Beware the smooth talking huckster

PANAMA. Panama has become a happy hunting ground for fraudsters and scam artists from big time schemes like DMG, whose leader David Murcia is now sitting in a Colombian jail, to promoters holding “sales” events in lush locations like the Gamboa Hotel Resort, or operating in enclaves like the Canadian community in Penonome.

They all have one thing in common, smooth talk. If it sounds too good to be true, it is. If you have been told by a close friend of an unbelievable opportunity to make big bucks beware. “Word of mouth” is the best sales tool used by the ponzi operator, and your money will be used to pay your friend, who has already been conned, for introducing you to the charming, oh so believable king pin. If he, or she, looked like a gangster, you wouldn’t be talking to them right? But if they come from your own country and know the ropes in Panama, and are helping to keep away the local sharks? Beware. The best target for immigrant groups has always been fellow nationals. Just look at the early days of the Irish gangs in the US, followed by the Italian mafia, the Puerto Ricans, Chinese tongs and today’s Russian mafia.

You don't have to be a big-time money manager like Bernie Madoff to execute a successful scam. Greg Hays, whose firm Hays Financial Consulting specializes in detecting and unraveling frauds, says they all start the same way: with one really good line of BS reports Mike Olson in Wired Magazine.

The Ponzi

The Ponzi scheme uses cash from new investors to pay dividends to old investors, so it looks like profits are soaring. In a pyramid scheme, every "investor" lures a new batch of suckers for a cut of all future entry fees. A multilevel-marketing scam has "reps" sell some product but entices them with commissions on sales of those they, in turn, recruit.

Whenever Madoff was asked how he turned such high profits (about 10 percent annually), he cited "split-strike conversions," a proprietary system that he couldn't discuss. "There's usually some cryptic angle," Hays notes. Marketing scams often push products with secret compounds that, say, triple muscle mass, hair thickness, and brain cells.

Any huckster worth his salt relies on word of mouth. They have to get people singing their praises early. Pyramid promoters cut checks regularly, and multilevel marketers shell out big "bonuses" for recruitment.

By its 11th round, a pyramid that began with six takers needs 362,797,056 more. There aren't enough people to sustain these schemes, so they skip to another country Panama is a welcoming location.