Faces of Fraud: Cases and Lessons from a Life Fighting Fraudsters

Chapter 2

A Short History of Fraud in America

Sadly, fraud has a long and storied history in America. There is the saying “Everything old is new again.” That definitely applies to the incidence of schemes and scams taking place in the world of fraud. Old fraud schemes are continually being resurrected to defraud consumers and businesses out of billions of dollars. Whether it is a Ponzi scheme, corporate accounting fraud, advance fee swindle, or a boiler room scam, they all began many years ago and continue to claim victims today.

As a society, we have faulty memories when it comes to fraud. Although fraud schemes are usually the subject of intense media scrutiny and reporting, once the headlines fade, we often forget the warning signs and allow ourselves to fall victim again. Is it that human frailty, naiveté, and greed are too great for society to overcome? It sometimes seems that way, as efforts in education and awareness either fail or lose steam once the focus shifts to the next major headline.

One trait that all successful fraud investigators need is vigilance. In this chapter you will find just a small sample of historical mail fraud cases that reinforce the importance of vigilance in recognizing red flags and embracing best practices in preventing fraud. The Ponzi scheme is a vivid example of where we failed to learn from history, and consequently suffered huge financial losses as well as significant emotional impact. The Bernard Madoff fraud could have been avoided had ...