The media seem to report a new mega fraud or scam every day.
We have all been following the news about Madoff and the trail of destruction
left by his actions. Earlier this month Kazutsugi Nami, a Japanese businessman
was arrested for fraud of an estimated £1.4 billion. Allegedly Nami operated
the biggest ever “semi-ponzi scheme” and had promised to build a paradise on
Earth for investors, some of whom even called him divine. Lawyers investigating
him claim that the 75 year old Nami has a lot of experience running such
schemes and that his cult of personality had pulled in thousands of elderly and
housewives who thought they were given a stake in a get rich quick scheme. Well
dressed and groomed, Nami was self-confident even as police came to take him
away. Nami lured in his “shareholders” by building a cult-like status. He went
as far as claiming he had a divine decree to eliminate poverty from this world,
a phrase that is recurrent throughout his blog. Using free translation machines
such as http://www.freetranslation.com,
I would recommend anyone that is curious to have a look at http://enten.at.webry.info/ and use translation
machines to get a peek into how Nami played the (Japanese) masses.
Nami was claimed to be so charismatic that investors were
almost like worshippers in a Nami cult in which Nami was able to gain control
over members’ minds, some of then even calling him a God. Attracting investors
further took place by organizing large entertainment events featuring well
known artist. He started his own currency called: “enten”, allegedly promising
returns of 30% plus returns per annum on deposits. It will be clear where those
deposits most likely went. Nami defended his scheme until the end, try
translations of his blogs in the days before he was arrested.
Reportedly has mastered scams throughout his life and had
his first run-in with police in his late thirties. In 1978 he served a prison
sentence along with other corporate officials for another scam. It is
understood that during detention he wrote “On Happiness”, which served as the
foundation for his latest company.
Hindsight is a beautiful thing they say, but at the same
time a New Zealand advertisement speaks of “learning from the past to prepare
for the future.” Both cases brought back lessons learned from the book
Hustlers, Rogues and Bubble Boys, White Collar Mischief in New Zealand, by
Greame Hunt, describing a long history of charismatic fraudsters luring victims
into their schemes. At the same time I was thinking about the Top Ten Fraud
Tips of David Alexander, a man with ‘inside knowledge’ in the February number
of The Informant our monthly newsletter (http://www.arcisfdec.com/THE-INFORMANT.php).
David pointed out how all frauds appear to have a charismatic or flamboyant
tyrant at the centre, able to convince people to do as they wanted. I remember
reading how investors were actually begging to invest with Madoff and likewise
look at Nami, considered to be a God? Both had an almost cult like status that
was instrumental in people wanting to turn over their hard earned cash.
David further speaks of Understanding the opportunity and
using common sense, and in all fairness: how realistic is an opportunity that
promises a 30% plus percentage per annum. And that is where need and greed
probably came in. Here is a promoter running a company L&G with a history
of fraud, and yet people are convinced and handed over money.
Looking at other news coverage about Madoff, the first
immediate thing that came to mind was how Nami was actually running a cult
similar to the likes of Amway/Quixtar: big rallies and a cult in which people
are taken away and made to believe things they would ordinarily not fall for
all in pursuit and worship of the almighty dollar or in this case Yen or even
“enten”. I still vividly recall first seeing the Dateline Video in which
Quixtar was exposed http://video.google.com/videoplay?docid=-215989802739458876).
Play your show right and play on the right emotions and common sense seems to
be going out of the door it seems. How else could so many fall for these
characters. Whatever “opportunity” comes along, make sure you understand it
completely, keep asking questions until you do and don’t get distracted by the
cult of personality. But like said hindsight is a beautiful thing and admittedly
I have made mistakes, some are simply more convincing than others, even for an
old cynic like me.Why is the cult
important? Because it directly breaks away any trust barriers by creating
chains of influence and trust in which common sense, due diligence and
scepticism are replaced with blindness, greed and this ever present desire to
be part of something big and special.
In efforts to prevent and detect fraud, part of the focus is
on protection your assets. You have your stock or protected and secured, your
cash secured, physical security and internal control procedures in place.From experience it appears to transpire however
that especially small business owners appear to not realize how much of an
asset their information is and how especially in a time of lay off and cut
backs this is something to consider. While it may seem obvious to most
businesses to protect personal data, also give thought about other information
in your company that may be attractive as a target: client lists, credit
arrangements, supplier data, marketing plans, all may be valuable information
for a competitor. Too often I have ran into situations where employees started
their own business within the business of their employer or ex-employees giving
it a go their selves who realized a good head start by using the business
sensitive information of their previous employer.
The signs that such things may be happening are often very
subtle: you lose clients, just before you could launch that campaign your
competition apparently came up with the same idea, to name just a few.
Make sure you are aware of the value of certain information
and arrange for appropriate protection of that information. And when it comes
to (ex) employees using that information for their own purposes: have you taken
care of “non competition” and “non solicitation” clauses in your employment
contracts? They may not prevent the theft of sensitive data but they may assist
you where you (ex-) employees are trying to shoot under your feathers.
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The ARCIS Fraud Discovery & Exposure Centre Teams Up
with Bizlearn.biz
We are pleased to announce that we have recently started
partnered up with: Bizlearn.biz (http://www.bizlearn.biz).
Michael Taplin is the driving force behind bizlearn.biz.He spent the last 25 years as an independent
consultant, owning and running successful businesses that trained thousands of
people in large organisations. Bizlearn.biz aims to become the home for a
community of professional mentors, teachers and consultants who want to
contribute their hard earned knowledge to other business owners and managers. Bizlearn.biz
provides training on demand and is especially aimed at the small business
owners for whom institutional training often involves a too high commitment of
time, and cost, and where the result does not always justify the effort.
John Dierckx will be a contributor, trainer and coach within
the theme Risk Management: business system security, focused on fraud
prevention, detection for small and medium sized businesses.
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I get a lot of leads about different stories and articles
through various newsletters and web sites, but the amount of relevant
information on the Internet is simply far more than anyone has the time to
monitor. If you encounter a news item about asset protection or related tax subjects
that may be of interest to other readers of this newsletter, please send me an
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