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Transcription of interview with Doug Shadel on April 29, 2013.
Douglas Goldstein, CFP�, Financial Planner & Investment Advisor
Doug Shadel is the director of the AARP in the state of Washington. He is a leading expert
on fraud schemes in the elderly.
Douglas Goldstein, financial planner & investment advisor, interviewed Shadel on Arutz Sheva
Radio.
Douglas Goldstein: Give us a summary of what is AARP and what do you do?
Doug Shadel: I am a state director for a particular state, the state Washington. AARP is an organization
that serves people over the age of 50. We have 38 million members throughout the United
States including about a million in the Washington State.
Douglas Goldstein: What you focus on is fraud and cons. What are the most common cons that
are happening today?
Doug Shadel: Some have been happening for a long time and continue to happens today
like the one that we�ve been focusing a lot recently are foreign lottery frauds especially
coming out the Caribbean and especially in Jamaica, there have been a number of new stories
that was in congressional hearing last month about this.
What is a lottery scam? Somebody will write to you or call you and tell you that you�ve
won the elGordo lottery or the Jamaican lottery and in order to collect your winnings, all
you have to do is pay a legal fee or a processing fee of $29 or $300. As soon as you sent that
money or you respond in writing, you start getting bombarded by calls and I�m talking
about 40 or 50 calls a day from young aggressive males who will just not take �No� for
an answer and they will be very charming at first but what you discover is that there
really is no Jamaican lottery or that you really have not won the lottery and it�s
not uncommon to see people lose as little as $300 to $300,000.
Part of the question people say after you find out you haven�t won, why do people
keep sending money? Part of it is they�re just so intimidating, they�re afraid. We�ve
had examples where these guys will call and leave voicemail messages saying, �If you
don�t pick up the phone, I�m going to come and burn your house down.� So threats
of physical violence but the other psychological thing that happens is once you�ve lost a
bunch of money, you�re confronted with this conflict, �I�m a smart person and I did
something that wasn�t so smart.� How do you resolve that conflict? You either say,
�I�m not a smart person� which is hard to do or you say, �What I did really wasn�t
dumb and I�m going to keep doing it until I prove to the world that I really did win
the lottery.� We call it the rationalization trap and a lot of people are falling for this.
Douglas Goldstein: Why would someone believe he won the lottery?
Doug Shadel: We don�t know for certain. There�s more research that needs to be done
but I�ve done a lot of research on lottery victims and investment fraud that comes for
that matter. One of the things we did about 3 years ago was identified 45 people who�ve
fallen for the lottery. We sent geriatric social workers into their homes to do mental
status evaluations for them. The clock draw, what time is it that count backwards from
7 and these are people who know how to do this and they found that 80% of the victims
had some form of cognitive impairment which is a much higher rate than the general population
so that maybe one thing that�s going on.
There�s also, this is really around the world now, the sort of global sweepstakes
mentality. We�ve interviewed a lot of con men who did these types of scams. One of the
things they say is if it worked for 48 states in the United States promoting the lottery,
we could never pull the scam off because it�s legitimate. They are legitimate and they�re
promoting it and there�s millions of dollars being spent promoting sweepstakes and so it�s
in that cultural environment that people tend to believe when you and I might not.
The other thing that the con man said when we asked them a question, �What is your
central strategy for swindling people just across all different kinds of scams?� they
all say the same thing and that is �I want to get the victim under the ether� and we
say �What do you mean by ether?� Ether is a heightened emotional state where you
get all excited about something whether it�s a fear of losing your money or whether it�s
the excitement of winning the lottery. You�re logical reason in mind is no longer engaged
and you�re reacting emotionally. One guy said, �I want to keep them in the altitude
of the ether because if they drop into the valley of logic then I�ve lost them.�
This partly explains why we interview so many people who are doctors, lawyers, retired physicians
who have lost hundreds of thousands of dollars in investment scams and we speculate that
the reason that can happen is because they�re not using that really intelligent part of
their brain that the moment they made the decision, they�re being swamped out by the
emotion of the moment.
We used to tell people, �Whatever you do, don�t give out your credit card number over
the phone to people.� Now we say the principal advices, �Don�t engage in a personal conversation
with a stranger in which you�re telling them about your children and your grandchildren
and they�re getting you all emotionally involved and they�re also writing all those
things down and use them against you.� That�s unfortunately where we are now.
Douglas Goldstein: What can we do to help people with cognitive impairment?
Doug Shadel: I can tell you about a program we operate at my office here which is called
the �Fraud Fighter Call Center.� Law enforcement gives us the names of victims of fraud but
we also by names, just like the con-men do actually, of people who meet the profile.
We�ve done profiling and we search who falls for these types of scams in a case of the
lottery victim and it is someone who is over the age of 70, they tend to be female, they
tend to earn less than $30,000. We reach out to them and we have older volunteers about
75 of them in the office here who call them and give them peer counseling.
Douglas Goldstein: Before they get hit?
Doug Shadel: Before and after because the other thing that con man will tell you is
that the number one person they want to call to swindle is somebody who�s already been
swindled.
Douglas Goldstein: You would think experience would make them less vulnerable.
Doug Shadel: They�ve already pulled the trigger. Again it is throwing good money after
bad mentality. It�s also a personality type of somebody who is willing to talk to a stranger
and wire money across the world to someone they don�t know. We more and more in fraud
prevention work are trying to use those profile that we get from research and the victims
and focus our attention on those people and not the general public because the general
public, we don�t know what the exact prevalence rate is but research tells us it�s between
8 to 15% of the population at any given year. There�s an international crime victim study that has a prevalence rate
that�s about 8-10% so the good news is 85 -90% of the public don�t fall for these
things and the
question is which 85%?
Douglas Goldstein: How can people help their parents that way?
Doug Shadel: We�ve done lots of focus groups of family members of people who have gotten
caught up in this trying to find out best practices, what work and what didn�t work.
I can tell you one focus group I led. Twelve people, all of whom had elderly parents or
relatives who had fallen from one scam or another and were still kind of in it in a
prolonged time and I said, �What success can you point to, to get them out of this?�
Eleven of the 12 of them said, �I can�t tell you what didn�t work� because they�re
still doing it. What they told us universally doesn�t work when you approach a relative
who you�re worried about because they may be doing this is to say �Mom, Dad, how could
you be so stupid? This is such an obvious scam.� All of them did that because that
is the natural human thing. You�re on the outside looking at this and you�d go �Come
on, really the Jamaican lottery?� But the problem with that approach is that the defend
shields go up, they continue to do it and now they�re doing it behind your back and
it creates all kinds of family tension.
One example of a person who did it successfully was someone who literally said, �You know
I�m interested in this stuff you�re doing with the sweepstakes. How about everyday when
the mail comes, you and I can talk about this together and you can show me. I want to learn
about it.� This individual had the time to do that but given the time, his approach
was collaborative and supportive even helped her mail checks in knowing it was a scam but
through the course of several weeks of non-judgmental conversation, the victim finally said, �You
know what I�ve never won any money.� So talk yourself into it, that�s all I can
offer.
Other than the caregivers, people who are doing this care giving, to have things to
watch for, to beg your finally member maybe doing this because there are some warning
signs. One is getting a lot of mail. If you send in one of those fliers, just one, you�re
going to start getting 20 letters a day and lots of phone calls. Look for whether there�s
a lot of mail coming in, whether your loved one seems to not want to talk about money
because on some level, they know that this is something that they�re at the very least
worried about. If they all of a sudden they were very communicative before and now they�re
sort of keeping things from you and that�s another warning sign. It also tends to make
them very anxious in general, whenever the phone rings, they jump to answer.
We have some of this information on our website at www.aarp.org. You can just enter keyword
scams and there�s all kinds of tips on it and anybody around the world obviously can
go on to that website and get some of our tips.
Douglas Goldstein: How can people actually follow some of your work itself?
Doug Shadel: There�s a book that I wrote last year which was a compendium of interviews
with con men and it�s called Outsmarting the Scam Artists: How to Protect Yourself
From the Most Clever Cons. You can get that on Amazon or any other book outlet. In that
book, there�s also a vulnerability quiz that you can take or give to your loved ones
to see whether they�re doing things that make them vulnerable.
Douglas Goldstein, CFP�, is the director of Profile Investment Services and the host
of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com.
He is a licensed financial professional both in the U.S. and Israel. Securities offered
through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA. Accounts carried
by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company.
His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.
Disclaimer: This document is a transcription and/or an educational article. While it is
believed to be current and accurate, divergence from the original is to be expected. The original
podcast can be heard at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely
information and should not be used as the sole basis for making financial decisions.
The opinions rendered herein are those of the guests, and not necessarily those of Douglas
Goldstein, Profile Investment Services, Ltd., or Israel National News. Readers should consult
with a professional financial advisor before making any financial decisions. Please see
the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/.