Category: Fraud

Facebook and Google Stopped $100 Million Fraud

A Lithuanian man, Evaldas Rimasauska, conned Google and Facebook into transferring over $100m into accounts he controlled.

He sent fake invoices to Google and Facebook between 2013 and 2015.

Mr Rimasauskas and his associates posed as Quanta Computer, a hardware company based in Taiwan that had done business with Facebook and Google.
M r Rimasauskas pleaded guilty to wire fraud in federal court in Manhattan, where Judge George B Daniels said the charge could carry as many as 30 years in prison and a fine up $1m or twice the crime’s proceeds.

In a statement, Geoffrey S Berman, the US attorney for the Southern District of New York, said: “As Evaldas Rimasauskas admitted today, he devised a blatant scheme to fleece US companies out of $100m, and then siphoned those funds to bank accounts around the globe.”

Mr Rimasauskas was extradited from Lithuania to the United States in 2017.

In a court appearance, Mr Rimasauskas said that he had knowingly participated in fraud and that his role was to set up the bank accounts to facilitate the scheme, Bloomberg reported.

After money was wired from the tech companies to the bank accounts in Cyprus and Latvia, the Justice Department said in its statement, Mr Rimasauskas “caused the stolen funds to be quickly wired into different bank accounts in various locations throughout the world, including Latvia, Cyprus, Slovakia, Lithuania, Hungary, and Hong Kong.”

In emailed statements Sunday, Facebook said the company had “recovered the bulk of the funds shortly after the incident and has been cooperating with law enforcement in its investigation”.

Google said it had “detected this fraud and promptly alerted the authorities. We recouped the funds and we’re pleased this matter is resolved”.

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Dodgy Reputation Management Companies

Online reputation management is a specialized field that requires a solid understanding of marketing, branding, public relations, website content, social media and more.

Since online reputation management services are in high demand, many companies enter this industry despite not having the required skills. They attract clients by making big claims, unrealistic promises and commitments they probably  cannot fulfil. This can end in a waste of money for their clients and damaging to their online reputation.

One common approach us to offer what seems to be a great deal, complete with guarantees. But when the project has started, then the client finds out that the contract only covers basic work and a lot of extra payments are needed to complete the work to a good standard.

E.g. only carrying out very basic SEO improvements and wanting more money for anything further.

Once you have an Online Reputation Management in place, they will have all of your logins and passwords for social media accounts, website etc. And that can make it difficult to get rid of them safely.

Some poor online reputation management companies work really hard in the first month to win the client’s confidence, then sit back and simply monitor until near the end of the contract when they wake-up again and start new actions.

The Fake Guarantee

Many online reputation management business offer a guarantee for the client of being at the top of relevant Google searches, double the number of visitors to a website, 50% increase in sales etc. But these are unrealistic.  There are ways of fulfilling the guarantees without providing anything of value to the customer so don’t be taken in by these.

E.g. it’s easy to be number one on Google for a long keyword phrase that no-one would ever use.

The worst scam is where the fake online reputation management companies create negative content themselves and get it ranking high on Google. Once the client gets to know about it, the fake online reputation companies remove the negative content and pretend as if they had to work hard for that result.

Selection of an Online Reputation Management Company

If you do want to employ an Online Reputation Management Company then do your research to ensure they are the real deal and not a waster of money.  For any company you are considering:-

  1. Research the company in detail, looking for objective evidence and reviews.
  2. Research their team on LinkedIn or other relevant platforms to see if they have the required skillset and experience to handle the account
  3. Take up references I.e. contact their previous customers
  4. Discuss with the company a possible plan of action, and if they make unrealistic claims then avoid them
  5. Check any ‘awards’ quoted are genuine

If you have any experiences with scammers, spammers or time-waster do let me know, by email.

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The Man Who Invented an Island and Sold It

In the 1820s there were no online maps, GPS devices or location trackers, but there were good printed maps.

So,how did a Scots guy convince lots of people to part with their hard earned cash to buy a share in or even to visit the imaginary island of Poyai, off the coast of central America, which was never on any maps?

Gregor MacGregor convinced people to invest and even buy land on this small Latin American island. He even printed a guide to the island documenting its rich natural resources and geography.

In 1821, the city of London heard reports of a previously unknown nation nestled on the Caribbean coastline of what is now Honduras. Called Poyais, it was supposedly a lush and untapped paradise of fertile farmland, rolling hills and gold-rich streams. Its native “Poyers” were described as a friendly and hardworking people, and its capital, St. Joseph, was a European-style settlement dotted with public buildings and even an opera house.

Poyais boasted a deep-water port and a pleasant climate that made it immune to the scourge of tropical disease. It was, a guidebook claimed, “one of the most healthy and beautiful spots in the world.”

MacGregor inspired trust by using charm and citing his past military achievements—which he greatly exaggerated—but he also came armed with a series of fake official documents. He produced a handwritten land grant from the Mosquito King, a national flag, charts and maps showing Poyais’ borders, and even a copy of a proclamation he had made to the country’s natives before taking off for Europe.

MacGregor cashed in by floating a 200,000 pounds sterling Poyais bond in the London money market. He also started peddling land and titles to would-be colonists.  Enterprising settlers were told they could purchase 100 acres of pristine Poyais farmland for just £11, The more well-to-do bought officers’ posts in the Poyais military, while other investors were lured with the promise of posts as merchants, government employees and bankers.

In September 1822, when a ship called the Honduras Packet set sail from London with several dozen Poyais-bound pilgrims. Four months later, a second ship carried nearly 200 more settlers out of Leith, Scotland. Some had even converted all of their cash to Poyais dollars, which MacGregor had begun printing in Scotland. Yet after being deposited on the coast of Central America, the passengers made a startling discovery: not only was there no capital of St. Joseph, there seemed to be no Poyais at all. Instead of the settlement they’d been promised, they found only mile after mile of dense, insect-infested jungle.

The confused settlers built ramshackle huts and tried to survive while they waited for help, but it wasn’t long before malaria and other diseases spread through their ranks.  Help finally arrived in May 1823 and the surviving Poyers were evacuated, but the misadventure had taken its toll. Of the roughly 250 emigrants that had left England and Scotland, two-thirds eventually died from tropical diseases.

Even after the first Poyais survivors returned home, MacGregor still wasn’t brought to justice. His supporters—including some of the unfortunate pilgrims—even defended him in the press and argued that the colony’s failure must have been the fault of his agents and collaborators. In 1823, he fled England and set up shop in Paris, where he attempted to repeat the Poyais con all over again. He published a Poyais constitution, secured a bank loan and once again began recruiting settlers. This time, however, his phantom country attracted suspicion from the French authorities. MacGregor was thrown in jail in December 1825 and tried for fraud and conspiracy, but was acquitted due to lack of evidence and released eight months later.

Despite his brush with law, MacGregor continued promoting his Poyais schemes for another decade. In 1827.  MacGregor left for Venezuela, which had awarded him a full military pension for his participation in its wars of independence. He died there in 1845, having never been found guilty of a single crime.

This story reads like an April Fool but it is genuine – including that more than 150 people died because of this scam.

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PSA Consults on Phone Subscription Services

The PSA is consulting on proposals to introduce new Special conditions for all phone-paid subscription services. This follows the review that commenced in September last year.

The proposals are intended to reduce consumer harm, build confidence in the market and support good growth. The consultation closes on 16 April 2019. You can view the consultation on the PSA website https://psauthority.org.uk

The PSA is also publishing new research undertaken by market research agency Jigsaw, on what consumers expect when engaging with phone-paid subscription services – from discovery, signing up, using, and exiting a phone-paid subscription service.

Subscriptions have enormous potential as a growth area for phone-paid services. Major brands like Spotify have started offering phone-payment for subscriptions as a default payment option. Other music, video, film and TV streaming, books and other services are now also using or considering using phone-payment on a subscription basis.

However, 95% of complaints to the PSA over the last twelve months have been about subscription services. The reputation of phone-paid services is suffering as a result, and there are cases where PSA Tribunals have issued very substantial fines and prohibitions to non-compliant providers.

PSA recently commissioned research into consumer expectations of phone-paid subscriptions from Jigsaw, a market research agency. This research includes some interesting and significant findings.

  1. When purchasing a subscription, many consumers are not aware that phone payment is an option and therefore they may not know they are in a purchasing environment.
  2. They expect clarity in a payment process, to ensure that it is made clear what they are being charged for, how they will be charged, and that the payment is for a subscription.
  3. Consumers expect to see payment cues and friction that they are familiar with from other forms of digital payment, such as use of an account and password or a PIN number.
  4. Many consumers say that, provided the process is as secure and transparent as for other payment methods, subscriptions paid via a phone account can be a convenient option for accessing content.

With all of this in mind, the PSA is proposing changes to the regulatory framework for subscriptions to reduce consumer harm, build confidence in the market and support good growth. The proposals are aimed at ensuring that:

  • The process of discovering and signing up for subscription services is as clear as possible for consumers – including ensuring it is clear when a consumer is viewing promotional material and when they have entered a purchasing environment
  • There are multiple steps in the payment and sign-up process for recurring charges, so that consumers engage with the process and are fully aware of what they are signing up to
  • Consumers receive receipts that contain the relevant service information, in a manner more consistent with what they are used to from other forms of digital payment, to help ensure that consumers engage with these messages.

High complaint volumes, and the perception that operator billing is a vehicle for ‘scams’ are in no-one’s interests. PSA think that the proposals in the consultation document will address these issues: providing consumers with a payment experience that they understand and trust and helping to support growth of phone-paid subscriptions.

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Legal Aid Fraudster to Pay £22M

John Blavo ran Blavo & Co. solicitors. He specialised in mental health law and clinical negligence.

But his real speciality was creating fake legal aid cases and charging the government for non-existent cases.

In fact, over 23,000 such fake cases in three years.

He and his family lived the high life – mansions, supercars, holidays around the world etc.

His company doesn’t seem to have been especially talented at making the fake cases – but the Legal Aid Agency carried on paying out even when there were no records of the cases he was claiming for.

Eventually the Legal Aid agency did begin to suspect and started to investigate.

Between April 2012 and March 2015, he claimed fees from for representing clients at mental health tribunals in 24,658 cases but only 1,485 cases had actually happened.

In November 2015, Blavo & Co. was shut down by the Solicitors Regulation Authority.

A high court judge ruled that although Blavo & Co was doing about 1,000 cases per year they were claiming for about 9,000.

As sole shareholder of Blavo and Co, John Blavo was ordered to pay back £22 million but he has not actually been convicted of any offence yet. He is under investigation, but why are the Police taking so long?

No wonder the legal aid is so high if this shows the quality of checks they make before paying out.

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TSB Punished by Customers

A recent poll by Which magazine shows that TSB is now regarded as poor and rated even lower than RBS and other lenders responsible for the financial crisis.

In February 2018, TSB was highly ranked by its customers as a bank you can trust, but then the sky fell in for the bank when their new IT systems that hadn’t been tested sufficiently collapsed and many customers were locked out of their accounts for days or weeks in some cases.

Some customers had accidental access to other people’s accounts, the bank had little idea of what to do and their communication with customers was poor leaving many very angry at what happened.

To make matters worse, many fraudsters jumped on the bandwagon and began sending fake emails and making calls to TSB customers, leading to a large number of frauds.

The problems led the FCA to begin an investigation with the Prudential Regulation Authority.

Up to 1.9 million people using TSB’s digital and mobile banking found themselves locked out of their bank accounts following the migration of data on customers from former owner Lloyds’ IT system to a new one managed by current owner Sabadell.

TSB CEO Dr Pester told MPs on the Treasury Committee that he took “absolute responsibility” for the problems, but said the migration of billions of customer records was successful “to the penny” and the underlying engine of the bank was “working well”.

Paul Pester lost his job but the damage done to consumer confidence will take a long time to recover.

The problems had a simple cause – inadequate testing of the new systems in order to save time and stay on schedule.  That was a bad judgement.

The lesson is clear – do not take risks with customer data as you may end up very sorry.

If you’ve had bad experiences with TSB – let me know by email.

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