Creepy and Costly Frightening Frauds

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GUEST BLOGGER

Mason Wilder, CFE
ACFE Senior Research Specialist

As fraud examiners know, fraud comes in many varieties and touches every type of business. Some fraud stories defy belief due to the audacity of the fraudsters, the context in which they occur, or both. These seasonally appropriate examples of frightening frauds show that fraudsters will consider any type of trick when it comes to scamming victims.

Facilitation through mummification

Stories about mummies generally don’t conjure up connections to fraud, or Nebraska for that matter, but fraud turned out to be the motivation behind a woman’s mummified corpse found in her home earlier this year. The 73-year-old woman had been reported missing by her brother, who lived next door on the same property, weeks before the morbid discovery. Investigators spoke with the woman’s daughter, who lived with her mother, and attempted to access the home but were denied by the daughter — who claimed that her mother was with an unknown friend at an unknown location. Ultimately, a subpoena for the missing woman’s bank accounts revealed a charge at a Dollar General store and surveillance footage showed the woman’s daughter using her mother’s debit card.

After obtaining a search warrant for the missing woman’s residence, authorities were shocked at the conditions of the home, which included buckets and jugs of human feces and urine, even before they found the woman’s corpse — which had been mummified with newspaper and bedding after she died toward the end of 2020 of natural causes. Rather than report the death and have the body properly disposed of, the woman’s daughter decided to continue spending the social security disability money deposited monthly into the woman’s checking account. The daughter was charged with financial identity fraud and abuse of a corpse.

Ghost brokers

The U.K.’s national fraud and cybercrime agency, Action Fraud, recently issued warnings about an emerging scheme that has been dubbed “ghost broking.” Unlike the Beetlejuice film’s premise, this scheme does not involve hiring spirits to scare someone away; instead it involves the much less spooky realm of car insurance.

According to Action Fraud, these ghost brokers pose as brokers for established and legitimate insurance companies, offering car insurance policies at rates well below the market price, then forge or falsify documents to secure a policy only to cancel it soon after. Victims, generally cash-strapped and younger, don’t discover they’ve been bamboozled until they try to submit a claim or get pulled over by police and have to provide insurance documentation. So far in 2021 alone, these ghost brokers have caused losses of more than $1 million, with the average victim losing around $3,000.

Vampire facials

The eternal youth and immortality of a vampire makes perfect sense as a marketing gimmick for a beauty industry service. However, when the service involves elements that justify vampiric references, lots of things can go wrong — particularly if fraud is part of the practitioner’s business model. In April, authorities charged a spa owner in New Mexico with 24 felonies, including racketeering, fraud, money laundering, tax evasion and practicing medicine without a license in connection with “vampire facials” administered at her business.

A vampire facial procedure consists of drawing blood from the customer, spinning it in a centrifuge to extract plasma, and then injecting that plasma into the customer’s facial tissue to stimulate repair and regeneration. Similar therapies are used to treat injuries with documented success when correctly administered.

However, when a practitioner is willing to illegally conduct the procedure without appropriate medical knowledge and operates in unsanitary conditions, it can produce truly terrifying results. In this case two clients tested positive for HIV after receiving vampire facials from the spa. 

Psychic scams

Perhaps the most common type of fraud with paranormal premises is fraud carried out by purported psychics. According to both the American Association of Retired Persons (AARP) and the FBI’s Internet Crime Complaint Center (IC3), reports of psychic scams have increased since the onset of the COVID-19 pandemic and are increasingly moving online.

Even prior to the pandemic, scams involving some claims of clairvoyance or psychic ability have been popular confidence schemes. This year has been no exception, with several reports of victims being tricked into handing over cash, jewelry and even gold bars at the behest of fraudsters claiming they would remove curses or protect the victims from various supernatural threats.

In Naples, Florida, police announced they were searching for a woman who targeted multiple victims to whom she first offered tarot card readings or other spiritual services before asking them to bring her as much cash as they could gather, then offering to clean the “darkness” from the money in her “temple” in nearby Fort Myers. She ultimately caused losses of around $100,000 before disappearing, prompting the Naples Police Department announcement.

Elsewhere in Florida, an Israeli woman reportedly under the influence of a purported psychic was urged to find a “rich soulmate.” After succeeding in that task and getting married to a wealthy 78-year-old Tampa businessman, the woman was told by the psychic that in exchange for cash payments, she would ward off evil spirits and negative energy that could cause terrible things to happen to her and her family. Within months, the amounts the psychic requested reached $1 million and caused the woman to come up with the excuse of buying a condo in New Jersey as a cover story to obtain a cashier’s check from her husband. When employees of an Amscot check cashing store in New Jersey refused to cash the check, the woman requested her husband split it into three checks — which finally raised enough red flags for him to draw the line and involve the authorities. The wife was arrested at the airport when she came back from New Jersey on charges of exploitation of the elderly and organized fraud. She was ultimately deported back to Israel, while the unidentified psychic was never charged or arrested. 

In New York City, two psychics operating in Midtown Manhattan pleaded guilty this summer to fraud and grand larceny charges after stealing more than $1 million from more than 20 clients over five years. At the sentencing hearing, one victim stated that one of the psychics convinced him his son was being tormented by an evil spirit and that she could help resolve the situation through mystical rituals. A Canadian victim said a $5 palm reading led to her eventually forking over a total of more than $740,000. Although the two psychics claimed in court that they did not have any psychic abilities, the terms of their plea agreement raise some doubts, as they were only sentenced to five years of probation and ordered to pay $200,000 in restitution, which seems like supernaturally light punishment.

SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners