Tag Archives: fraud

The saga of the Agent smartwatch

From Wareable, “Kickstarter recently paid tech journalist Mark Harris to investigate what happened to the money in its biggest failed campaign to date – a palm-sized drone called the Zano. Investigate it he did in this 53 minute read Medium feature, concluding that crowdfunding sites like Kickstarter should have better mechanisms in place to identify weak projects in which the team or startup will ultimately be unable to deliver what has been promised.

That’s why a number of backers of the Agent smartwatch, a project Secret Labs, in collaboration with the House of Horology, are taking matters into their own hands. In June 2013, the campaign, lead by project creator Chris Walker, raised a total of $1,012, 742 from 5,685 backers. The estimated delivery dates were December 2013 for Early Bird backers and June 2014 for all other backers.

The “world’s smartest watch” still hasn’t arrived and, in a very meta turn of events, a group of backers recently turned to crowdfunding to raise money to hire legal representation and potentially initiate a class action lawsuit against the project’s creators.”

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We’ve had fake news, fake science — and now, ‘fake tech’

From Recode, “Fake tech is a term that came to mind while reading about the augmented-reality startup Magic Leap. The company has raised $1.4 billion based on videos created to demo its technology. But new information has surfaced that indicates these videos were created using special effects, simulated by a New Zealand company that specializes in such things. While it’s not clear how real the company’s technology is, you could describe these simulated presentations as fake.

I’ve also experienced fake tech on Indiegogo and Kickstarter. There are products described with seemingly impossible claims that can’t be verified by the host sites. So, anyone with a clever idea and a simulated video can raise money proposing an idea that’s impossible to do.”

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How Easy is It to Run Scams on Kickstarter?

From nanalyze, “We’ve written before about crowdfunding and warned our readers about how these platforms should be treated with a great deal of caution because of scams and people with no business acumen. When you crowdfund a business for equity, the only way you are getting paid back (if ever) is through a liquidity event and nothing guarantees that will take place. When you crowdfund a product or project, nothing guarantees that the product or project will be delivered on time or ever.

We’re simply saying, that the Kickstarter platform seems like the perfect place to operate a scam on.

The takeaway here is that it’s surprisingly easy to run a scam on Kickstarter if you have half a brain, some money to spend on building a prototype, a video camera, a website, and a mate that works at Infosys with a bank account in the U.S. There’s actually a website called kickscammed.com which tracks $2.5 million in crowdfunding scams to-date.”

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Alleged Bar Works schemer is on the lam

From Crain’s New York, “Renwick Haddow, a British citizen who was charged with fraud last week by both the Securities and Exchange Commission and federal prosecutors, has not turned himself into authorities and is considered a fugitive, according to a spokesman for the U.S. attorney’s office for the Southern District of New York.

Haddow unlawfully sold securities in Bar Works and a Bitcoin store, then diverted at least $5 million of the money into overseas accounts he controlled. Government investigators allege Haddow raised almost $38 million in the scams, the bulk of it through Bar Works, a co-working company whose dubious concept was to combine desk spaces with a bar environment where members could both work and drink.

As government investigators were close to pressing charges against Haddow in recent weeks, the alleged scheme showed signs of coming apart. A visit by Crain’s to Bar Works’ two midtown locations found they had been shuttered and the landlord of a planned Bar Works location on West 16th Street and Eighth Avenue said he had begun eviction proceedings against the company after it stopped paying rent in recent months.”

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Madoff fund has paid zero to fraud victims so far

From USA Today, “Victims of Bernard Madoff’s huge Ponzi scheme have so far received no repayments from the company the Department of Justice tapped to distribute $4 billion recovered from the notorious fraud.

Nearly 8½ years after Madoff’s arrest, RCB Fund Services LLC is still working to finalize reviews and recommendations for 63,580 claims covering $67.8 billion in reported losses.

Although fraud victims have received nothing from the fund, Breeden’s company has been paid $38.8 million for its work, Bloomberg News reported Tuesday, citing records released by the government in response to a Freedom of Information Act request.”

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3 men facing charges in gemstone investment fraud investigation

From CityNews, “Three men have been arrested in connection with a gemstone investment fraud investigation.

Police say representatives from companies called Royal Fine Jewels or Nygard and Associates allegedly contacted victims and gave them false information about the value of jewelry or gemstones they had purchased.

The victims were also given false information about buyers for those valuables. The victims then entered into sales agreements with non-existent companies called TSE Marketing and Vargas Marketing. The companies being fake, the sales agreements were never fulfilled.”

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Finding hidden assets for a lawsuit judgement

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Police investigating local mobile car repair scam

From Tucson News Now, “Police are investigating a local mobile mechanic, who is allegedly operating under a fake business license. Multiple people have come forward to say he’s ripped them off.

“Definitely a scam artist,” Tammy Mercado said.

Mercado’s daughter was having car trouble. So she called Weaver’s Mobile Mechanic LLC. She said when Chantland Weaver looked over the car and asked for $700 to get the parts, she didn’t hesitate to hand it over.

“He needed the money up-front so he could go buy parts, and I understand with (him) being a mobile mechanic, and we had done that in the past, and it had worked out great,” Mercado said.”

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The Importance of Corporate Due Diligence

Corporate due diligence is taking on a new role in business. Many companies are now doing some type of research, due diligence, or background checking on vendors and business partners to help prevent fraud. Recently, I have seen two different cases relating to this.

First, we came across a situation where a company had been doing business with our client for a long period of time. The company had been buying inventory from our client every month, paying for the allotted amount, and reselling it. Towards the end of a year the company approached our client saying they had a really big order and they needed a bunch of inventory. They asked our client to send it right away and that they would pay. Now, this order represented about eight or nine times the company’s typical order so at first our client was purely excited to fulfill it. The inventory was then sent to the company but our client didn’t received payment for it. Ultimately, the one “really big order” resulted in our client losing more money than they had made from this company’s prior orders combined.

Unfortunately for our client, this loss could have been very easily discovered had some due diligence been performed. If our client had looked into it they would have found that the company they were selling to was having major financial problems. The company was behind on their bills, the owner had filed foreclosure, some of the vendors for this company had reported their inventory being diverted and instantly resold wholesale just to generate capital. Additionally, the company had a lien filed against them 30 days prior by the state sales tax department because they weren’t paying sales tax on what they were selling retail. All of these issues would have been reasons to prevent our client from doing business with the company. Had our client done some due diligence before working with this company, it could have prevented a huge loss for them.

The other situation we’ve come across recently relates to fraud and identity theft. In this particular case, a trucking company had some of their corporate documents, specifically their insurance certificate, copied from a website where they posted they were going to do work.  A different trucking agent had one of their trucks and drivers use this other company’s stolen credentials to go pull up to a warehouse, load up inventory, and drive away stealing the cargo. When the inventory didn’t arrive at the other end, the company who shipped the cargo called the name and address on the paperwork only to find out the truck that had taken the inventory had used fraudulent paperwork and stolen their products.

Researching the finances and assets of an individual or company is an important measure to take prior to doing business with them, along with criminal background checks. Don’t just wait for a “really big order” to begin your corporate due diligence. Take a look at your current and prospective vendors, or even other types of business contacts, to make sure that they are legitimate. Be confident that the company or person you’re doing business with will be able to pay, will be able to follow through, and that their prior activities similar to what you’re doing have been handled with integrity. Due diligence may take some time and money initially, but it could potentially save hundreds, thousands, or even millions of dollars in the long run.

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