Hold on to Your Money

By Rabbi Eli Teitelbaum

Only the most naive person would believe the stranger who offers to sell him the Brooklyn Bridge-cheap! But, as they say," a sucker is born every minute," and reality seems to bear it out! The ease with which con artists relieve people of their hard earned money is astounding.

Every few months, another scam seems to make its way through our community with devastating fury, defrauding even clever businessmen of their investment. How can intelligent people fall for these get-rich-quick investments that promise impossibly high returns? Anyone who believes it's only the other guy that can be scammed is making a big mistake. Experience proves that nearly anyone can be taken for a ride, so hold on to your wallet tightly! Perhaps Nach tells us the story of how the Givonim fooled all of Klal Yisroel in order to teach us this important lesson. No one is infallible! People who are gullible, greedy or in deep financial straits are the most susceptible. Yet, even large banks and successful corporations have fallen prey to the modern alchemist's clever schemes.

After it's all over, we sit and wonder how we were able to be fooled so easily-- but by then it's already too late. The only thing we are left with are shattered dreams and broken hearts. While some private individuals have been taken for many thousands of dollars, large corporations and big banks have been taken for millions.

It's a dangerous world out there when the law protects the scam artist who does business as usual, even though he knows that he is on the verge of bankruptcy, and has absolutely no intention of ever paying for the merchandise or making good on the debts. The domino effect on the honest businessmen is devastating.

I once warned a friend of mine not to invest his money with a smooth talker who offered him a high and quick return for his investment. I was stunned to find out a year later, that despite my strong warning, he wound up putting in some big bucks with this scoundrel which, of course, evaporated into thin air.

The success rate of such scam artists is amazing. The stories are heart-rending. There are no limits to their brazenness. Past horror stories are still fresh in our minds when the next one makes its rounds.
A widow tells me that she was taken to the tune of six million dollars by a clever Jewish lawyer in Monsey, whom she trusted to manage her life savings. Another widow who owns a store in Brooklyn asked for my help when she realized that she was being scammed to the tune of $50,000 by a clever con-artist, who convinced her to invest in a non-existent clothing venture which promised her high returns. Unfortunately, there was little I could do at this point since the money had already been spent by this con-artist betting on horses. The skinny cows keep eating the fat cows, and they remain as skinny as before, since they gamble their money away and there is nothing left to recoup. How amazingly true! "You can fool all of the people some of the time and some of the people all of the time !" And as someone added, "You can fool too many of the people too much of the time."

Here is a story that should confirm to you just how much larceny is out there kicking around in the hearts of investment advisors. This is a true story taken from a book titled "The Definitive Guide To Futures Trading," by Larry Williams. In the mid-1970's, a registered investment advisor I personally know sent out a market letter to 5,000 people telling them to buy soybeans. To another 5,000 people, the same investment advisor sent out a letter telling them to sell soybeans. I can't recall the exact details, but let's say soybeans went up. He , of course, did not send out any more solicitations to the people who he told soybeans would go down, but he did divide the 5,000 names in half and sent two more letters. One letter said now it was time to buy pork bellies: the other letter said it was time to sell pork bellies. pork bellies went down. He then had 2,500 people who had seen him right on soybeans and right on pork bellies, so he sent out 1,250 letters to half of that group telling them that his next trade was silver. Buy it, it was going higher. To the other 1,250 people he sent out a market letter telling them it was time to sell silver.
Silver went up. To 1,250 people, our investment advisor looked like a hero, he had three major trades in a row correct. Now came the sales pitch.

To those 1,250 people he offered a special subscription to his yearly market letter for only $500, which was an absolute pittance compared to the profits one would have made if he had taken the advice of the investment advisor on the last three trades

Some scams are called "Ponzi schemes," named after Charles Ponzi who (in 1919) cheated people by taking their money and investing it into non-existing ventures, or simply gambled other people's money away. He established good credit by returning lots of money to the first few investors thereby making others believe that he could be trusted and was good for his money. Little did they realize that this money was coming from the new investors he was now defrauding, and that the business ventures were pie in the sky!

The problem is that as soon as one Ponzi scam topples, a new one is there to take its place. The chance of recovering one's money is about as likely as discovering an oil well in your back yard. Other clever schemes are known as MLM's (Multi Level Marketing, like Jewel-Way) that promise you the moon, but only deliver heartaches.

Be especially wary of the stranger that suddenly befriends you and soon follows up asking for a loan which he then repays on time. Once he has your confidence, he'll bamboozle you for big bucks for which he'll give you a genuine rubber check in exchange.

One must learn to recognize the telltale signs of a fraud. Anything that sounds too good to be true probably is. Anyone that will give you a $100 bill for only $99 must be a cheat. So too are all easy money scams. Only a fool believes that he can invest $200 and get back $2,000 in only one year, guaranteed!

What hurts most however is when some frum newspapers shamelessly accept these false advertisements and thereby become accomplices in deceiving the public. This is certainly prohibited under the prohibition of lifnei iver lo titein michshol and midvar sheker ti'chok. I find it difficult to believe that they too are being scammed.

A number of years ago a student of mine brought me a leaflet which offered people to invest just $273 and receive $1,436.23 in return in just 18 months. He showed me that it even came with a money back guarantee, "so what could be wrong ," he asked? "My father just invested into it," he told me. I told him the story of the alchemist who claimed that he had discovered the secret formula to change silver to gold. At first people were very sceptical and believed he was a fraud. When he offered them a money back guarantee, some townspeople decided to give it a try. They brought him a few silver coins which he put into a large boiling kettle to which he added some mysterious ingredients and told them to come back the next morning claiming that it had to be left boiling overnight. Sure enough, when they came back the next morning he gave each of them a gold coin for the silver one they had given him the night before. He did this a few more times and the word spread far and wide that this alchemist was for real. Soon thousands of people lined up outside his house with their silver coins which they wanted him to turn into gold. Imagine their disappointment when they came back the next morning and all they found was a large kettle of water still boiling over a fire. During the night the alchemist had of course packed his bags and left for the next village where he would make a repeat performance.
When will people take off their green tinted glasses and stop being blinded by the quick and easy money scams?
Perhaps next time someone wants to sell you the Brooklyn Bridge, tell him you're holding out for the Manhattan Bridge instead!