Two Popular Business Loan Scams By William CateFraud is a growth industry. Law Enforcement rarely investigates fraud complaints, unless losses are measured in
tens of millions of dollars. Investigations seldom lead to charges. Unless accused is potentially involved with Organized Crime or Terrorists groups, extradition isn't a Government option. Swindlers are likeable people, convicting them of anything is extremely difficult. If convicted, jail time is in a resort atmosphere prisons and fines are infrequently collected. As Mafia members in Canadian documentary "The Mafia in Canada" observed, Canadian jails offer better accommodations than their homes in Italy.
Knowledge and cynicism are your best defense against being taken. If it sounds too good to be true, odds are it isn't true. If it doesn't make sense, odds are it isn't true. If it isn't in writing, don't risk your money. If you can't arrange a local meeting with principals, don't send them your money. Be aware of common business and investment scams. There are hundreds of variations of any basic scam. If offer you are considering sounds like any common swindle, odds are it's a variation of that swindle.
PBG - The Scam That Won't Die
You want to borrow millions of dollars for your startup business. There's a bank or insurance company in some far off land willing to lend you needed funds. They are willing to prepare loan papers and make commitment for some sort of loan origination fee. The standard fee is 1% of funds being sought. Once you have loan commitment and before you get your loan, you must find a major bank to be your cosigner. Thus, name of this swindle is Prime Bank Guarantee (PBG) Swindle.
The major bank is being asked to accept all risks inherent in making a business loan and get none of benefits. Assuming bank's loan officer has an IQ of 60 or above, he or she will realize that this isn't a good deal for Prime Bank. At least, with major bank doing loan, they would get interest payments until borrower defaulted. PBG lenders know that Prime Banks won't lend. This is a front fee scam with no risks of defaulting on contract terms, since borrower will never find a major bank co-signer.
The folks with IQs below 60 are large networks of "brokers" selling these deals to business community. They will help entrepreneurs find PBG lenders. For a fee, they will help PBG victim contract Prime Banks to see if bank wants to be victim's co-signer. Many of people in this network may be good salespersons, but they lack capacity for simple logic.
