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Psychology of Fraud: Mental Triggers That Leave Us Vulnerable to Scams

May 4, 2020 //  by Rocky Marmolejos//  Leave a Comment

John Gentile and Lorn Leitman met in the Army Reserves in the early 1970s and quickly became best friends. After their military service, Gentile graduated from medical school and established a successful chiropractic business in South Florida. Mr. Leitman became a licensed attorney and CPA. For almost four decades they strengthened the bonds that were formed during their Army days—they traveled together, called themselves brothers; Gentile even became a godfather to Leitman’s daughter.

In 2012, this storied friendship came to a bitter end when Leitman received a 17.5-year prison sentence for operating a Ponzi scheme that defrauded investors, including Gentile, of a total of $4 million dollars.  

Mr. Gentile’s ordeal was in many respects similar to the experiences suffered by other victims of fraud. Yet, a pervasive misconception about financial fraud victims is that they are most often elderly, naïve, greedy, passive, socially isolated or uneducated people—when in fact, research suggests the opposite. The truth is that fraudsters and scammers target all people, regardless of their demographics.

In fact, having a brain makes you a good candidate for being scammed because the human brain is wired for persuasion. Humanity’s susceptibility to persuasion, like much of our behavior, is a product of evolution. From an anthropological perspective, the ability to be persuaded was a biological necessity required in order to get a group of individuals to act in the interest of the collective. In exchange for giving up a strongly held opinion, a tribe member would receive protection and inclusion into the tribe. In addition, there are a series of human tendencies and needs—our belief in the goodness of others, the desire to please, the need to be cooperative, our affinity for and willingness to believe in stories, etc.—that, if satisfied or met, can be exploited by skillful and unethical individuals. 

Here are some of the mental mechanisms by which our brains can expose us to scams.

But I’m Too Smart

Believing that you are incapable of falling for a scam leaves you in a highly vulnerable position because your guards are already down. Social scientists call it the “illusion of invulnerability”—the belief that you are free from a danger because of a perceived advantage or a false sense of optimism. The invulnerability illusion was illustrated in a Better Business Bureau study that found that younger and educated people—more so than elderly people—were more susceptible to scams because they never expected to be targeted. In the study, which surveyed more than 2,000 adults, 69% of victims were under the age of 45, and 78% had a college or graduate degree. 

The Need to Please

We supposedly live in an age of cynicism and selfishness. The nightly news airs a string of negative and sensationalized stories, Facebook can be a blackhole of toxicity and the neighbor rants about how there is no decency anymore. But the fact is that most people are nice. Not only are people nice but they are driven by a need to be generous and giving, especially when others have been generous to them. This need for reciprocity can be a dangerous weapon in the hands of a con artist.  

For example, if someone were to offer you a lucrative investment opportunity you may, in turn, see it as an act of goodwill. In exchange, you may be pressed into listening to a sales pitch or, worse yet, into making a misguided financial commitment.

The Captive Audience

Through storytelling, early man was able to build community and maintain social order. And even today, when we hear a compelling story, our brain becomes measurably more engaged. When this happens, the neurochemical oxytocin is synthesized in the brain, causing us to develop and associate trust with the storyteller. In movies, this causes us to identify and feel for the characters, but the same principle applies in interpersonal relationships. This is known among neuroscientists as the “you seem trustworthy” signal, and research suggests that “emotionally engaging narratives” inspire prosocial, cooperative behavior in response. Con artists who are good performers or storytellers have an easier time connecting with victims, and victims are prewired to emotionally respond, identify and empathize with them.

A Wolf In Sheep’s Clothing

Humans are social creatures that enjoy spending their time with people who share the same values, passions, beliefs and worldviews. The problem arises when you automatically regard everyone within your group as having the same goodwill and intention as you do.  

Scammers regularly target religious communities—aptly termed “affinity frauds” by law enforcement—because they can easily exploit the trust level that exists between members. Bernie Madoff, who orchestrated the biggest investment fraud in history, stealing close to $65 billion dollars from investors, was able to gain the trust of the Jewish community by exploiting his Jewish affiliations. 

In the case of Dr. John Gentile, the chiropractor and Army veteran, he relied on his close relationship with Leitman and never properly vetted the financial investments he was offered. Gentile saw in Leitman a like-minded individual. It never occurred to Gentile that his friend (and fellow veteran) was capable of scamming him.

F.O.M.O. (Fear of Missing Out)

People are generally afraid of missing out on a “good thing.” And if a “good thing” is available in limited quantities or for a short period of time, people tend to want it even more. Fear of missing out can be a driving force behind many ill-advised financial decisions. Con artists can present opportunities in ways that make it hard for an investor to decline. Scammers may say that the offer must be accepted after the pitch or that there is a cap on the number of investors and that swift action must be taken before it’s too late. In the end, the victim concludes that the opportunity is too good to miss out on without properly verifying the offer.

In Conclusion

By no means an exhaustive look at the way the mind can sometimes make it easier to fall for scams, this post can help with recognizing some of the cognitive pitfalls that can make anyone vulnerable. It is important to remember that if you have been defrauded it is not because of a shortcoming on your part. Naturally, the emotional toll of falling for a scam can be tough to overcome. But it helps to remember that anyone is susceptible to financial fraud—even the best and the brightest. 

Up Next!

Check back for more white-collar crime and fraud news, including the the biggest cons capitalizing on the global Covid-19 pandemic today, and how to spot one when when you see it.

About the Author

Rocky Marmolejos

Rocky lives in rural central Missouri where cattle outnumber people.  As a kid, he enjoyed tinkering with radios but was only mildly successful in fixing them.  Nowadays, he enjoys tinkering with sentences and, occasionally, a vintage sewing machine. 

Category: fraud, human behavior, News, white-collar crimeTag: con artists, cons, fraud, Fraud Watch, human psychology, mental triggers, news, scams

Latest Jeremy Crawford Scam Targets Clothing Brand for Severely Disabled People

April 16, 2020 //  by admin//  3 Comments

Jacqueline and Jack Cameron. Photo courtesy of Jacqueline Cameron.

Starting a business was the furthest thing from her mind when Jacqueline Cameron took a pair of scissors to her husband’s clothes eight years ago. All she cared about was figuring out some way to make it easier for her to care for him so she could keep him at home with her and keep her vow to him.

Jacqueline’s husband, Jack, was a successful chiropractor in his mid-50s when, in the early 1990’s, he was diagnosed with a rare degenerative auto immune disease similar to ALS. Suddenly life as they knew it came to a screeching halt. “It floored us,” Jacqueline says. “It was scary and ugly — no cause and no cure.”

“We thought, ‘What do we do now,’” adds Jacqueline. “I said, ‘One thing is for sure, you are not going into a care home. I will look after you until the end — whatever that means.’”

The doctor told the couple that Jack had only two to five years to live. But thanks to Jacqueline’s loving care and Jack’s determination and will to survive, he managed to slow the progression of the disease and far exceed his doctor’s expectations. But by 2012, he was so crippled by the disease that he was no longer able to dress himself.

That’s when Jacqueline went to work.

Photo courtesy of Jacqueline Cameron.

“I already knew what I was going to do, but I waited as long as I could to give him his dignity,” she explains. “I took some of his clothes, cut them where needed and then inserted zippers. The clothes looked just as good as before, but now I could dress him in under five minutes. When his occupational therapist saw what I was doing, she was blown away. She said, ‘You can’t keep this to yourself. People need this.’”

Super-Fly Adaptive Apparel was born and incorporated in 2013, with a small board of directors to guide Jacqueline along. Though her beloved husband, Jack, passed away in 2016 after nearly fifty years of marriage, Jacqueline took comfort that something good had come out of his illness and that she and her small business were making a difference in the lives of people with severe disabilities. It never occurred to her that someone could be cruel enough to steal her branded idea and money from unsuspecting customers. That someone was Jeremy Crawford working in cahoots with his wife, Amy.

Jacqueline with one of her clients, Sean Crumb. Used with permission from Jacqueline Cameron.

Jacqueline first encountered Jeremy in the fall of 2018, when she was showcasing her garments at an event for small businesses in Calgary. She said he was so excited by what she was offering he came running over to meet her, talking about all the things his online marketing company could do for her. Jacqueline was intrigued enough to meet him at Starbucks to learn more about his online marketing business and invited him to present his idea to her board. They, in turn, did an online search on Jeremy and came across articles detailing a lawsuit by Randall Rush that claimed Crawford had bilked him out of nearly $5 million.

“Jeremy was a little nervous,” remembers Jacqueline. “I don’t think he realized that I had a great board. Glen (one of the board members) said, ‘I checked you out and you have quite a record.’ Jeremy responded by saying that despite the media coverage claiming otherwise, he had actually won the lawsuit. But Glen pushed back, asking why he had to pay the money back.”

In the end, the board told Jeremy they would think about his proposal. But because of Jeremy’s ongoing pressure, Jacqueline agreed to come to his office to meet with him and his wife, Amy, and learn more about their sales projections for Super Fly. That’s when, according to Jacqueline, she was ushered into an upscale office in a prestigious Calgary building that they passed off as their own — even though she knew immediately it was cubicle space for rent.

Despite the skyrocketing revenue projections Jeremy and Amy shared, Jacqueline had experienced enough warning flags to steer clear. She sent them an email passing on the opportunity and held firm even when Jeremy, once more, tried to pressure her.

  • Screenshots of Super-Fly’s actual online store (taken on April 14, 2020). Items from their online storefront were taken and repurposed on the Ulivvo online store without the knowledge or consent of Super-Fly.
  • Screenshots of Super-Fly’s actual online store (taken on April 14, 2020). Items from their online storefront were taken and repurposed on the Ulivvo online store without the knowledge or consent of Super-Fly.
  • Screenshots of Super-Fly’s actual online store (taken on April 14, 2020). Items from their online storefront were taken and repurposed on the Ulivvo online store without the knowledge or consent of Super-Fly.
  • Screenshots of Super-Fly’s actual online store (taken on April 14, 2020). Items from their online storefront were taken and repurposed on the Ulivvo online store without the knowledge or consent of Super-Fly.
  • Screenshots of Super-Fly’s actual online store (taken on April 14, 2020). Items from their online storefront were taken and repurposed on the Ulivvo online store without the knowledge or consent of Super-Fly.
  • Screenshots of Super-Fly’s actual online store (taken on April 14, 2020). Items from their online storefront were taken and repurposed on the Ulivvo online store without the knowledge or consent of Super-Fly.
Screenshots of Super-Fly’s actual online store (taken on April 14, 2020). Items from their online storefront were taken and repurposed on the Ulivvo online store without the knowledge or consent of Super-Fly.

That was the last she had heard of the Crawfords until early March 2020, when she received a phone call from a private investigator.

“She asked me if I knew Jeremy Crawford. I hadn’t interacted with him since December 2018 and I had put him out of my mind. But then it hit me, and I said, ‘Wait a minute, I think I do.’ The investigator replied, ‘Well, he’s got your website.’”

When Jacqueline hung up the phone and went to the Ulivvo website owned and operated by Jeremy and Amy Crawford, she felt physically ill. There, under the Crawfords’ online store, was her Super-Fly brand showcasing Super-Fly clothes that featured her trademark zippers. There was also an attached shopping cart so unsuspecting customers could order the items.

That’s when it all began making sense for Jacqueline. In recent weeks, she had had issues logging into the back-end of her Super Fly website and noticed that sales had dramatically fallen. And after a recent delivery to a customer, the woman remarked that she was sorry Super Fly would no longer be in business. Within days of the shocking discovery, the online store on Ulivvo disappeared.

This coincided with the private investigator’s calls to notify other unsuspecting businesses that their brands were being fraudulently used by Jeremy, including Billy Footwear, another brand that services people with disabilities. Jacqueline can’t prove whether her drop in sales, the back-end issues with her website, or her customer’s strange comment is related to the scam. But the idea that Jeremy would steal her brand, and take money from severely disabled people already struggling to survive is more than she can bare.

Screenshots of the Ulivvo Pro member online store taken in early April 2020, showcasing Super-Fly and Billy Footwear products, as well as other brand name items, that in fact had no affiliation with Ulivvo and were used without the knowledge or permission of the retailers. The Ulivvo online store was taken down days later.

“When you are dealing with disabled people I feel there is no forgiveness,” says Jacqueline. “As Patrick on my board says, ‘This is awful…. It’s hard to believe that someone would stoop to such predatorial, unethical behavior.’”

Jacqueline may be eighty-two, but she’s not going to back down from this fight. The Top 7 Over 70 business owner is determined to share her story as far and wide as possible and is exploring other avenues for recourse.

“I’m not going to move fast,” notes Jacqueline. “I’m going to take my time and do this right.”

admin

Category: Crime Spotlight, Jeremy Crawford, white-collar crimeTag: Amy Crawford, cons, Crime Spotlight, Fraud Watch, Jacqueline Cameron, JerCraw, JerCrawFraud, Jeremy Crawford, Super Fly, TheJerCraw, white-collar crime

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