April 1995 Topics - Part 2
Video Arcade Fraud, Swindle Sheet, Copy Ban Plus,
Caveat Emptor, PSA, Derivatives, FSC,
and Swirls (Trash for Cash)
 

Savings and loan associations financed “trash for cash” deals to sell real estate at artificially inflated prices.
 

Video Arcade Fraud
Counterfeiting done by kids using color photocopiers. They copy $5 bills at a library. They put five $5 bills front-side down using legal size paper. They copy just one side of the bills on ordinary bond paper. The kids go home, cut them out, and then go to a video arcade. At the arcade, they insert the phony bills into change machines to obtain gaming tokens or cash. Most change machines and vending machines in North America only scan one side of a bill. By 1996, the U. S. Treasury Department plans to redesign the $100 bill. Other denominations, including the $1 bill, will be redesigned by 2000. The portraits will be 50 percent larger and off-center. Each bill will have a portrait-shaped watermark. To reduce counterfeiting, the bills will have small shiny-colored iridescent disks that cannot be photocopied. Unfortunately, most change machines will probably be reprogrammed to read the old style currency as well as the new style currency. Video arcades, vending machines, and laundromats will continue to be victims until both sides of currency are scanned by change machines.

 

Swindle Sheet
An expense account.
Jay Robert Nash, Dictionary of Crime, Paragon House, New York, 1992, p. 379.

 

Copy Ban Plus
A technology developed by the Standard Register Co. to print checks and transportation passes. A tiny dot pattern, which is invisible to the human eye, is printed or engraved in the background of a document. If a counterfeiter attempts to copy, scan, or photograph the document, the word “VOID” appears all over the reproduction of the document.

 

Caveat Emptor
Latin for “Let the buyer beware.” The purchaser must examine, test, and judge any goods or services for himself. The buyer should not be ignorant of what he buys. The seller might not be held responsible for the quality of his product unless that claim is guaranteed in a warranty. Buy at your own risk.

 

PSA
A Public Service Announcement. Free advertising provided by newspapers, magazines, radio stations, television stations, or billboard companies. The announcements promote causes for the good of the general public. The messages may warn about health risks, risky driving habits, and promote safety and education. Some PSAs warn the public about scams, encourage them to fight crime, and publicize hot lines and silent witness programs to report suspicious activities. They encourage the public to improve and protect their communities and neighborhoods.
Photo: News Release, London Borough of Hillingdon, March 22, 2002, www.hillingdon.gov.uk/news/archive/march/spillthebeans.php.

 

Derivatives
Complex financial agreements whose returns are linked to, or derived from, the performance of some underlying asset, such as bonds, currencies, mortgages, interest rate swaps, commodities, or debt instruments. Investment losses from derivatives have increased to hundreds of millions of dollars each year. Some investors have sued fund managers or derivative sellers for fraud, claiming that they failed to disclose the volatile financial risks involved. Courts in the United States and Britain have not ruled on what level of disclosure of risk is required for derivatives. All types of investors have lost money in derivatives - individuals, large companies, and municipalities. Investors that have sued to recover multi-million dollar losses include Proctor & Gamble Co., Gibson Greetings, Inc., Odessa College, and Charles County in Maryland.

 

FSC
Federal Supreme Court.

 

Swirls (Trash for Cash)
“Trash for cash” deals, in which savings and loan associations sold real estate at artificially inflated prices. The thrifts financed entire transactions, making the deals look good on paper; but in reality, the transactions brought in no real income to the thrifts. Bank officers frequently received hefty pay bonuses or commissions for creating and processing swirls. Bank stock prices gave old and new investors undeserved confidence.

 

ã Copyright 1995 Larry C. Adams. All rights reserved.
 

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