Recently, the Bermuda Monetary Authority cautioned again about investing in a recent financial scheme (scam) that appears to be a fraudulent activity.

Scammers have existed in the human race since the evolution of trade and finance, literally, since time immemorial. Wherever there is a buck to be made, unethically or illegally, scammers operate quite effectively. They are not an off-chance encounter or an unfortunate set of circumstances affecting just a few people. Scammers are working assiduously every minute for the advancement of one single thing — their personal benefit.

Inevitably, when individuals are scammed, offhand careless comments are made that run like this: “Well, that would never happen to me, I’m too smart for that ruse,” and that even nastier remark, “There is a sucker born every minute!” Neither of these comments are remotely true. Scammers have seriously compromised personal finances — from those incredibly sophisticated finance-focused individuals (so they thought) to regular people just like you and me, living ordinary lives.

Scammers are criminals. Make no allowances for them. They are not ‘getting their life together,’ or have they made a “mistake in judgement.” They know exactly what they are doing. They are thieves of the worst order.

Who are these dreadful people? Scammers come in all shades, all trades, and walks of life — from the most prestigious roles in society to the lowest forms of vile career criminals. The worst of the worst are those placed in (or have access to) the highest positions of power. Those politicians, elected by the people, with an explicit commitment and mandate to serve the public — instead they only serve themselves, as it turns out. Corrupt politicians scam both those they serve and society. Regrettably, the second worst group are scheming relatives (and those in legal/finance fields assisting them) who steal money, property, and civil rights from their own family, particularly those elderly who cannot fend for themselves.

Scammers are very often charismatic, personable born leaders, extremely intelligent and committed to their craft, if we can call stealing such a thing. They have great personalities, are meticulously style-conscious as any successful person would strive to be, very trustworthy at first impression, profess religious focus and direction, extremely adept in making friends of unsuspecting individuals, who are then used to help recruit more friends/investors, and completely devoted to their personal goal — getting rich. Yet, also not surprisingly, many scammers have no credentials, licenses, or experience to sell investments or manage money.

The common theme scammers all possess is that they are going to get what they want; who cares about anyone else? Corruption is meaningless in their vocabulary, only useful for the sole purpose of getting others to assist them, and knowingly or unwittingly to commit crimes, as we shall see.

How do they do it? The kinds of scams run the gambit, but they all share a number of common processes.

Psychological methodology is used extensively:

• Scammers cultivate an ‘us against them’ mentality, as in those nasty big banks or giant firms that never really work for, or give breaks to, the ordinary person, and like-type messages of perceived injustices.

• They target and work hard to earn the trust of trustworthy groups, such as a congregation and its pastors, or athletic clubs, trade associations and membership groups of affiliated individuals with long friendships derived from common interests, mutual goals and personal respect for each other.

• They focus on the popularity of the scam offering, citing how a respected member of the community has ‘endorsed’ this new product by buying in first. This is a serious part of a Ponzi scheme strategy where a highly respected, often a completely innocent individual invests in the scam, and does receive his/ her investment money back plus the interest owed. It is only much, much later that those who invested further down the Ponzi product purchase chain find out that there is no money left. What had the air of total legitimacy, disappears in a puff of smoke.

• Scammers provide upfront wonderful free incentives: free expensive dinners, free trips, free counselling, lots of wonderful promises and so on. Friends and neighbours are invited to share, spread the word and feel that they are participating.

• Scammers project an aura of exclusivity. That is, if you want to join this exclusive group of investors, you need to step up your game — so that you, too, will be recognised as a popular figure. The Madoff scheme delivered with that concept. People in that predominate culture begged to be included on his investment roster list, so that they too, would be perceived as part of the in-crowd, the charitable group, the top contributors. They gave their money to charity. So did he, or theirs, that is.

The danger signals are there, but our social wants and insecurities tend to ignore our excellent subconscious intuition. We are much smarter than we think we are, but we allow ourselves to become susceptible and then, so often manage to sublimate our personal internal warnings. That is, we do not follow our basic instincts (the fight or flight instinct inherent in all of us since man first walked the earth, for example) that when things don’t feel right (danger implied), we walk (or run away) as fast as possible.

Since scammers are so incredibly damaging, and everyone knows this, why do individuals find themselves succumbing?

It is complicated. We are complicated.

We know this. Scams are blatant, but far more often, far more subtle than we understand. We don’t even know we’ve been scammed until a devastating aftermath occurs, as it will since the scammer’s goal is to end up with all the money, property, and valuable assets.

On an overwhelming basis, scammed victims can suffer terribly: possibly, left with scars that may never heal, financial ruin, loss of personal dignity, humiliation in retrospect for such poor decisions, and the ultimate betrayal of trust in their fellow man.

Don’t be one of them.

Next article part 2 — Why do we continue to ‘try out scams?’ The kinds of scams perpetrated, yes, even in Bermuda. Scams aren’t always about money: influence peddling, lucrative contracts, power plays and paybacks are well represented. There are preventive measures to avoid scamming and reference sources for the discovery of scammers/bad behaviour. Individuals can take the scammer test to find out if they could be personality-susceptible to scams.

Martha Harris Myron CPA CFP JSM Masters of Law: International Tax and Financial Services,

Appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland

President: The Pondstraddler* Life™ Consultancy: international financial planning, publications, presentations for the challenging lifestyles of multinational individuals and their families residing, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle. Specific focus for residents of Bermuda, the premier international finance centre. Contact: martha@pondstraddler.com

* Pondstraddler. A person with one foot on each shore whose heart resides in both countries*