Fraudsters Enabled by Modern Government Practices

A month or two ago, the ZMan included in his podcast a segment about this story:

For years, people living in a quiet neighborhood in the Northland ignored the invoices that arrived in their mail demanding payment to a homeowners association.

“Just want to let you know it’s a scam,” Tony Navarro said he was told when he moved to the Summerfield subdivision. “This is not an HOA neighborhood at all. There are no monthly fees.”

But then, just before Christmas, a $445 lien was filed against Navarro’s home and more than 30 others.

The reason? For not paying dues to the Summerfield Homeowners Association. An HOA that has no board and provides no services.

The filing of fake liens and other documents has become a big problem in Missouri. The owners of a $4 million mansion in St. Louis had to go to court to prevent a woman they accused of filing a fake quit claim deed from taking possession of their home.

This is the sort of scam the government should be shutting down immediately it comes to their attention and the perpetrators jailed for fraud. But instead we learn:

We also wanted to speak to the other person behind the fake Summerfiled HOA, but he was even harder to reach.

Al Roberts is in federal prison, convicted of $3 million in mortgage fraud. Roberts, a retired Kansas City school teacher, formed Column’s Park, the company behind the HOA. Roberts also sent out the initial invoices to homeowners.

How is this guy able to run a fake company issuing fraudulent demands for payments from federal prison? I have no idea, but it’s clear the government isn’t much interested in stopping this sort of thing. But there is a deeper point here, one which is reinforced by this tweet:

Only in a society where the laws are numerous, vague, and arbitrarily and aggressively applied with punitive sanctions for non-compliance can a scammer get away with sending dodgy demands and threats to random people with the hope of getting payment. In effect, the fraudsters are mimicking the behaviour of the state, which is key to making the scams work. The whole thing relies on the recipient being terrified of being judged to be non-compliant with an obligation they didn’t know about, and having their life ruined.

The root cause of the problem is not the scammers, but the nature of the government in the places they operate. Back when government was smaller, less complex, and applied some common sense these sort of scams wouldn’t have been possible. But those days are long gone, and criminals have stepped forward to take full advantage.


16 thoughts on “Fraudsters Enabled by Modern Government Practices

  1. This type of government is also tilted towards milking the law-abiding and ignoring the illegal and feckless.

    I read something about California recently in which the author described how the state will fine people like him thousands of dollars for a wrongly-laid drain, while ignoring the illegal plumbing of illegal immigrants.

    The UK is nowhere near as far down this route as ‘the land of the free’ I am glad to say. I have a relative who is an environmental health officer; in the UK she needs to go through a process to get changes made and to impose fines. In the US, her equivalent can waltz in, shut you down and fine you without notice, even for minor (yet expensive) misdemeanours.

    The UK has also not gone down the route of the government ordering HMRC to fuck over opposition politicians either. However, the treatment of Tommy Robinson for example, shows that we’re heading in that direction.

    Here in Hong Kong, we are almost entirely free of that shit. Running a business is easy, transparent and inexpensive. I have a great burden of regulation from fucking HSBC than from the government.

  2. Not just government, Tim.

    I’ve worked for organisations with procure to pay processes so shite that any half credible invoice would be paid after a follow up by a half credIble lawyer’s letter.

    For a modest fee, I can provide your readers with the relevant automated email addresses to send their claims to.

  3. @Bill

    We have been hit with quite a few spurious emails of recent times instructing our payment staff and in one case our clients staff to pay a legit invoice into a new dodgy bank account. One of them worked, it was for smaller amount and we only discovered it after the supplier rang up chasing his payment. I actually put this error on a final warning notice to the employee concerned amongst a few other things. I struck it out of her warning in the end as she had got advice and we need procedures and all that malarkey. Dumb bogan stuff but good for your employability.

    On the Government, I recently caught up with two years backdated tax returns and felt quite good about my hefty negative gearing refund hitting my bank account. Only to find this morning in the mail that they have doubled the tax rate of my super contribution for the last two years and sent me an IOU for both years.

    But I shouldn’t feel so bad because the ATO quite kindly provide a breakdown of where your income tax goes and over one third of mine goes to welfare.

  4. Back in the early Nineties there were a spate of scams involving sending invoices for “Services Rendered” to thousands of companies and organisations, usually for amounts between £100-1,000.

    Most wouldn’t get paid, but enough would – about 20% – to make the scam profitable. At the same time it was very hard to press for criminal charges as, 1) they never followed up with threatening letters demanding payment, and, 2) if pushed they could always claim they performed a service of an extremely subjective nature; PR, “praying for the client”, market research, etc, etc.

    I got two of them. The invoices, that is.

  5. @Bardon,

    If you have a rough idea of the threshold of payment value that is considered pointless to challenge it can be a good scam.

    Similarly with overpayments for payroll at termination, if your benefit is less than the Dunn and Bradstreet costs, fill yer boots.

  6. This is strange. I’m just about to take ownership of a newly constructed home and I got an invoice from the HOA (supposedly). I complained to,the builder that I can’t owe anything since I don’t own the house yet. They replied that it looked like a fraud and to definitely not pay it. Very interesting.

    My wife works in accounting at Daimler Trucks in the U.S. and they get emails all the time spoofing the CEO requesting funds to be transferred somewhere. Within a day or two of getting a new CEO, they had already changed the name in the new emails. These guys never rest.

  7. On a funnier note, fraudsters would make a lot more money if they’d just handle spelling and grammar better in the emails.

  8. ” if they’d just handle spelling and grammar better in the emails.”

    That’s usually a filter in more time-consuming scams. If you are sending invoices below a threshold, then that’s true. For most other scams, the scammers want to filter out, as early as possible, any potential targets with more than half a brain. They are selecting for morons who can’t spot an obvious scam 🙂

  9. For most other scams, the scammers want to filter out, as early as possible, any potential targets with more than half a brain.

    This is something the Nigerian scammers came up with to explain why their emails read like they’d been written by a six year old with brain damage. Personally, I didn’t believe it.

  10. All scamming and fraud works for one reason: all the ‘recipients’ of whatever is on offer want to believe it true.

    All those people who supposedly ‘bought’ the Brooklyn Bridge wanted to believe it was for sale (and as such they were going to benefit) though in the history of bridge sales I heard the people who bought London Bridge and had it shipped to the States were reported to be disappointed to find they hadn’t got Tower Bridge. Oh well, so it goes.

    As for the junior in accounts who authorises a thousand reams of yet-to-delivered photocopier paper without checking, say, I am reminded of a place where I worked where the most stunning, short-skirted and very friendly young woman persuaded one of that company’s directors at a personal demonstration to order a photocopier for the business. Great price, except the paper was ridiculously expensive and the contract stipulated you had to buy it by the lorry load.

    In other words, scams take different forms and some forms in short skirts and low cut tops work best of all.

  11. Not entirely on topic but….One of the more amusing scams that I’ve come across (and will be familiar to the author of this blog) was when the test code for the new SAP purchasing system in a West African subsidiary of a large European energy company wasn’t turned off after initial implementation and millions of dollars of spurious “purchases” below the flagging threshold were rung through before anyone in a position to stop it became aware.

  12. Sort-of related: The phony IRS schemes which have people sending money to what should be obvious scammers. Well, they would be obvious, if the letters ‘IRS’ didn’t have the populace wetting themselves (perhaps not without reason).

  13. One of the more amusing scams that I’ve come across (and will be familiar to the author of this blog)

    Heh, I didn’t hear about that one!

  14. Well, they would be obvious, if the letters ‘IRS’ didn’t have the populace wetting themselves (perhaps not without reason).

    That’s exactly the point: the government has everyone so scared people are willing to pay scammers rather than run the risk of having their lives ruined.

  15. @Whiteboard Technician:

    That was a certain Anglo/Dutch Oil company wasn’t it?

    I remember that anecdote (or one very similar) being told when we were doing the SAP FI/CO implementation at BP Oil Trading in 2007.

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