Advance fee fraud: the big lie

DOIhttps://doi.org/10.1108/eb025651
Publication Date01 Jan 1995
Pages283-289
AuthorGerry Squires
SubjectAccounting & finance
Journal of Financial Crime Volume 2 Number 4
Advance fee
fraud:
the big lie
Gerry Squires
Received (in revised form): 8th December, 1995
Gerry Squires
is fraud
advisor
to the
National
Fraud and
Investigations
Group of
Coopers
&
Lybrand,
and is based at their London
offices.
He
was formerly Head
of
the
City of
London Police
Fraud
Squad,
and his
experience
in the
investi-
gation
of
major
City
frauds spans more
than 22
years.
ABSTRACT
Negotiable instruments by means of which
large
sums of
money
are
transferred
between
banks
have
long been a source
of fascination to
the more
sophisticated
fraudsman. Careful
study of the instruments and their conven-
tional
usage,
combined with the exercise of
imagination and knowledge of
psychology
have
produced
an innovative and audacious
strain
of fraud which
continues to
develop,
and
which
has been
dramatically successful.
INTRODUCTION
To describe advance fee fraud by reduc-
ing it to its essentials is to invite incred-
ulity that anyone let alone
experienced and sophisticated business-
men
could be duped by such a trans-
parently dishonest proposition, but the
continuing and spectacular success of
this form of fraud is testimony to the
presentational and psychological skills of
its most able practitioners.
The elements are these: the victim is
induced to believe that by paying a sum
of money to the fraudsman, he will
secure access to a substantial sum of
money, either by way of a loan, or by
way of a highly attractive investment
opportunity. On this bare framework,
fraudsmen over the last three decades
have built structures of ever-increasing
variety and ingenuity.
In its earliest form advance fee fraud
was relatively simple, and examples
coming to the attention of Police Fraud
Squads bore stiking similarities. Its first
victims were businessmen with cash-flow
difficulties, who were experiencing
problems in borrowing from conven-
tional lenders. A chance meeting at a
social or business event, or on a train or
in an airport lounge, would produce an
introduction to the fraudsman, who
posed as an agent for a principal with
huge funds at his disposal, and who was
looking for worthwhile, long-term
investment opportunities. In these first
meetings the businessman was encour-
aged to believe that there would be no
difficulty in supplying his requirements,
provided that the agent could convince
his principal of the integrity of the busi-
nessman and the security of the loan.
The first stage
It will be seen that this approach places
the businessman in a position of suppli-
cant and ready supplier of financial
information, and puts the agent in the
position of ally, intermediary and emis-
sary in the businessman's dealings with
the unseen and unidentified principal. It
also provides a justification for the
agent's insistence that the businessman
should reimburse all hotel and travel
expenses necessarily incurred.
Page 283

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