Contriving the conned crowd

If promising a foolproof investment system that promises returns that are too good to be true (TGTBT) is a tell-tale sign that a scam is afoot, then a second sign, albeit not quite as obvious until some scrutiny is brought upon it, is the creation of an artificial bandwagon, a false crowd of sorts. This is as necessary as promising the moon and the stars where those targeted by scammers are typically wary they might be the only investor subscribing to a particularly novel scheme being peddled.

Bandwagons provide a sense of comfort, false assurance that others either subscribe to the same promises, or, for the more gullible particularly uninterested in the arithmetic, a sense of comfort that perhaps others have done the requisite due diligence necessary and a collective has previously assembled to validate the scammer’s TGTBT claim.

In some cases, indeed, a real and genuine apostolate might have been assembled, brought together through a seminar, a workshop or investment chatrooms. In these times of e- commerce and online transactions, anonymous discourses on Facebook or Viber communities, it is not difficult to assemble and lead both rats and Hamlin’s innocents down to the river’s edge. Forming a hundred-strong cybercommunity on the basis of TGTBT promises is surprisingly easy.

In other cases, however, or about as often as gullible investment communities exist, the bandwagon is imaginary, hidden behind an anonymous collective as followers on a Facebook page, again, a Viber group, a savings and loan association (S&L), or an exclusive investment club.

Between 1986 and 1995 in the United States, the S&L crisis was a creeping financial disaster few realized was erupting. It was spawned, as typical of scams, by slow growth, stagflation and weak interest rates that shove the desperate into the tempting clutches of unregulated fraudsters promising TGTBT returns from far too little capital.

That there is a sense of safety in numbers behind the tact. Likewise, the number of people pulled into the con vicariously legitimizes and the increasing number of advocates, subscribers and victims, creates a critical mass enough to both validate the con or, depending, on a scammer’s insidious system, create volumes akin to mass hypnotized apostolates.

These crowds work to not only propagate a scam but for an integrated body of victims, these bandwagon crowds are integral to a scammer’s TGTBT promise. Note these examples. A recurring scam despite its notoriety is either the typical pyramiding scam or the Ponzi scheme that victimizes almost on a yearly basis. Bandwagons and crowds integral to both were for pyramiding scams, initial recruits — typically called up-links mimicked from network marketing schemes — recruit several investors and the recruitment exponentially grows down the line. Late-joining investors pay the up-link recruiter for the right to participate and thus create the TGTBT cashflow. Under a Ponzi scheme, investors surrender funds

to

a portfolio manager and are paid back from the incoming funds of late joining investors.

A tad complicated are the “Pump and Dump” insider trading scammers who assemble a motley group of seemingly diversified investors enough to purchase low-capital stocks. By encouraging each to invest separately albeit simultaneously, the crowd-sourced simultaneous purchasing pumps up the stock price ever so slightly before the collective dumps to fulfill the scam TGTBT promise.

“Under a Ponzi scheme, investors surrender funds to a portfolio manager and are paid back from the incoming funds of late joining investors.

“Bandwagons provide a sense of comfort, false assurance that others either subscribe to the same promises.