Serious Advance Fee Loan Scam

Finger Lakes Times - October 10, 2004

GENEVA — An advance-fee loan fraud bilked a local woman out of $1,100 recently.

Advance-fee frauds promise victims some payout, loan or other benefit — if only they’ll send money first to cover administrative fees. The most well-known example is the infamous Nigerian e-mail, which offers a large share of a deposed or deceased leader’s fortune in exchange for laundering the money into the United States.

Amy Gay, of North Exchange Street, was not interested in a windfall. The divorced mother of a 12- and 17-year-old said she just wanted to improve her credit rating when she saw an advertisement for Paragon Financial Group Sept. 12 in the The Week Ender of Geneva. The ad offered personal, home, business and debt consolidation loans to people with “damaged” credit.

The ad ran Sept. 3, 10, and 17. Editor Chris Pruzenski stopped the ad’s fourth appearance after he received a complaint about it. The Times does not print such advertisements.

Gay called the ad’s phone number and spoke with a person who instructed her to wire money to an individual in Canada through Western Union to buy insurance on the loan. Although that seemed strange to her, she said the representative had a reasonable-sounding answer for each of her objections. Gay felt even more reassured after she investigated the company by visiting the Web site listed in the ad, Bogus Paragon Financial site , and she wired the money Sept. 30.

“It looks like a legitimate Web site,” she said, noting that it features the Merrill-Lynch bull trademark and FDIC logo, “but it is a total fabrication.”

Her loan was supposed to be wired to her account Oct. 1, but there was still no money on Oct. 4. Gay called the Better Business Bureau, got another phone number for Paragon and spoke with Lakisha Gilmore-Atherton .

The real deal

It’s a call that has become too common for Gilmore-Atherton, an administrator for the real Paragon , located on Walt Whitman Road — not ” Valt ” Whitman Road , as the ad states — in South Huntington, Suffolk County.

“Obviously, everyone who calls here is looking for their money, and all we can give them is a phone number,” she said, adding that the scam is hurting her company’s reputation. “As far as our company, it’s been going on for at least two months. What they’ve done is they’ve literally stolen our identity.”

Principal Brian McDonnell said the situation has become incredibly frustrating, noting that he spent 20 years building his company on doing the right thing even when the wrong thing was technically legal. Now, a ring of criminals is damaging that tradition.

“It drives me insane that we can’t shut down this Web site,” he said, adding that government agencies and law enforcement officials seem unwilling to address the problem.

He’s heard many reasons — international jurisdictional issues, the difficulty of finding and prosecuting the con artists, the light penalties in Toronto for those caught, and the sheer size of the problem. McDonnell said the lead investigator in Toronto told him these scams took in $52 billion last year, with most of the money leaving Canada.

That’s scary news for McDonnell, who worries what the money is funding in today’s world.

That concern — bolstered by a three-inch folder growing daily and workers spending half their day combating the scam — have prompted McDonnell to go on the offensive. He’s trying to get newspapers to agree not to print the ads and wire services to warn people sending money to Toronto.

“If we can get a combination of the two, maybe we can slow this activity down,” he said, adding that unbridled success will only encourage more advance-fee fraud.

More scams, more victims

Criminals seem to be aware of the gold-rush potential of these scams. Authorities are investigating another “Paragon” Web site, www.paragonfinancial.net, and the scammers have hijacked the name of another legitimate company, Continental Funding of New York City.

“This is really getting out of control. It’s crazy. It’s absolutely crazy,” said Gilmore-Atherton, whose company’s real Web site is www.todaysbestrate.com .

Week Ender editor Pruzenski noticed the misuse of Continental’s name Sept. 28, when he received a suspiciously familiar request for advertising rates from a company claiming to be Continental Funding.

“It looks identical to the original fax from Paragon,” he said.

Both faxes, which Pruzenski shared with the Times, are printed in the same unusual font and worded identically. Only the business names, contact information and sample ads differ.

Concerned, Pruzenski called the toll-free number of the new company’s Massachusetts office. They never responded to him, so he did not run the ad.

Peter Janoff, president of the real Continental Funding, was shocked Thursday afternoon to learn con artists had tried to place an ad in his company’s name. The proposed ad featured Continental’s real Web site, www.continentalfunding.com, but a false phone number. Janoff said his company has never done business in this area and has no out-of-state offices.

The company is listed on the state Banking Department’s Web site, www.banking.state.ny.us, as a mortgage bank. Janoff said he planned to file complaints with the department and other authorities immediately.

The Banking Department Web site has a warning about a similar scam being run in the name of Heartland Credit Union with an Amsterdam, Montgomery County, address. A real Heartland Credit Union is located in Madison, Wis., and is not involved in the scam, the warning notes. It also asks consumers and media outlets to report any such ads to the department’s Criminal Investigations Bureau at (212) 709-3540.

Calls placed to the Paragon and Continental advertisements’ phone numbers were not returned.

Another victim, Trisha Jones of Williamsburg, Ohio, called the Times Wednesday after speaking with Gilmore-Atherton. She wired $1,900 to Toronto Monday to insure a $100,000 debt consolidation loan she never received. She borrowed the money from her church and can’t repay it; she and her husband had already been afraid of losing their house.

“I have a financial issue, obviously. That’s why I called this place, and I thought it was real,” she said, adding that she has six children, ages 1 to 11.

Jones reported the fraud to the FBI, Western Union Fraud Department and an attorney, but authorities told her the money is not usually recovered.

Gay also contacted authorities, filing a report with the Ontario County sheriff’s department. Investigator Dennis Crouch said Thursday he reported her case to the Secret Service, which is already investigating these scams. He said he knew of no other local victims.

Secret Service agents in Rochester said they could not comment on the investigation.

Protecting oneself

“There are a lot of warning signs that people have been missing in this scam,” said Teresa A. Santiago, chairperson and executive director of the state Consumer Protection Board, in a June press release about a similar scam offering start-up loans for small businesses.

Victims then were losing $500 to $2,400 to a Canadian crime ring advertising under the names Empire State Financial Services, Mortgage Expo and Crown Financial.

Santiago warned that con artists keep changing the company names and phone numbers, so consumers can’t protect themselves by memorizing a list. Instead, before sending money anywhere, consumers should investigate a company by visiting such Web sites as www.Ripoffreport.com and www.BBB.org or calling her agency at (800) 697-1220.

Lending institutions can also be verified through the state Banking Department at www.banking.state.ny.us/simbanke.htm .

McDonnell said newspapers receiving suspicious ads — and consumers reading them — should call Information to get a local phone number for the company and call it to make sure the ad or offer is legitimate.

Santiago also said people should verify the address in the ad is for the business in question. Empire was using a New York City school’s address.

“Sending money via Western Union to a Canadian address is another tip-off,” she continued. “You should never send money before you receive a product or service and no transaction is safe unless you know for sure that you’re dealing with a legitimate firm.”

Santiago also said “loan insurance” fees should be a red flag for potential borrowers .

“Legitimate lenders usually don’t usually ask for a fee up front,” said Santiago, noting that legitimate fees are usually quite small.

Jon Sorensen, the Consumer Protection Board’s director of marketing & public relations, agreed and added that consumers shouldn’t look for loans through newspaper ads.

“It’s always dangerous to put money up front or to wire money,” he said. “It’s not the w ay legitimate companies do business.”

The state Consumer Protection Board is working with U.S. and Canadian agencies to find those responsible for this scam. Complaints may be filed with the board at (800) 697-1220 or via the Internet at www.nysconsumer.gov .