It was a late-night phone message that tipped off Steve Goldberg, a Washington, D.C., investment adviser, that something was amiss. Goldberg was startled by a request from a broker to wire $270,000 from a wealthy -- and elderly -- client to a bank in London. Immediately, Goldberg smelled a rat.
The client (we’ll call him Mr. Smith) had previously mentioned that he expected a big inheritance, but his reluctance to offer details raised Goldberg’s suspicions. So he told the broker to delay the transfer.
Slowly, Goldberg unraveled the scheme. The initial bait sounded like something only a fool would fall for. A fax purporting to be from a staffer on the Swiss Banking Commission claimed that someone with the same last name as Goldberg’s client had died in 1996 without a will, leaving $17.5 million unclaimed. The civil servant wanted Smith to misrepresent himself as a long-lost cousin, collect the cash and divvy it up with the schemer.
Smith is in his eighties, sharp and still working. But as the accompanying story notes, it’s not uncommon for financial skills to deteriorate with age.
Once he responded to the scam artists, Smith found himself in the hands of skilled criminals. He hired the Swiss lawyer they recommended -- or, at least, he thought it was a Swiss lawyer -- to investigate the deal. He made phone calls to “officials” in Berne and London, and he received return calls.
Over several months, Smith handed over $1.3 million in pursuit of a big score -- all before he became Goldberg’s client. The scammers first said he had to pay Swiss inheritance taxes, then user fees, then new fees tacked on because of anti-terrorism laws. It all sounded plausible. And the deeper he became ensnared, the easier it became to defraud him.
When Goldberg first warned of a swindle, Smith angrily disputed the possibility. “I need this wire to go out or I lose the whole thing,” he pleaded. Searching for a way to protect his client without violating his privacy, Goldberg turned to Todd Schwartz, a Portland, Ore., attorney. His advice was to call in the FBI. “We’re going to make an assumption that he’s being abused because he’s elderly,” Schwartz told Goldberg. “Elder-law statutes should protect you. Confidentiality stops with illegal activity.”
Smith eventually came to the painful realization that he had been deceived. He was deeply embarrassed and ashamed. “Few cases like this ever end with the recovery of any money,” says Goldberg.