The perfect scam
1. Choose a good business model and abuse it…
The key criteria is that I would base it on a good business model. This seems to be the key to the best scams. They take something that everyone knows works and abuse the process.
Property investment companies Fresh Start, Dylan Harvey, EcoHouse all worked in building residential property.
2. Get some big successes early and create case studies from these successes…
Choose 10 lucky people and pay them an above average return, then get their permission to use a video (video works best) so they almost become the face of the scam.
3. Don’t put your face on the scam, use glossy images and stock photos…
You need to remain as anonymous as possible so create the brand without your face, your name that can change. The more your face gets out their the harder it is to make a comeback!
4. Pay the money to a celebrity or sportsperson that is known, doesn’t need to be a current one.
Pat Cash was fronting the tennis for Harlequin, I imagine he was just paid to be the name on the tennis academy, he probably knew nothing about the eventual scam. David Ames bought a football club, Anthony Emery-Armstrong bought a football club. If you can't afford this then at least get some photos of celebrities with you.
5. I would choose the product in an area where it is hard to compare my investment with other investments.
Harlequin was in the Caribbean, Eco-House in Brazil, Profitable Plots was outside cities, North Dakota Developments. All in markets that investors were not familiar with.
6. I would structure the finance in such a way that the investor puts little of their own money in but borrows it from an institution
Harlequin clients only put down £1000 and borrowed the rest which Harlequin made the payments on their behalf.
7. Pay big commissions to intermediaries or your team, so they become the face of the scam and they turn an eye to due diligence in favour of the money.
Blinded by the money…Also pay them on time, they are your salesforce. EcoHouse, Profitable Plots, Harlequin, North Dakota Developments all paid over 10% commission to agencies that sold for them.
8. Promise big returns to investors, above 15%
People are amazingly blind to doing investment research if the promised return is high enough. As the saying goes: The scent of the returns outweigh the odour of the risk. North Dakota, Harlequin, EcoHouse, Profitable Plots all did this.
9. Put in place guarantees, buybacks, insurance policies, pseudo escrow accounts with T&Cs
Do whatever it takes to make the appearance of certainty that they can’t lose and this will have people disregard research and fob off concerned friends and family. Have clients pay to a solicitor escrow accounts but with T&Cs statement you know you can draw down on the circumstances. North Dakota, EcoHouse, Harlequin all gave guarantees of some sort.
10. When it starts to go belly up, use heavy handed solicitors to threaten people.
Pay refunds to the vocal people with confidentiality clauses, this will only perpetuate the fall so once this starts to happen that's the time to exit and close up shop. You are better to close it early than let it run its course. After all, if you make it look like a bad business model and blame it on that, you are less likely to end up in the authorities' clutches.
11. This should be step 1: decide early it's a scam and remove as much money from the business as early as possible.
Don’t leave it to the last minute. Remove large amounts, live the lifestyle move it offshore into various companies that offer things like consulting, over the top licences and pay over the top for all sorts of things to move money out of the business.
So that's the start of how you can set up your own perfect property scams…but I didn’t really write this to help you execute a flawless swindle, I wrote it to give you an introduction to the things to avoid or the things that should sound warning bells for you. Read my book How to Avoid Property Fraud, a Ponzi Scheme, Scam or Bad Business Model for the full scoop on some of the dirty rotten scoundrels I've outlined above.
Live with passion,