We’ve all heard the term “con man”. One might assume that “con” is short for “convict”, but it’s actually derived from the word “confidence”. The term “Confidence Man” was coined by a newspaper writer in the year 1849 and got truncated somewhere along the way. In fact, most people perpetrating scams and cons aren’t convicts. They are people who appear very trustworthy and use their victims’ trust and confidence to perpetrate their crimes. Victims are often embarrassed that they fell for the con, blame themselves, and don’t report the crimes because they are ashamed, thus allowing the con men and women to continue the exploitation with the next victim, and the next, and the next.
Confidence scams take many forms and, sadly, are often the reasons victims end up in protective proceedings like guardianship and conservatorship. While crooks are always looking for new and innovative ways to defraud people out of their hard-earned money and property, there are a few common themes. By being aware of the tricks these thieves employ, you can better protect yourself.
One common type of scam is sometimes referred to as an affinity scam. The Securities and Exchange Commission explains, “affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or pretend to be – members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster’s ruse.” The SEC offers some good tips on how investors can avoid this type of scam.
One notorious local example of an affinity scam that Phoenix residents will remember well was the Baptist Foundation of Arizona. I actually had a client who was a victim of this very scam. You might know someone who was, too, because the fraud was widespread and went on for years before anyone knew what was happening. But affinity scams aren’t limited to investment schemes. Often the affinity scammer is a member of your local congregation or immigrant group.
One memorable case was a “good Christian woman” as the victim I knew said he thought the perpetrator was. She used the facade of faithful church attendance and religious talk, quoting scriptures and praising the lord, to ingratiate herself with religious elderly people. Once she convinced her targets that she loved their Lord Jesus and had their best interest at heart, she would become their caregiver, then become the beneficiary of their estates, take out life insurance policies on them, and steal valuables and medications from them while they were sleeping. She preyed upon vulnerable and incapacitated people who sometimes didn’t even know they had become victims, moving from state to state and city to city to avoid discovery and prosecution. Be very wary of someone you hardly know who offers to “care” for you. They will say all the right things and appear to be a very doting caregiver.
Another type of confidence scam is abuse under Power of Attorney. Theft by Power of Attorney is very common and it isn’t prosecuted as vigorously as it should be. Often the victims are told that their complaint is a “civil matter”, but Arizona law says otherwise. Misusing a Power of Attorney is theft. In fact, using a vulnerable adult’s property for a purpose other than the vulnerable property owner’s benefit is theft whether or not the fraudster holds Power of Attorney. The criminal code defines this type of theft as having occurred when “a person knowingly takes control, title, use or management of a vulnerable adult’s property while acting in a position of trust and confidence and with the intent to deprive the vulnerable adult of the property.” The law defines “a position of trust and confidence” as “a person who has assumed a duty to provide care to the vulnerable adult, or a joint tenant or a tenant in common with a vulnerable adult, or a person who is in a fiduciary relationship with a vulnerable adult including a de facto guardian or de facto conservator, or a person who is in a confidential relationship with the vulnerable adult, or a beneficiary of the vulnerable adult in a governing instrument.” Let’s expand on that last one a bit.
The beneficiary of the vulnerable adult in a governing instrument is in a position of trust and confidence. This means being named as someone who inherits under a will or trust. Too many times adult children or other relatives think that they have the right to use – and misuse – property and money of their loved ones like it’s their own because “I get it all when they die anyway.” This is wrong and it’s theft. What you get when a person who has named you as their beneficiary dies is what is LEFT. While they are living, all of that money and property will be needed to provide for your loved ones’ care and, if they need placement in assisted living or private care in their own homes, this can be very costly. There may not be anything left to inherit after their needs have been met with the money that they worked hard to earn and save their whole lives. Your living parent’s estate is not a stream of income for you, nor is it an appropriate retirement plan for you. If your parents are wealthy, learn from their example: Work hard and save your own money. If you get something when they pass, that’s a bonus. It’s simply not yours while they are living and treating it like it is could land you in prison.
Another common scam these days, which is sometimes facilitated by sharing sad stories with sympathetic individuals on social media, is the charity scam. Sometimes the scam is perpetrated by someone pretending to be a charity organization soliciting donations for a popular cause like animal rescue or an incurable disease. Other times it’s an individual preying on people’s charitable nature. One recent example is a woman who duped over 50 people out of over $200,000 by pretending that several relatives and friends had died, then convincing victims that she had cancer.
It’s important to understand that con artists prey upon basic traits in the human psyche. You’re an honest person, so you expect that others are, too. You’re caring, kind, and compassionate and crooks will try to exploit those values. We don’t usually suspect generous people of trying to trick us out of our money. Scammers use this to lure you. Con artists will often do favors for you, bring you gifts, offer to help you with something for free that you would otherwise have to pay for like doing yard work or working on your car. There is an old proverb originating from the Trojan war: “Beware of strangers bearing gifts.” The Trojan Horse was presented as a “gift”, but it was really a ruse used to get soldiers inside of a fortress that could not otherwise be breached. Con men are constantly looking for new and creative ways to breach your fortress walls. It’s important to be ever vigilant. Exercise healthy skepticism of anyone offering to “help” you.
Planning ahead and appointing a trustworthy decision maker under your trust or power of attorney can prevent you from being the con artist’s next victim. Placing confidence in a con artist can cost you more than you can afford to lose. If you have been the victim of this type of con, don’t be ashamed. They get away with their crimes because they are good at what they do. Being too ashamed to report the crime or ask for help allows them to get away with it and move on to the next victim. If someone you love is currently being exploited, there are steps we can take to stop the exploitation and, in some cases, recover stolen assets. Contact us for a consultation to discuss ways in which we can help.