Stanford/Bowdoin: ‘A Tapestry Of Believable Lies’

andybowdoinbw.gifHats off to Houston Chronicle writer Loren Steffy, who explained economically why cons work.

A con, Steffy explained, works because the con weaves “a tapestry of believable lies.” It’s a pointed, short, highly memorable line that deserves special mention because it puts readers “right there.”

Steffy detailed some of disgraced financier Allen Stanford’s lies in this column. Lots of things in the column reminded us of the Andy Bowdoin case. Bowdoin is the head of AdSurfDaily Inc., a Quincy, Fla.-based company accused of operating a $100 million Ponzi scheme.

Here are some Stanford/Bowdoin parallels:

Friends in high places. Stanford went around saying he’d been knighted by Prince Phillip. Bowdoin went on a tour to showcase a special award he’d received for business acumen from President Bush. It turned out that Buckingham Palace called Stanford on his lie; in fact, he’d been given the title of “Sir” by the prime minister of Antigua, a Caribbean Island nation of 85,000 known for lax banking standards and money-laundering.

In Bowdoin’s case, the U.S. Secret Service called Bowdoin on his friends-in-high-places lie. It turned out that the award he received was an award for writing checks to the National Republican Congressional Committee. Basically, Bowdoin wrote a check for banquet tickets and called it a special honor from the President of the United States. Bowdoin, by the way, had more than $1 million on deposit in Antigua. The Sunday Times reports today that $8 billion is missing from Stanford’s bank and that regulators suspect a Ponzi scheme.

Charities and sports. Stanford “sold” clients on his benevolence. So did Bowdoin, who once gifted 100,000 ASD “ad packs” to a charity. Stanford was big on sports sponsorships. Bowdoin told his faithful that ASD soon would become a sponsor for professional auto racing. Members claimed ASD would have a car in the Indy 500.

Holes in the resume: Stanford claimed to be related to the founders of Stanford University. The school exposed the lie and sued him for trademark infringement. Bowdoin claimed to have operated a string of highly successful businesses. Turned out that one of his highly successful enterprises was at the center of a securities-fraud investigation in Alabama and that Bowdoin and co-scammers had fleeced investors out of hundreds of thousands of dollars. He pleaded guilty to a felony, was sentenced to a year in prison, but the sentence was suspended when he agreed to make restitution.

In August 2008, he still owed the Alabama victims $45,000. Just a month before, he paid $50,000 for a new Lincoln. In June, ASD cash was used to retire the $157,000 mortgage of his wife’s son and daughter-in-law, and about $28,000 was used to buy them a new car. At the time, Bowdoin owed his ex-wife more than $162,000.

Nothing out of the ordinary. As Stanford’s empire was collapsing, he told investors that the SEC investigation they were reading about in the newspaper was a “routine” look into the business. He also said he was cooperating fully, which the SEC said was a lie when it later alleged a multibillion-dollar, international fraud scheme.

Bowdoin told members that his business had been approved by regulators and was perfectly compliant. It turned out that ASD didn’t even have a compliance attorney and knew in 2007 — months before it started gathering tens of millions of dollars from members at company “rallies” — that the business was illegal. In the hours after the August seizure of ASD’s assets by the government, people with close ties to Bowdoin sought to assure members that the matter was a temporary blip that would be settled within days.

For good measure, Bowdoin later told ASD members that Ponzi allegations against ASD hand been dropped in Florida. People flooded forums to share the good news — except it wasn’t true. As recently as last week, some ASD members continued to make the claim that Ponzi allegations had been dropped, despite the fact that the office of Florida Attorney General Bill McCollum specifically refuted the claim months ago.

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5 Responses to “Stanford/Bowdoin: ‘A Tapestry Of Believable Lies’”

  1. All scams/Ponzi’s/Fraud has 2%-5% truth, and the rest is all lies. It is this 2%-5% of truth that makes the program believable. Then just follow the script:

    Sell people hope. People live on hope, and their hopes and dreams must be fed through spin and lies.

    In any situation, if possible, accentuate the positive. Always show your kindness by doing people favors. You will require the gratitude of such people to come to your aid and defend you.

    Build up your stature, integrity, and credibility by publicizing the good deeds you have done in areas unrelated to the subject of scrutiny.

    Build a strong base of support. Try to have surrogates and the beneficiaries of your largess stand up for you and defend you.

    Claim your organization has been given a clean bill of health by the governing authorities.

    If you are under investigation always say you will “cooperate.” However, use all means necessary legal or otherwise to stifle the investigators. Remember that “people live on hope” and their inclination is to believe you.

    Blame your problems on jealous competitors, banks or financial institutions, or overzealous government agencies trying to keep the little guy down.

    Claim your statements have been taken out of context or twisted by critics not wanting the organization to succeed.

    Any of these sound familiar? Now there are a lot more statements that could be added, but these seem to be the most prevalent in today’s scammers vocabulary and deeds.

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  2. Hi Lynn,

    Thanks for your comments. In looking back at Madoff, Stanford, Nadel, Bowdoin, there are striking similarities.

    The ONE big difference, though, is that only Bowdoin had cheerleaders after getting caught.

    And only in the Bowdoin case are people attacking the government — for taking down a Ponzi.

    Regards,

    Patrick

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  3. I think that’s because of the “target audience” of the scams. Madoff was looking as hedge fund managers and bankers. Bowdoin was targeting the type of people who would believe in 12 Daily Pro, CEP, believe that some MLM fruit drink will cure cancer, and that putting moth-balls in your petrol tank will improve your MPG.

    CEP, 12DailyPro, PIPS all had cheerleaders after getting caught and people attacking the government or the court appointed receivers.

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  4. Hi Tony,

    Tony H: I think that’s because of the “target audience” of the scams. Madoff was looking as hedge fund managers and bankers. Bowdoin was targeting the type of people who would believe in 12 Daily Pro, CEP, believe that some MLM fruit drink will cure cancer, and that putting moth-balls in your petrol tank will improve your MPG.

    CEP, 12DailyPro, PIPS all had cheerleaders after getting caught and people attacking the government or the court appointed receivers.

    I think you’re right about this. It’s still interesting, though, to watch the cheerleading. One of the most interesting things is that sometimes it morphs into a pitch for high-mileage mothballs.

    Patrick

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