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How to Deal with Fraud

Photo by Don Hankins

Photo by Don Hankins

One thing I have never posted on my blog before is that I was defrauded out of a large sum of money.  It’s kind of embarrassing to admit this and I definitely should have known better.  Here I am, handing out financial advice to others and yet I was taken in myself by a con artist.

However, I have decided to share my story with everyone, in the hope that others may avoid a similar fate.  And, I have learned some very valuable lessons that I feel obligated to pass on. 

There is good news to my story and some closure in my case.  Many victims aren’t so lucky and they never recover their money or obtain justice from the courts.

Last week, after two years of lies, confusion and disappointment, I received an email from the District Attorney’s Office.  The perpetrator plead guilty to one felony count and as part of his plea agreement, he will have to pay me full restitution.  He will be sentenced near the end of this month.

How it Happened

Back in 2007, we decided to take a vacation to visit my wife’s family.  My wife is from a small island in Micronesia and the plane tickets are incredibly expensive.  We contacted Continental, who has a monopoly on air travel to Micronesia, and were quoted a price of $10,000 for four tickets.  This was way out of our budget, so we talked to some of our relatives who had bought discounted tickets.  They recommended a travel agent who was very knowledgeable about travel to the islands and he recommended ways to reduce the cost of the tickets by flying on certain days.  He provided a quote of  $6,756 for the four tickets and we purchased them.

My wife was leaving two weeks earlier than the rest of the family, so we drove her to the airport.  We arrived at LAX, after a two-hour drive, and found out the e-ticket reservation number was invalid.   The tickets had been reserved but never paid for by the travel agent.  When we returned from the airport very angry, the travel agent wouldn’t answer his phone.  After some back-and-forth messages and an apology from the travel agent, he provided a one-way ticket for my wife.  We never received the rest of our tickets and I had to buy another one-way ticket to fly my wife back home.  So, I was out more than $6,000 and our family vacation was ruined.

Dealing with It Emotionally

It’s easy to get depressed when you are the victim of a crime.  And, it’s easy to blame yourself, even though you are not the criminal.  It’s hard to explain to others how the fraud occurred; when you know deep-down you may have been able to avoid it.  The hardest part for me was accepting some responsibility for my own missteps, while keeping the blame focused squarely on the person who committed the crime.

Another frustrating situation was everyone asking, “What is going on with your case?”  They were almost as upset as I was and they wanted to know that justice would be served.  The reason this was so frustrating is because I had no idea what was going on with my case and I wouldn’t find out for years.  I began to doubt there would ever be a resolution and I wished people would just stop asking about it.  Even though I knew others were only trying to help, it stirred up a helpless feeling I wanted to avoid.

After a while, walking away from the problem would have been the easiest thing for me to do.  It would have been a big relief to put it all behind me.  One thing that kept me going was the thought of other victims, past, present and future.  I don’t know their names or their stories.  But, I knew they existed from talking to the DA and I knew exactly how they were feeling.

Dealing with It Legally

Disclaimer: I am not an attorney and this post should not be construed as legal advice.  This post is for entertainment purposes, based on my experience in my specific case.  If you need legal advice, you should contact an attorney.

I Researched the Law – When it first became obvious that I wasn’t going to get my airline tickets or a refund in a timely manner, I looked up the specific laws governing travel agencies.  I learned it is considered a felony for a travel agent to misappropriate money paid for airline tickets.  And, if the airline tickets cannot be furnished, a full refund must be provided within 48 hours.   It was very important that I understood the law before I presented my demand email to the travel agent or filed a complaint with the authorities.  Otherwise, it may have reduced my chances of recovering my money or obtaining a conviction.

I Stated my Demands – Before I could sue in court or file a complaint for fraud, I first needed to demand a refund in a definitive manner that couldn’t be disputed in court.  In my case, I replied to his email saying he couldn’t provide the tickets and I was lucky that he replied back to my demand email, proving he had received it.  Otherwise, I would have sent a certified letter, with a return receipt.  In my demand email, I included all of the following items:

  • I referenced the specific laws that had been broken.
  • I demanded a complete refund and included the amount. 
  • I demanded a refund within 48 hours and included the date.
  • I stated my next action would be to file a fraud complaint.
  • I referenced the specific regulating authority. (DA’s office)

I Filed a Fraud Complaint – The travel agent’s response to my demand email didn’t comply with the law.  Basically, he stated that he didn’t have my money and he would try to pay me back by the end of the year.  So, after the 48 hours had elapsed, I filed a fraud complaint with the DA’s office.  The DA had an online complaint form, which made filing a snap.  But, that was only the beginning of the work that was required to initiate my case.

I Got it in Writing – Long before my demand email, I realized legal action was likely.  So, I stopped using the phone and switched to email.  I also let the phone ring through and caught the messages on voice mail.  Since my company had a Cisco phone system, the messages were forwarded as a WAV file attached to an email.  When I provided my evidence to the DA, I forwarded these voice messages.  They were time-stamped recordings in his own words, that couldn’t be twisted around or disputed.  Between the email and voice messages, he incriminated himself completely and I captured it.

I Tracked Everything – I created a timeline in Excel that detailed every contact that occurred.  And, I printed out every email, logged every phone call and obtained a copy of my cancelled check.  Then, I sorted all of the printed evidence to match the timeline.  The packet I sent to the DA’s office was almost an inch thick.  My caseworker told me we had the strongest case of all the victims.  This empowered me to believe I could make a difference.

I Followed Up Regularly – Anyone who has ever dealt with the court system knows it takes forever.  I was warned by the DA’s office that it would take a long time to resolve this case.  And, I followed-up every month for almost a year.  One day, I got a voice message that my case worker had retired.  I honestly just gave up hope at that point.  But, my case was still working its way through the system.  I was very surprised last week, when I learned my case was settled.

Final Thoughts

I was lucky the fraud occurred in the U.S., where reasonable laws and enforcement exist.  I was very unlucky (and foolish) because I didn’t use a credit card for this purchase.    If I had, I could have easily reversed the charges and recovered my money.  I also should have checked on his status as a travel agent.  I later learned that his registration hadn’t been renewed for many years.  If he had been a registered travel agent at the time of my purchase, there was a recovery fund that may have provided a refund.

Seasoned fraudsters try to act like your friend and take advantage of your good nature.  They may act like they are a victim of bad luck and they just don’t have your money.  Or, they may try to intimidate you and act like it is your fault.  In my case, the travel agent hinted that I had to play by his rules in order to get my money back.  In all cases, you must realize the fraud was planned ahead of time and these are simply techniques to avoid prosecution.  Never doubt yourself or fall prey to these common tricks.  Otherwise, you will become the victim, instead of the plaintiff.

The Bottom Line

The bottom line is that your best recourse against fraud is to avoid it entirely.  Before handing over your hard-earned money on a large purchase, make sure you can obtain a refund if something goes wrong.  If that doesn’t happen, you must become diligent and aggressive in pursuing the fraudster.  No one else will care about your case, unless you demonstrate your own willingness to spin the wheels of justice.

Recommended Reading

This post was featured on the Carnival of Personal Finance. If you aren’t familiar with the Carnival of Personal Finance, it’s the premiere carnival of its kind. If you want to read informative articles from knowledgeable bloggers, this is the place.

6 comments to How to Deal with Fraud

  • Bret,

    Wow. I’m glad you are going to get some closure on this! Now, I don’t want to dampen your spirits, but you need to know that getting the judgment is the (relatively) easy part – but collecting on it is often a whole other matter entirely.

    The Honeybee got a judgment against an old employer of hers a long time ago (he failed to pay her for about a month’s worth of work). After a lot of hassle and over a year, the sheriff finally got an order to forcibly take the funds from him.

    I wish you continued good luck regarding this case.

    Best,

    Len
    Len Penzo dot Com

    • Len,

      Thanks for the tip. I was going to sue in small claims court before the Statute of limitations was up next summer, if the fraud case didn’t settle by then. And, I am already familliar with trying to collect a judgement, which is why I was holding off. He actually already agreed to payments, made one, then he quit sending money.

      Instead of a civil judgement, we got the felony criminal conviction, with restitution as part of his plea agreement. That way, if he doesn’t make the payments, they can toss him back in jail. But, I am getting way ahead of myself, because the sentencing doesn’t happen until 12/29/09. Then, I will know a lot more.

  • Good job of keeping track of everything. I have fortunately never been through an experience like that, but as the daughter of an attorney and having spent 15 years in the financial services industry, “document, document, document” is a mantra I know well.

    People wonder why I use email for a lot of communications and the simple matter is that it is so much easier to document the history of a conversation on email than by taking notes on a phone call. That came in handy during a divorce, actually, when dealing with someone who kept denying that statements were made – finally I just refused to answer the phone and would only communicate via email … curiously, everything simplified and wrapped up rather quickly.

    Anyhoo – email and certified mail are your friends. Good luck getting your money back. How’d the sentencing go?

    • Andrea,

      Thanks for your comment. The sentencing went well, but not what I expected. The perp didn’t get any real jail time, which blew me away. But, we will likely recover all of our money, which is very rare.

      He got nine months of house arrest and will only be allowed to go to work and back, plus two weeks time served. He also got five years of probation and will have to pay everyone back as a condition of probation. The court will collect and disburse the payments, so there shouldn’t be any waffling.

      In talking to the Investegator, he said there were nine victims for a total of $27K in fraud. He said the victims were more interested in getting their money back than in putting the man in jail. He said we should consider ourselves lucky, because he was working on a $1.5 Million fraud case and those victims wouldn’t recover anything.

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