Category Archives: Con men

RELYING ON REPUTATION: LIVE BY THE SWORD, DIE BY THE SWORD

“A good reputation is more valuable than money.”

Publilius  Syrus

Those who cultivate a good reputation know its priceless value and almost magical quality.  Once built, a solid reputation can open the corridors of power.  Money, praise, and devotion often follow.  What’s not to like about reputation?

Blind faith in another’s reputation can, however, be very dangerous. This article peeks behind reputation’s curtain — shining the light on its sinister underbelly.  Indeed, many of us would be better served not to rely on reputation.

This edition of the HR Law Insider posits that instead of relying on reputation, one should develop his or own belief regarding potential business partners and employees.  Then, this article provides real world guidance as to how to avoid becoming entangled with those that appear to be paragons of success and virtue.

Image result for bernie madoff wife

REPUTATION’S THIN ROOTS AND SHAKY FOUNDATION

“Everyone prefers belief to the exercise of judgment.”

Seneca

Reputation is defined as “the common beliefs or opinions that are generally held about someone or something.”

Phrased in a different way, reputation is a belief one reaches not on the basis of facts, evidence, or experience, but on the beliefs of others.   Should one trust such a belief?

Bernie Madoff’s reputation was impeccable, before it wasn’t.  For decades Madoff was revered by the wealthiest, most sophisticated investors.  Before his vast Ponzi scheme was uncovered, investors clamored to give Madoff their money.  To be seen with Madoff, or to be near him,  gave many the feeling that they had entered the very corridors of power.

When one currently observes a picture of Madoff, one sees the quintiseential conman.  Now, it is “easy,” in hindsight, to see that Madoff was a fraud.

HOW TO AVOID THE REPUTATION TRAP:  DO NOT FOLLOW THE HERD

No One Would Listen is a thrilling story of how Harry Markopolos, a little-known number cruncher from a Boston equity derivatives firm, uncovered Bernie Madoff’s scam years before it made headlines, and how he desperately tried to warn the government, the industry, and the financial press.

No One Would Listen demonstrates how Madoff used his reputation as diabolical tool to woo the world’s “smartest” investors.  In the end, just before his demise, Madoff’s reputation was so good that he no longer needed to solicit investors — they came to him.

How will the next mini-Madoff you meet try and make you come to him?:

  • He will have carefully grown a social and business network of name people and companies.  How could someone so connected, with such a brilliant reputation, not be a winner and leader in his field?
  • He will make it appear as though he is doing you a favor by working with you.  Time and again a conman will tell people that his sole objective is simply to “help” people.  How fortuitous that he chose you to help!
  • Ironically, many unscrupulous types forge reputations by starting charitable organizations, making “giving back” a central theme, and/or appearing at high profile charity events.  How could a philanthropist be bad?
  • Those trading on reputation will present an appearance of wealth and success, and seem so generous as to be selfless.  Selfless people are to be trusted, right?
  • There may be a religious or spiritual component to reputation.  Religious and spiritual people are “pure” in many peoples’ eyes — their reputation is beyond reproach.
  • He will obtain the endorsement from, or membership in, seemingly well known organizations.  Here’s a little known (outside the legal community) trade secret:  did you know that lawyers pay money and have friends endorse them in order to get on those seemingly exclusive “Top 50 Lawyers” lists and magazines?
  • Reputation can be built in as little as hours or days on internet, which has made it easier than ever to cultivate reputation.

 

CRACKING THE CODE

Ignoring reputation is simple, but not easy.  Those who cultivate solid reputations are very skilled at their craft.  The siren song of a good reputation has fooled many a smart business person and investor.

Due diligence and common sense are the keys to overcoming the instinct to rely too heavily on reputation.  For example, consider a significant background check and otherwise thorough vetting when hiring a key employee or business partner.

Do not stop there, however.  Always be willing to ask challenging questions of your employees, business partners, and others with whom you trust your money or livelihood.  Defensive responses and ambiguous (non)-answers are obvious clues that something is amiss.

Asking good questions and evaluating the veracity of the answers is much easier when one is not left starry-eyed by another’s seemingly “impeccable” reputation.  In short, do not whistle past the graveyard — always be willing to be objective and proactive about your situation.

Avoid confirmation bias.  This is “the tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses, while giving disproportionately less consideration to alternative possibilities.”  Time and again I have seen this bias lead successful business people to ignore hard data, stay in bad deals, or continue to believe in unscrupulous business partners or employees.

In conclusion, be your own Sherlock Holmes.  Make it your business to know who you are dealing with.  Use your cognitive tools to separate the wheat from the chaff.

As you ponder these ideas, enjoy some of my favorite — and applicable — Sherlock Holmes quotes:

  • “It is a capital mistake to theorize in advance of the facts. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.”
  • “Never trust to general impressions, my boy, but concentrate yourself upon details.”
  • “The world is full of obvious things which nobody by any chance ever observes.”
  • “How often have I said to you that when you have eliminated the impossible, whatever remains, however improbable, must be the truth?”
  • “My name is Sherlock Holmes.  It is my business to know what other people don’t know.”
  • “I shall be my own police.  When I have spun the web they may take the flies, but not before.”

For further information on hiring and managing employees, business partnerships, employment and shareholder disputes, or other general commercial matters, contact Art Bourque at Bourque Law Firm.

THE CONFIDENCE GAME: HOW TO GUARD YOUR BUSINESS AND FAMILY AGAINST THE BEST CON ARTISTS

One who deceives will always find those who allow themselves to be deceived.  Machiavelli.

Con men roam the corridors of country clubs, infect industry meetings, and seem to magically materialize just when needed  — “helping” those in a time of need or in search of prosperity.  Prosperity, of course, is a euphemism for money.  Con men promise money and deliver misery.

Cons result in billions of dollars of losses and waste.  On a micro level the con man wrecks business and family wealth; on a broader level cons can destroy an entire nation’s economy.

Why, then, are there no courses in college or business school on con men? Why don’t we teach our children how to spot and avoid these monsters cloaked in legitimacy?   Because our schools and households are behind the curve.

The purpose of this article is to balance the playing field.  Con artists are just that — they are artists. To hold one’s own against such an artist requires understanding the dark art of the con.

YOU’VE BEEN HAD AND YOU DON’T EVEN KNOW IT

It is estimated that only 37% of people who have been the  “mark” of a con man even know they have been conned.  This astonishing statistic is depressing:  if just over one in three people recognize a con after it has happened, how can there be any hope of identifying a con man before he has his hooks in you?

The Confidence Game: Why We Fall for it Every Time is a fascinating place to start for those seeking to look inside the world of the con man.  More important, the book provides numerous anecdotes and tips to enable readers to spot con men and avoid being sucked, along with their money, into the con’s painful predicaments and emotional escapades.

From multimillion-dollar Ponzi schemes to small-time frauds, Maria Konnikova pulls together a selection of fascinating stories to demonstrate what all cons share in common, drawing on scientific, dramatic, and psychological perspectives. Insightful and gripping, the book brings readers into the world of the con, examining the relationship between artist and victim. The Confidence Game asks not only why we believe con artists, but also examines the very act of believing and how our sense of truth can be manipulated by those around us.

WHAT TO LOOK FOR — IF YOU CARE TO LOOK

A recent book review of The Confidence Game puts it best:

Con artists aren’t just master manipulators; they are expert storytellers. Much as we are intrinsically inclined to trust, we are naturally drawn to a compelling story. Just ask any advertising executive or political operative. “When a fact is plausible, we still need to test it,” Konnikova writes with characteristic concision. “When a story is plausible, we often assume it’s true.” And once we’ve accepted a story as true, we’re not likely to question it; on the contrary, we will probably unconsciously bend any contradictory information to conform to the conclusion we’ve already drawn. There’s a name for this phenomenon — confirmation bias. It provides the key psychological scaffolding for the long con, during the course of which the mark finds a way to rationalize any number of warning signs.

IN 24 YEARS I HAVE SEEN IT ALL — OR NOT

Many victims of cons are either too impoverished or too shamed to contact a lawyer or the authorities.  Despite this, I have handled a number of investments scams, Ponzi schemes, embezzlements, and the like in my law practice over the last 24 years.  Time and again I have seen victims ignore warning signs and rationalize ANYTHING to assure themselves they have not been conned.

Hanging out in lawyers’ offices is no fun.  So, avoid being conned in the first instance.   Here is what to look for when a person enters your life and “shares” with you how they can help you make money:

  • The con man will flatter you from the start (case in point:  to engender my trust, a  con man recently told me that I was the “most honest” lawyer he had ever met a mere 30 minutes after we were introduced)
  • The con man may have a seemingly “legitimate” background, having worked for name recognized companies or having lots of “contacts” in your industry
  • Cons will tell you that they have obtained a special ability, “formula”, or license to make or get something that no one else possesses
  • Skilled con artists can bring out your least enviable traits, like greed, fear, and insecurity. They well know that promises of outsized returns with no risk will get your attention
  • Cons often work with silent partners (e.g. one con man may tout his silent partner as an industry expert or someone who possesses a product that will make you millions)
  • Cons carefully develop their reputations;  many con men are “philanthropists” and well known in their industry
  • Con men often pose as altruists:  they often state that they entered your industry only to help you or solely to improve humanity
  • Cons mirror their victims — selecting those of the same race, religion, political affiliation, and culture (thus the victim thinks:  he is just like me, he could never deceive or be dishonest)
  • Con artists create crises that require immediate answers (and more money, which they promise will fix everything)
  • Con artists try to make you feel inadequate if you don’t believe them or ask too many questions; many of their “answers” are nonsensical gobbledygook that the victim is shamed into accepting for fear of looking stupid
  • Con artists will isolate you from friends and family who are skeptical of their money making scheme
  • Last but not least, cons will tell you that you will make outrageous sums of money thru a “relatively” small initial investment

CONCLUSION

Have you just met someone who is trying to “help” you navigate a challenging situation?  Are they doing it “just” for you?  Are they immediately flattering you and ingratiating themselves with you — touting their vast experience and name-dropping?

It is possible that this new person in your life has been heaven sent just when you need him.   But, it’s more likely this man is too good to be true.   He is a con man.  Politely tell him to hit the road.

Art Bourque has guarded and guided victims of business and investment scams for many years; he hopes this article will help others avoid being conned or deceived.  Contact Mr. Bourque with any questions concerning this article.  In the interim, “enjoy” this gritty Henry Rollins video, Liar, which symbolizes how a con man thinks and what a con man really looks like on the inside: