Streetwise for Sunday, April 21, 2017
Psssst need a phony ID? A fraudulent tax refund? Insurance money from a sham car crash? Florida may have just what you’re looking for. Since the first settlers hacked their way into Florida’s mangroves, sunny South Florida has been virtually synonymous with shady deals and scams. And you thought Wall Street had uneven playing field.
In fact, the three South Florida counties Miami-Dade, Broward and Palm Beach have become less renowned for old-school Miami Vice-style drug shootouts than for scammers stealing millions by using laptops, stolen identities and fake medical procedures.
And those desiring to perpetrate fraud are endlessly creative. Bogus Jamaican lotteries, false marriages for immigration purposes, mediocre seafood marketed as better seafood, insurance rip-offs from fake accidents and fires even foreign substandard cheese passed off as domestic top-shelf are only the appetizer. The big money is in the big trio areas of fraud: Medicare, mortgage and identity-theft tax refunds.
According to the Federal Trade Commission, Florida ranks first in identity theft complaints. The number of false federal income tax returns in South Florida is 46 times the national average, according to a Treasury Department report.
And if you are a snowbird, remember that Florida does not have a monopoly on scam artists. Everyone remembers Bernie Madoff and how he relied heavily on his religion to gain entry to wealthy Jewish investors and institutions.
Shawn Merriman, aka the Mormon Madoff, was a well-respected investment broker and a lay bishop in the Church of Latter Day Saints, known more commonly as the Mormons. For 14 years, he ran a Ponzi scheme that bilked investors, including his own mother, out of more than $20 million.
Being able to discuss Scripture is neither a prerequisite for, nor an affirmation of financial acuity. Donald Nadel and Joseph Malone, operating as Renaissance Asset Fund, raised more than $16 million, largely from members of the Jehovah’s Witnesses. The pair promised risk-free returns of 10 percent to 25 percent in as little as four months. Renaissance was nothing more than a Ponzi scheme.
U.S. Mail is a great way to steal identities. The Postal Inspection Service is offering a $50,000 reward for information leading to the arrest and conviction of anyone involved in 13 recent robberies of letter carriers in South Florida. One was slain in 2010 for his mailbox key.
Since 2007, approximately 2,300 people have been charged with falsely billing Medicare for a total of $7 billion. South Florida’s share of that? More than 1,500 defendants through last September.
Since 2009, Florida has led the nation in mortgage fraud as a percentage of the number of loans originated, according to the LexisNexis research company. The company reports that a financial industry index of mortgage fraud ranks the South Florida metropolitan area No. 1 nationally, with 12.3 percent of all such fraud reports in 2013, the most recent year available.
Paul George, a Miami-Dade College history professor who specializes in South Florida, noted that the region’s reputation as a haven for schemers dates to the land speculation boom of the 1920s, when alligator-infested swampland was marketed to Northerners as a slice of tropical paradise. Today, with the area such a melting pot, it’s no wonder South Florida is also a cauldron of creative crime, he said.
Yes, I understand that greed can have a perverse effect on both the wealthy and the not so wealthy. What human trait do you think built Las Vegas? Why does virtually every State have a lottery? Everyone wants the riches of life without working for them. Please note, that is not what investing on Wall Street is all about.
Yes, you can achieve investment success. Moreover, I personally believe and as I teach my students, it is easier to make money on Wall Street than to lose it. However, you must stick to a few basic rules. The primary one of course is to only invest in tried and true blue chip companies with 10 plus years of increased earnings and dividends.
Lauren Rudd is a financial writer and columnist. You can write to him at LVERudd@aol.com. Phone calls accepted between 9 AM and 3 PM at (941) 706-3449. For back columns please go to www.RuddReport.com.