the brainchild of William Wise, who has a long a record of securities violations. The defendant in the case is Washington Mutual Bank, which Wise used to facilitate the operation of his scheme[1].

Specifically, Wise used two branches of WAMU located in Napa California to deposit, transfer and wire throughout the world the money earned from his illicit activities. Eventually, as Wise’s account grew, WAMU’s branch manager in Napa suggested he obtain a remote deposit facility (often referred to as a reverse ATM). Before that device was provided, WAMU was required to audit Wise. WAMU also suggested Wise obtain software offered to the bank’s larger clients to direct and manage a high volume of wire transfers. This tool again required a WAMU audit. This second audit was run from WAMU’s treasury department in Seattle, Washington. By providing these special services, WAMU knowingly provided Wise with his own private “bank within a bank”.

As the complaint alleges, WAMU learned of Wise’s illicit scheme thorough two audits by two different managing departments, but nevertheless allowed Wise’s activities to remain unchecked. WAMU’s complicity in the scheme resulted in the defrauding of millions of dollars from thousands of investors.

During this time period, WAMU had been operating under a Consent Decree issued by the US Office of Thrift Supervision in 2007. The decree was in direct response to WAMU’s previous failures to comply with numerous federal anti-money laundering statutes including the International Money Laundering Abatement and financial Anti-Terrorism Act of 2001, the Money Laundering Control Act of 1986, and the Bank Secrecy Act of 1970. The Consent Decree, among other things, ordered strict compliance with bank secrecy and money laundering requirements, and called for new and improved policies for maintaining compliance with federal banks secrecy and money laundering laws.

Steven N. Berk, Counsel for the plaintiffs remarked, “WAMU’s history of putting profits above compliance to capitalize on the mortgage bubble is well documented, but only now are we seeing that same corporate culture spilling over into taking risks in other areas such as the support of illegal and shady investment schemes.”

Assisted by Zach Kady

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The culture of Bank of America appears to place profits over compliance

October 23, 2009

A Complaint filed yesterday in Federal District Court in Tampa, Florida alleges that Bank of America was at the center of yet another Ponzi scheme. The operator of this scheme, 27 year-old Beau Diamond, defrauded hundreds of investors from Florida and around the country of at least $37 million. He claimed to be an experienced trader in off exchange foreign currencies. In truth, he had no such experience and was not registered to sell securities or trade foreign currencies for others. 

Nevertheless, Bank of America, as alleged in the Complaint, accepted Mr. Diamond into its Premier Banking and Investment Division. According to the Bank’s promotional materials, as a Premier customer, young Mr. Diamond received “close personal attention,” “priority customer service” and “expertise in banking and investment services.” Providing these services over a 32 month stretch surely alerted the bank to the scope and nature of Diamond’s illegal activities. 

Steven N. Berk, Co-lead Counsel for the investors, explained that “the lifeblood of a Ponzi scheme is the ability of the scheme’s operator to claim legitimacy and have a banking facility that can accept and distribute large sums of money from a significant number of individuals. Bank of America was critical in providing both. Without the active support and backing of, in this case, one of the nation’s largest banks, Ponzi schemers like Mr. Diamond would be relegated to using off shore banks and other dubious financial arrangements. Many investors would no doubt be scared away. But with a Bank of America on their side, these schemes can too easily metastasize.”

This matter is strikingly similar to at least 3 other cases filed around the country where Bank of America has been alleged to have had actual knowledge of, and provided substantial support to, a Ponzi scheme.[1] In all of these cases, the schemes originated and operated out of tiny Bank of America branches. 

This case originated in a branch with only 5 employees located in Siesta Key Florida. “It defies common sense to believe that those employees would not have known Diamond was engaged in some type of illegal enterprise. He was under 30, had no business experience, no securities licenses, and no employees. Yet he amassed nearly forty million dollars from hundreds of individuals and in many cases quickly wired that money off shore, or spent the money on luxury items and gambling.” 

Berk also noted that “Bank of America’s support of several Ponzi Schemes (where innocent investors lost hundreds of millions) appears unfortunately consistent with other questionable conduct such as the Bank’s failure to advise its shareholders of $6.5 billion dollars paid in bonuses to Merrill Lynch executives (a case being prosecuted by the SEC) and investing heavily in the sub-prime mortgage market racking up tens of billions in losses. The culture of Bank of America appears to place profits over compliance.”

Berk Law is working on this matter with the Florida firms of Randall Smith of Lakin & Smith and Andre Perron of Ozark, Perron & Nelson, P.A.

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Con artists love money transfers because they enable them to receive their marks' money before their victims even know that they have been swindled.

On October 20, 2009, the Federal Trade Commission ("FTC") announced that MoneyGram will pay $18 million to settle FTC charges that MoneyGram knew or intentionally looked the other way as some of its agents participated in fraud. The FTC alleged that between 2004 and 2008, MoneyGram agents aided con artists who tricked US consumers into wiring more than $84 million within the US and to Canada, and because the $84 million is based on consumer complaints to MoneyGram, the actual consumer losses is likely much higher.

According to the FTC, MoneyGram knew, or should have known, that 131 agents out of MoneyGram's more than 1,200 agents, were responsible for over 95% fraud complaints MoneyGram received in 2008 regarding money transfers to Canada. A similar small percent was responsible for over 96% of overall fraud complaints in 2006.

Be wary of money transfers–they are essentially the same as sending cash. Con artists love money transfers because they enable them to receive their marks' money before their victims even know that they have been swindled. Usually, you cannot reverse a money transfer or trace a money transfer. The con artist can pickup the money from multiple locations making them hard to track, and it gets even harder to track the con artists if they have accomplices within the money transfer company.

The FTC's consumer alert "Money Transfers Can Be Risky Business," available online at: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt034.shtm , lists several types of common scams involving money transfers. Here are some of the common schemes.

The Counterfeit Check Scheme: You receive a check with instructions to deposit it and wire some or all of the money back. Banks make the money available within days, before the check clears. Uncovering a fake check can take weeks. When it is discovered that a fake check turns out to be fraudulent, you still owe the bank for the money you withdrew.

Variations of the counterfeit check scheme includes: phony lotteries and sweepstakes where you receive a check in the mail for winning some sort of lottery or sweepstake. You just need to deposit the cashier's check and wire back money to pay for taxes and fees. The scammers like this one because by calling it a foreign lottery or sweepstake, they can convince people to wire money to people they don't know. Of course, when the cashier's check eventually bounces, you are responsible for the money you withdrew. Another variant is the overpayment scam, especially common on online classified ads like Craigslist: someone responds to your post and offers to use a cashier's, corporate, or personal check to pay for the item. Somehow, they write a check for more than the item price and ask you to wire back the difference. Once again, when the check is eventually found to be fake, you owe the bank for the amount you wired. One last variant of the counterfeit check scheme is the mystery shopper scam, where you are hired to be a mystery shopper and evaluate the services of a wire transfer company. You're given a check to deposit in your personal bank account, withdraw cash, and wire the money using a certain money transfer service. Once again, the check is eventually determined to be fake and you're on the hook for the amount you wired.

Online Purchase Scams: When online shopping, a seller insisting on a money transfer as the only payment method should be a red flag. If this is the only option you're given for paying, odds are good it's a scam.

Advance Fee Loans: Some scammers advertise for loans or credit cards regardless of your credit, and then require you pay a fee via a money order to apply. Once again, if you have to wire money for applying to receive a loan or credit card, odds are good it's a scam.

Family Emergency Scam: Some scammers call and pretend to be a relative in an emergency and say they need you to wire them money. Check with your actual family before wiring anyone money under these circumstances!

If you have already fallen for a money transfer scheme, here is what the FTC says to do: "call the money transfer company immediately to report the fraud and file a complaint. You can reach the complaint department of MoneyGram at 1-800-MONEYGRAM (1-800-666-3947) or Western Union at 1-800-448-1492. Ask for the money transfer to be reversed. It’s unlikely to happen, but it’s important to ask. Then, file a complaint with the FTC. Visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261."

Assisted by: Jed Sorokin-Altmann

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