The federal judge overseeing the criminal case against Jordan Belfort, the felon depicted in the movie “The Wolf of Wall Street,” had bad news last month for the syndicated newsmagazine “Inside Edition.” He denied its request for a list of Belfort’s 1,300 victims.
The potential harm from releasing the list to the public would be “substantial,” wrote Judge John Gleeson of U.S. District Court in Brooklyn, citing the danger of “sucker lists” coveted by frauds on the prowl for easy marks.
Financial criminals go to great lengths to hunt down and size up their prey, buying lists of people who attend investment seminars, mailing postcards and spamming investors with email and inundating them with phone calls. But to the con artist, nothing can top the “sucker list.”
“It’s pretty well-known in the fraud world that the best list to get is the list of people who have already been taken,” said Doug Shadel, a specialist on fraud schemes and the elderly for AARP in Seattle. “The judge is right not to let the public see that list because those are the most vulnerable people.”
More than 8,000 complaints were lodged with the National Consumers League last year, with victims reporting a variety of frauds, including “phishing” scams and “sweetheart swindles” in which con artists nurture an online relationship and persuade victims to send them money.
Among non-Internet frauds, though, the fastest growing were those in which investors who already had been victimized were pursued again, according to Fraud.org, a project run by the National Consumers League.
The technique has been used to home in on victims of prominent swindles. In 2010, a sham Nigerian website sought victims of Bernard Madoff’s Ponzi scheme, claiming to have found $1.3 billion of Madoff assets that would be distributed to victims if they would supply the claim numbers from their legal filings and copies of their most recent brokerage account statements.
The site, I-Sipc.com, was shut down after regulators caught on. The Securities and Exchange Commission called it “a fake mirror image of the Securities Investor Protection Corp.’s (SIPC) website.” SIPC is a nonprofit organization that provides some financial protection to customers when brokerage firms fail.
Shadel said he was surprised at first to learn that con artists preferred to focus on investors who had already fallen for swindles because he expected that victims would be on guard. “Why would you want to call somebody who just lost $10,000 to an oil and gas scam?” he asked.
But in interviews with con artists during his career as a consumer advocate and a special assistant to the Washington state attorney general, Shadel learned that, in the view of criminals, the victim who has lost $10,000 in an energy fraud has passed the test of being willing to write a large check to a stranger over the phone, becoming a perfect target.
“Con men told me the first thing they do is let the person rant and rave about their losses, and they write down everything the person says,” Shadel said. Just like the burglar who goes into a jewelry store the day before robbing it, “They’re casing the mind of the victim by finding out what their hot buttons are.”
Victims get on criminals’ radar screens “basically because they respond to something,” said Anthony Pratkanis, a professor of psychology at the University of California, Santa Cruz who has listened to 645 audiotapes of criminals pitching undercover investigators. Con artists compile names of people who have gone to investment seminars, dropped a business card in a fish bowl at a restaurant or signed up for a free trial of an investment newsletter, he said.
They also find their prey by buying lists of people who have responded to mailings for free sweepstakes. A list that is currently offered online zeros in on “a unique blend of interest-sourced responders” who have entered a sweepstakes and successfully applied for credit.
In his 2012 book “Outsmarting the Scam Artists,” Shadel told the story of a boiler-room operator that hired an attractive young woman “to go to work for a competing boiler room” so that she could steal the competitor’s list.
Law enforcement authorities sometimes seize documents that include lead sheets that have been marked up by criminals who profiled their targets, Pratkanis said. “There are a lot of handwritten notes” on those lists that mention favorite sports teams, the targets’ professions and illnesses like Alzheimer’s, he said. Criminals pass those sheets around, enabling others in a boiler room to make a fresh pitch with some inside knowledge about the person on the other end of the phone. The Seattle Seahawks fan might receive a phone call during which the con artist laments a loss by the team on the previous night, Pratkanis said.
Fraud specialists say the most vulnerable victims are those who have experienced some negative event, like a death of a spouse, a financial reversal or a serious injury or an illness in the family. “Events like these chew up your cognitive capacity, so you might not do the safe practices you used to,” Shadel said.
When AARP compared fraud victims to nonvictims in a study released in March, it found that victims were more likely to click on pop-up ads, sign up for free trial offers and to post their personal schedules or calendars online.
The primary target for investment frauds is a man in his 50s or 60s with high financial literacy, Pratkanis said. Con artists flatter and bond with targets who consider themselves to be savvy investors, he said. “They say ‘You are an investor, you know what’s going on.’ ”