The TV show “American Greed” offers case studies of financial scams. Past shows are generally available...

The TV show “American Greed” offers case studies of financial scams. Past shows are generally available at youtube.com. Watch one of the following shows:

Season 1, Episode 5 “The Baptist Foundation of Arizona”

Season 13, Episode 6, “The House Flipping Reality Show Fraudster”

You may also watch a different episode as long as it deals with a financial scam.

After watching, answer the following questions:

a. How did the scammer attract investors?

b. What did the scammer really do with the investors’ money?

c. How did the scammer reassure investors?

d. Were there any warning signs that investors should have seen?

e. How much money did investors lose?

f. Was the scammer punished?

Solutions

Expert Solution

a.The scammers are good at understanding the business they do and devising the best ways to make believe that their actions are legit. They maintain better relations with the investors allthrough the scam till exposed. They prepare themselves with documentation of un related customers to fraud investors.

b. The scammer had thoiught of securing his life with the investors money out of greed. They embezzeled the money and made alternate investments that cannot be traced out and then tried to take advantage by declaring bankruptcy.

c.The scammer reassured the investors by showing the agrements and ststing that the loans are secured. But in actual the secutity in itself is fabricated.

d. The investor duediligence was not robust. There were signs of a market downturn but the business was booming and high number of deals happening. This should have alerted the investors.

e. Investors in this video Season 13, Episode 6, “The House Flipping Reality Show Fraudster” lost a total of approximately $ 30 Million.

f. The scammer has been punished. The fraud acts always lead to punishment as the system and the authorities are on watch of the every action.

jeff jeffy answered 1 year ago

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