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Spot a Fraud

For ten years, my favorite job as Compliance Officer of an Investment Bank was spotting liars. This meant figuring out which finance professionals NOT to hire because they embellished their qualifications, which potential clients NOT to accept because they had obfuscated weaknesses in their companies, and which alleged investors NOT to believe because they would never pony up a dime. On the theory of “garbage in, garbage out,” I figured that anyone who lied to me up front about something I easily discovered was likely to lie later on about something important I might not detect. With 7 billion people on the planet, I endeavored to avoid those mendacious people and work with honest ones.

What appalls me is the frequency with which I have encountered grown-ups who lie, easily, smoothly, and frequently to get something they want, based on merits they lack. Obviously, their blarney must work on some of the people some of the time. I'm also dismayed by the number of companies and individuals who don't do background checks before they hire or recommend people, or who part with their money or let someone into their homes or lives without asking a few logical questions first. So shame on both parties!

The following article shares easy, cheap or free research that anyone can do in less than an hour and examples of real frauds I have encountered. Protect yourself with a bit of skepticism, a few minutes on the Internet, and some judicious questions.

Start with the person's resume. If your interaction is not professional, and doesn't warrant asking for one (such as your daughter's new boyfriend), look up the person on Linked In or similar self-posting websites. Scrutinize the document. Do you recognize the names of the schools and companies? Do the job descriptions and interests correspond to what you know of the person? Some lies are obvious, while others require more digging, by cross referencing this information with corroboration or contradictions available elsewhere. Examples below.


Examples of Findings:

One CEO of an OTC shell company lied in his SEC filings about his academic credentials. He claimed a PhD from a university that does not even exist! Instead, he actually has an AA degree from a community college in Washington State. I told the SEC what I found.

A potential employee claimed a MBA. The school registrar revealed that he attended adult education classes, but never enrolled in a degree program.

One man claimed to be a bishop in a conservative branch of the Anglican Church(for which he created a Wikipedia page) and to have been ordained after attending a particular seminary. A bit of research revealed that he made up this alleged denomination AND the school! Neither is a legitimate, recognized institution.

A woman listed no college degree but put “post-grad” on Linked In, citing no school at all. She also indicated membership in The Yale Club and Harvard Club. These are rather obvious ploys to sound impressive.

Two people claimed to be members of a national honor society that sounds real but is actually a “pay to post” website.

How can you validate or discredit educational claims?

If you are unfamiliar with the name of the school,search for its website or Google “accredited universities.” If the only reference you find is in connection with this person's posting, such an institution does not really exist. Some other schools exist only as “degree mills” - website companies from which a person can buy a fake diploma. In the case of legitimate, small colleges and universities, you can call the registrar, who may answer your questions about someone's enrollment. In most cases, though, you need to pay a few dollars (usually less than $10) to the National Student Clearinghouse website:

Many employers ask applicants to sign an authorization for a background check, and on it to include relevant details such as address and social security number. Such a standard form is an easy to way to separate the wheat from the chaff early, as some people may fade away to evade such scrutiny. If your reason for checking somebody out doesn't provide an opportunity to solicit such authorization, you might ask a friend who is an alumnus of that school to look up the person's name in their alumni database. Alternatively, you can review the school's website to see if, for example, it offers the degree the person claims or to glean some details you might work into a subsequent conversation if you doubt the person's attendance there.

Prior employment:

Examples of findings:

One man claimed to have investment banking transaction experience. A short call to the employee check hotline revealed that he had one year's experience in a back office, administrative support function.

One woman's patchy resume indicated consulting services to the CEOs and boards of international banks. Her prior experience? A BA from a state university, followed by 3 years selling household products for a pyramid marketing company and 5 years as a telecom customer service representative (which her Linked In profile neglected to mention, but which are evident from other Internet sites).

One woman described herself as a real estate investment expert. The real estate broker confirmed that she had worked with them for several months as a brand new realtor but, as yet, had no clients.

Calls to two prior employers of a job applicant were the most interesting I've ever had. One man actually yelled that my applicant was crazy. His prior employer indicated that he was a severe alcoholic with rage management issues who sabotaged several client relationships. He was with each company for only a few months.

Several alleged investors were unable to give me the names of any companies in which they had previously invested. Another investment firm was cited in a public company's SEC filings as having failed to fulfill their contracted investment (the firm needed to explain a revision to their financial outlook).

How can you find out about prior employment?

Review the names of past companies, dates, and duties on the resume. Be sure to look for other resumes on other sites, by googling the person's name and any of those companies. Often, people update one document but forget that the Internet stores prior versions, too, and that other companies and websites may mention them. Red flags of doubt include:

frequent job changes, with short stints at each, an illogical career trajectory, impressive titles or duties surprisingly early with little prior experience, long gaps, multiple resumes that don't match on dates, duties, titles, or firms, companies you can't find through Internet searches, claims of great success yet major swings in industries, cities, or employers. Ask for references and be sure to call them.

Ask if the person worked there, during the years and with the duties claimed and ask “is there anything else I should know?” Some large companies have “employee check hotlines” for such inquiries. If the person claims to have been self employed (as a reason why you can't find the firm) look it up in the corporations list of the state's secretary of state or commerce website. Although each website differs, many allow you to research whether a company name is “available” or associated with an existing or even past company, and many list the officers and directors, along with the address. For some types of businesses, the Better Business Bureau ( is a good source of information, not about individual employees but about the reputation of the company. I like the website, on which unhappy clients criticize companies. For public companies, you can review SEC documents and EDGAR filings at Most professions that require licensing, such as accounting, law, medicine have websites where you can search for names, specialties, and whether the person remains in good standing with the profession. I like for searching attorneys and (look for Broker Check) for investment bankers. If you don't find the name of the person, he or she is not licensed. If you do not find the name of a person who purported to be a licensed doctor, attorney, investment banker, etc, call that organization. Ask why you don't find the person. They might be interested to learn that someone is masquerading as a member of that profession. In fact, some groups have posted "wall of shame" websites naming names of imposters. There is one for people who pretend to have been Navy Seals.

Crimes and Lawsuits:


A man proclaimed himself an expert in financing small companies, but his credibility was marred by revelations that he had filed personal and corporate bankruptcies in two different states after shareholders accused him of fraud. Even more damaging were the words of the bankruptcy judge, who handed down the most sweeping denunciation of his business practices that I have ever read outside a criminal indictment.

A man sought investors in his new venture, based on claims of great experience in the past. He neglected to mention, understandably, that his past included SEC sanctions for fraudulent business practices so egregious that he is in a case study at a law school!

A man was imprisoned in New Jersey for fraud, and moved to Texas to look for new investors in the same type of business. I reported him to the white collar crime division of the local police but they said they couldn't do anything until he actually committed a crime in their jurisdiction.

A man was barred from licensing in the securities industry and from selling any security in the state of CA based on a law suit by several investors. He re-registered the exact same business in MD and got some attorney who obviously did no due diligence to draft a Private Placement Memorandum so he could solicit new investors! I called the state's attorney general and the lawyer.

One man is operating businesses, soliciting investment, under two different last names. Somebody actually set up a website to expose him as a fraud.

One woman is listed on the internet under several spellings of her name, several different email and physical addresses, and inconsistent resumes, titles, and job histories.

One man sought investment in a pet food company. However, he is under indictment in CA for 48 counts of fraud and cruelty to animals when he ran a pet shop.

How can you discover a person's crimes and lawsuits?

Google the person's name with a variety of search terms for your worst fears, such as lawsuit, bankrupt, and various crimes. Common names, like “John Doe” may be very difficult to search, so narrow the field with details like the city, state, job title, school, or some other such way to narrow the field: "John Doe" + NY + invest + fraud. Some states, such as TX, AK, and FL make it very easy to look up lawsuits, bankruptcies, and IRS liens. Others, like CA and NY have tighter privacy laws. When you search, don't look just at the first page of results. Some clever people bury their past misdeeds with a pile of free press releases, self-published articles, and other more recent information.

* * * * *

Over the years, I have uncovered more lies among professionals that I ever expected. Now I am pretty jaded, with a fine tuned “nose” for people who “don't pass the sniff test.” I'm not talking about women who lie about their age or men who lie about the size of the fish that got away. I'm warning you that there are plenty of charming people who have lied and will lie to get into your company, your home, or your bed. Protect yourself. Check them out.

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