Anatomy of a Fraud

               Victor Lustig had all the trappings of being the perfect salesman.  He was able to convey confidence and build trust.  Even though he was in his heyday in the 1920’s, his 10 commandments could easily be mistaken for being part of a modern sales program. 

               The problem?  He was selling scrap metal – from the Eiffel Tower!  I know this sounds far-fetched and you have to wonder how anyone could believe it.  Certainly, it is a reflection on how convincing Lustig must have been, but also was not as ridiculous as the idea seems today.

               The Eiffel Tower was built in 1889 for the Paris Exposition.  Initially, Parisians hated it; most thought it was ugly and ruined the skyline.  One author of the time complained that he would eat at the restaurant in the Eiffel Tower, as it was the one place in Paris he could eat without seeing the tower on the cityscape.

               Furthermore, the tower was only supposed to last for 20 years before being taken down.  Modern technology saved it as the Eiffel Tower remained, albeit with the addition of radio antennas affixed.

               Even in that environment, Lustig had his work cut out for him.  So how did he succeed?  His first commandment was to be patient and listen.  Listening was the first step to build the kind of trust needed to make a sale – especially a dubious one.  Along those lines, he did not pry into personal matters.  He let the relationship develop with patience.

               Lustig would wait for his ‘mark’ to reveal their political and religious views and then agree.  He did not boast nor would he act bored, helping to make the other person the center of attention.  To further enhance and develop trustworthiness, he believed in being tidy and organized.  He would not get drunk and would carefully hint at intimate topics, only following up if there was an encouraging response.

Photo by Benh Lien Song

               From Lustig’s example and his basic fraud commandments, you can build a picture of what a ‘typical’ fraud might look like. 

1.      The In.  In as in intro.  The swindler needs to build that first step to get in with the target and start to build trust.  This can be an introduction by others, such as a church group (a common approach by many modern scammers).  It may be through past experience, such as Bernie Madoff, who, as chairman of the Nasdaq, seemed completely trustworthy.

2.     Build trust.  Once the foot is in the door, the swindler has to become a trusted source.  Listening, agreeing, and not boasting worked well for Lustig here. 

3.     The Hook.  The moment has come where the swindler must present his plot, but do it in a way that answers the question, “what’s in it for me?”  This could be done subtlety, or as we often see with great bravado – “Take this pill and lose 20 lbs in one week!”  The hook may be an appeal to help others, such as getting donations to a fake charity.  This happened recently in Denver where a calendar featuring firefighters was sold to raise money for a children’s group, but was actually going to the director behind the charity.

4.     Buy in.  Now it is time to close the sale, so to speak.  Once the trust has been built and the hook tossed out, the swindler has to get the mark to take the bait.  Generally, that means paying out money, or promising to pay, such as someone getting a will changed.  There will be some form of loss and a pecuniary gain, as lawyers like to say, for the suspect.

5.     The Bust.  One way or another, the fraud will be revealed.  Either when authorities arrest the suspect or when he has sailed off into the sunset absconding with the loot.  Either he/she will be busted or the victim’s bank account will be or maybe both.

               So how to avoid becoming a victim?  The two most dangerous steps are the hook and the buy in.  Check and double-check all the facts before turning over any money or items of value.  Make sure you really know whom you are dealing with.  Don’t be taken in by someone who seems nice or who agrees with you.  If you are, you may end up in step 5 with your savings going bust.

Photos courtesy of WikiCommons

              

Eric Smith, CPP is the leading authority on organizational self-defense.  He has extensive experience in law enforcement as well as security management.  Eric is available for staff education and security awareness training as well as business coaching to help organizations provide safe workplaces.    To learn more visit http://www.businesskarate.com/profile.html. 

If you would like to reprint this post, please contact Eric at eric@businesskarate.com.