Posts Tagged ‘Scam’

DOJ: Beware of Lottery Fraud

July 16th, 2012 No comments

Lottery fraud seems to be getting around these days. Earlier today the Department of Justice shared a blog post to warn the public of these scams.

The scam is simple. Perpetrators inform target victims via telephone or e-mail they’ve won a contest. But in order to obtain the prize, the recipient must first pay taxes and other fees. In the more severe cases, victims have lost their life savings by seeking to obtain a prize that doesn’t actually exist.

Last August, for example, I wrote about a story of two individuals who sent several hundred thousand dollars overseas in order to redeem their alleged prize.

The Department of Justice Consumer Protection Branch provides some common signs of lottery fraud:

  • You should not have to pay fees or taxes in advance to receive lottery or sweepstakes winnings. Beware of checks or wire transfers sent to you by the lottery. The fraudsters will tell you to cash these payments and forward the money, but after you have sent this money, the payment you originally received will bounce.
  • Lottery fraudsters use technology to mask their telephone number. Your caller-ID may identify a call as coming from the United States that is actually coming from a foreign country.
  • Lottery fraudsters impersonate officials from federal agencies in order to convince victims that the scam is legitimate. The United States government does not participate in the distribution of prize money from lotteries and sweepstakes.
  • You should never give your Social Security number, bank account number or any other personal identifying information to these callers. Fraudsters promise to use this information to pay the “fees” for your prize, or they offer to pay off your debts. In reality, they use this information to steal your identity and your money.
  • Lottery fraudsters are particularly successful with victims who live alone or suffer cognitive impairment. Fraudsters befriend victims to create trust and to convince victims to hide the payments from family members.

Congratulations! Your Lottery Winnings Don’t Exist

August 3rd, 2011 No comments

Imagine a new e-mail landing in your inbox. The sender is someone who works for the “Tourism Malaysia Lottery Program,” and claims that you, the e-mail recipient, have just won a $1 million prize from the program. In order to redeem this prize, you are first required to deposit $500 to open a bank account in Malaysia in order to facilitate the transfer of funds.

I’m fairly certain that both you and I would immediately proceed to click the “Delete” button, well-knowing that we would never see a dime. In a complaint recently filed by the U.S. Department of Justice, we learn the story of two individuals who deposited not only the initial required amount but also several hundred thousand dollars in order to redeem their alleged prize. Unfortunately, our instincts were accurate.

To perpetrate the scams, the culprits had each of their victims comply with several requests made beginning in late 2007 through early 2010. The e-mails claimed that in order to retrieve their prizes, certain fees and taxes must first be paid by wire transfer to overseas banks. One victim was under the belief that his money was being used to pay the IRS.

Please take note: I cannot immediately conjure up any circumstances by which a taxpayer situated in the U.S. would satisfy any U.S. income tax obligation by wire transfer to an overseas account. Further, as far as I know, one does not satisfy an income tax liability on lottery winnings by paying the liability out-of-pocket before receiving the winnings. If anything, the lottery payer may be required to withhold a portion of the winnings for remittance to the IRS; alternatively, there may be no withholding and the taxpayer is solely responsible for paying the tax liability directly to the IRS.

As a result of these scams, one victim is now out-of-pocket $428,758, and another $868,438. You’d think that someone who makes a transfer or two of a few thousand dollars would realize something is amiss after not receiving anything. These two victims, however, kept sending more. Approximately 111 wires were sent to 56 accounts among three countries.

The complaint asks for a forfeiture of more than $1.2 million held in various accounts. Similar to poker players with frozen funds on online gambling sites, an individual can file a legal claim for an interest in the funds. Apparently, no such claims have been filed.

(Hat tip: The Blog of LegalTimes)

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