Scammer Deepfakes CEO's Voice To Trick Subordinate Into Transferring $243,000, And More Of The Week's Best Scam Stories
CONS AND PROS
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​It seems like we're living in a society that's full of scams, hoaxes and questionable practices committed by individuals or corporations these days. Some scams are purely horrible, some are more incredible than egregious, and some are just really, really weird.

Welcome to Cons And Pros, a weekly roundup of the most outrageous scam stories we have come across this week.

The Original Ponzi Scheme

While we're all familiar with the phrase "Ponzi scheme," a scheme that promises high rates of return to its investors and pays profits to earlier investors with money from more recent investors, not many of us are aware of the story of Charles Ponzi, the man whom this particular type of scam is named after.

Michael Durbin pulls back the curtain on the life of Ponzi with his article on Damn Interesting and details how the first Ponzi scheme from Charles Ponzi began. Initially, what Ponzi was trying to pull off was a form of arbitrage involving the International Reply Coupon, a coupon meant to simplify the process of international mail. Ponzi, however, soon met a roadblock when he ran out of funding.

At the end of February 1920, Ponzi owed $2,655 to Giberti's initial investors—their $1,770 capital plus $885 interest. Ponzi had no arbitrage profits with which to pay them. But he had money from more recent investors, so he simply used that, dipping into funds from Peter, as it were, to pay Paul. He claimed the gains were legitimate, that an associate named Lionello Sarti had gone to Italy and returned with large quantities of coupons, along with the fortunate news there were plenty more to be had. It's very likely Sarti never existed—nobody other than Ponzi would ever report meeting the man. Ponzi's satisfied investors didn't care as long as they were getting paid.

Damn Interesting

[Damn Interesting]

From CEO To Fake CEO

As deepfakes continue to seep uncomfortably into our lives, here's another example of why we have to be more wary of this AI technology:

The CEO of an energy firm based in the UK thought he was following his boss's urgent orders in March when he transferred funds to a third-party. But the request actually came from the AI-assisted voice of a fraudster.

The Wall Street Journal reports that the mark believed he was speaking to the CEO of his businesses' parent company based in Germany. The German-accented caller told him to send €220,000 ($243,000 USD) to a Hungarian supplier within the hour. The firm's insurance company, Euler Hermes Group SA, shared information about the crime with WSJ but would not reveal the name of the targeted businesses.

[Gizmodo]

All Beware The Con Queen Of Hollywood

And speaking of using a fake voice to dupe marks, who can forget the infamous Con Queen of Hollywood, an imposter who has posed as some of the most powerful women in Hollywood to scam freelancers in the industry and whom recent investigations have revealed to likely be a man?

While the Con Queen remains at large, Julie Miller's Vanity Fair article offers insight into the reasons why the Queen has been so hard to catch:

Kotsianas, who has spoken to over 100 victims, says the reason it's taken so long for authorities to zero in on this con artist is not so much because he's hard to find. "It's a very complicated case jurisdiction-wise," she said. "And it's the type of case that can fall between the cracks of law enforcement, in that even though it's really high-profile names being impersonated, the dollar amounts of the individual victims is really not that large in terms of what the FBI typically wades into."

[Vanity Fair]

The Walmart In No-Man's Land

While not necessarily a scam, Quartz's reporting of Walmart's tax dodge scheme, which involves the company inventing a "fictitious" Chinese entity to avoid paying $2.6 billion in taxes certainly counts as a dodgy corporate practice.

Walmart's arrangement, internally named "Project Flex," revolved around the company's payments to its Chinese subsidiary in Shenzhen, from which it sources many of the billions of dollars of Chinese goods it imports every year, the former executive wrote in a presentation explaining it. To avoid paying tax in either the US or China, Walmart created a "tax nowhere" entity that neither country would claim jurisdiction over, according to the former executive.

[Quartz]

And if the IRS is able to reclaim the $2.6 billion Walmart owes, it will be the second-largest tax repayment in US history (the honor of the first goes to GlaxoSmithKline's $3.4 billion settlement with the IRS in 2006).

Pang-Chieh Ho is an Editor at Digg.

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