Fraudulent Documents As Contagious Infection

By Matthew B. Greene, JD

Copyright 2007, 2009 STILAS International Law Services, P.A.

All International Rights Reserved.

Matthew Greene is the founder of STILAS, originally a government contractor for international economic security. Matthew Greene is a former Chief of Special Operations in anti-organized crime and anti-corruption, and is an international legal expert and career strategic advisor to governments, agencies and ministries in various countries.

This article is a brief extract from one of a series of expert reports developed by Matthew Greene and STILAS, in cooperation with certain federal law enforcement and national security agencies of multiple countries, for protection of national critical infrastructure in the private sector.

Introduction

Depositors, investors and clients are frequently attracted and seduced by the fraudulent proposals that lure them away from the safe and real transactions. It is impossible for any honest business to "compete" with fraudulent scams. The only task of fraudsters is to promise anything and everything that they think people want to hear to give up their money. The challenge of legitimate professional services is to truthfully and accurately report the realities (and limitations) of their genuine capabilities and targeted results. The expected yields and assurances of results, in compliance with licensing obligations and a multitude of national and international laws, can never compare to the outrageous claims and clever deceptions of experienced fraudsters. Compounding the problem is the fact that such fraudulent proposals are "infectious", often "contaminating" legitimate practices through confusion and distraction, primarily because they are so widely and aggressively promoted and circulated.

Dangerous Trend of Copied Standard Fraudulent Documents

Every day, intermediary brokers and financial advisors worldwide are exposed to high volumes of fraudulent proposals. Most do not have the benefit of specialized training to detect fictitious terms in the many documents, or the investment banking experience to know what transactions are possible to close on or not. As a result, brokers, and even lawyers, become immersed in a false world of imaginary terminology invented by creative fraudsters, who are masters in the art of winning confidence (the origin or the term "confidence man" or "con-artist").

Inevitably the brokers and lawyers begin to believe that they know something about the transactions, and come to adopt the false language of fraudsters, bringing those fantasies into other legitimate transactions. This causes great confusion, making it difficult to assess the validity of any proposal, and hard to distinguish whether a broker or advisor is a co-conspirator in a fraud, has been deceived by a fraud that he is unwittingly promoting, or simply has developed a bad habit of using the infectious fictitious terminology even when describing a legitimate transaction.

The Metropolitan Police Service of London (founded in 1829, traditionally known as "Scotland Yard", and now located at "New Scotland Yard"), explains that "some of these terms may be correct banking expressions or close derivations of them. Some may be just meaningless or nonsensical however they have been used so many times over the years that they themselves have gained some history and credibility." (Metropolitan Police Service of London, Specialist Crime Directorate (SCD) Operational Command Unit (OCU) on "Economic and Specialist Crime" ("SCD-6"), Standing Fraud Alert - "High Yield Investment Fraud".)

The majority of lawyers, financial advisors, brokers and clients have been systematically overexposed to an excessive volume of fraudulent documents, consistently using the same false terminology and misleading instructions, for decades. Making the situation much more dangerous, since the majority of brokers and clients avoid the involvement of hired licensed legal counsel to draft professional legal instruments for transactions, they predominantly copy from the many fraudulent documents that are in wide circulation internationally. Such copying usually involves an entire proposal or contract, but can also inadvertently copy only one damaging part, such as instructions for a fictitious or misleading procedure.

As a result, there is now a large body of standard contracts, all derived from fraudulent scams that are known to national and international law enforcement agencies, that are being circulated worldwide to all who enter the financial sphere, and being unknowingly copied by those attempting to promote similar but lawful transactions.

The US Federal Trade Commission (FTC) emphasizes that "The materials are fakes, according to enforcement officials, and the contracts the scam artists ask consumers to sign are worthless." (US Federal Trade Commission (FTC), FTC Facts for Consumers, The Truth About Advance-Fee Loan Scams, May 2005.)

As New Scotland Yard points out, the contracts or "letters are often littered with spelling mistakes and bad grammar. This is a deliberate ploy by the fraudsters to induce the potential victim to believe that he is dealing with uneducated people who would not have the ability to defraud him / her. Nothing could be further from the truth! The majority of victims prove to be professional business people, doctors and lawyers." (Metropolitan Police Service of London, "SDC-6" Economic and Specialist Crime, Standing Fraud Alert - "419 Fraud / Advance Fee Fraud".)

The unfortunate consequence of the above factors is that many lawyers are mislead or deceived into "approving" or "endorsing" proposals and contracts that are directly derived from fraudulent documents. This inadvertently causes even more damaging confusion, as it leads third parties, as well as the principals themselves, to further believe in the effectiveness, safety and credibility of documents that should have been identified by experts as based upon and copied from risky and fraudulent documents that can cause damages and liabilities.

The US Treasury Department identifies the primary cause of losses by criminal theft, and the main enabling factor of the mechanisms that accomplish that theft, as the common type of unprofessional contracts, containing fictitious terms that have no financial or legal meaning, that are copied from known fraudulent schemes, and widely circulated among intermediary brokers. In particular, it blames "ambiguous wording in the documentation" that results from misuse of banking terms or the use of fictitious and meaningless terms. (Office of the Comptroller of Currency (OCC) of the US Department of Treasury, OCC Alert on Fraudulent Investment Programs, Alert 2001-3 of March 30, 2001, issued to US national banks, State banking authorities and federal regulatory agencies, signed by Brian C. McCormally, Director of Enforcement & Compliance Division.)

Red Flags Indicating a Document Originating from Fraudulent Schemes

"To give the scheme an air of legitimacy, the promoters distribute documents that appear complex, sophisticated and official." This central goal is primarily accomplished by using fictitious terminology that sounds important and highly technical, but yet is unverifiable to avoid exposure of fraudulent claims. (US Securities and Exchange Commission (SEC), Advisory How Prime Bank Frauds Work, issued October 30, 2003 by the SEC Division of Enforcement.)

According to the FBI: "Certain words and phrases are repeatedly used ... Some have absolutely no meaning in commercial banking or business practices and others are used in ways contrary to standard practices." (Federal Court of South Carolina, Affidavit for Warrant of Arrest, Section 11, sworn statements under oath by FBI Special Agent Paul A. Jacobs in the "Sweet Tea Masquerade" case, Affidavit filed March 7, 2003.)

Misrepresentation of International Chamber of Commerce (ICC) documents is a "red flag" on the majority of law enforcement lists. ICC itself "issued a warning to investors" about fraudulent programs "falsely quoting its name and rules." According to Eric Ellen, Executive Director of ICC Commercial Crime Services (CCS), the proposed investment instruments "are falsely said to conform in all aspects with the Uniform Customs and Practice for Documentary Credits as published" by ICC. "Reference is made to ICC Publication 500, the current version of the documentary credit rules that came into force in 1994." (International Chamber of Commerce (ICC), Banking Instrument Scam, Paris Advisory of May 7, 1998.)

Some terms seem to come from completely different spheres of life that have no rational relation to banking, finance or law. For example "rolls and extensions" are used in a hair salon, and "good clean and clear" better describes a skin treatment at a beauty salon. Con artists seem to use absolutely any available words to push the right emotional and psychological buttons to give their targeted victims a false sense of confidence in the offering, and a false sense of importance and sophistication of the transaction. Having a whole world of their own terminology also supports the deception that the fraudsters are experts in something serious and complex that requires trusting them to bring profits to the mere layperson.

Matthew Greene and STILAS avoid accepting any business from the general public. Consultation is generally provided only to government agencies and banking institutions. Provision of services to the private sector may be considered only upon introduction through trusted partners or colleagues of Matthew Greene and STILAS.