Saturday, January 22, 2011

A classic religious argument, as applied to investment fraud

I just had an experience which is not directly related to religion, but which parallels it very well and gave me some enlightenment about why people might believe it.

A few years ago, my girlfriend made an investment that may or may not be bad.  We recently began receiving letters about it, claiming that it is a fraud.  The first letter was an anonymous letter by somebody claiming to be a fellow investor in the organisation, with no return address.  We received the second letter the next day.  It was from somebody claiming to be some kind of litigator who specialises in recovering invested assets from con-artists.  He wrote that he was on our case, and would like for us to work with him.  The letter was printed on shit-quality letterhead, had no return address, the company had no track record at all on the internet, their website domain had been registered just a few days earlier, the physical address the website was registered to was a P.O. box, their phone numbers and addresses in the letter were virtual offices (ie. a mail/call forwarding service), etc.  It was also sent from a post office just a few kilometres from the post office that the first anonymous letter came from. 

So right away we know this is a fake.  The investment may or may not be a fraud, but these letters definitely are.  We of course do not take them up on their generous offer to help us.  But the letters kept coming.  We received one more letter from this scam litigation firm, but the most interesting one just came today.  This is also where the religious parallels come in to the picture.

Today's letter was from somebody who also claimed to be a fellow investor.  It was encouraging us very strongly to join with the lawsuit organised by the scammers.  It contained one argument which you should find familiar.  The writer argued that there are four possibilities, we join or don't join, and the lawsuit succeeds or fails.  If we join and the lawsuit wins, we win.  If we don't join and it wins, we lose.  If we join and it doesn't win, we only lose the retainer fee paid to the lawyers.  If we don't join and the lawsuit loses, it's a null result.  So the only way we can possibly lose is if we don't join!  He neglected to consider losing the retainer as being a bad thing.  Great, isn't it?  Too bad it's Pascal's Wager, restated for investment fraud lawsuits.  The problem is that just as there is no evidence to support the existence of gods, there is no evidence to support the existence of this litigation firm.

Unlike those other scam letters, this one had a contact name and phone number.  So I called the guy.  He had received the same scam letters we had over the last few months.  He seemed sincere.  He wrote in the letter that he's had a terrible time since the first letter came, worrying that he's lost a good amount of his savings.  He's in it for double what my girlfriend is in for.  He's in distress and has lost a lot of hope.

You may or may not believe the next part.  He told me he knows the litigator guy he spoke to on the phone is using a fake name.  He knows the firm doesn't have a real address.  He knows their phone numbers are virtual offices.  He knows they only registered their website a couple of days before this all started.  He knows they're lying on their site about how much money they've won in settlements of other cases.  He knows they have no track record at all and appear to have come out of nowhere.  He knows this particular case has reported nothing at all in five months.  And so on, and so on.  But he's still siding with them!  Not only is he siding with them, but he's sending out letters to the other investors telling them that they should join with this firm, too!  He's evangelising!  He knows all of the signs point to this company being fake, but he is in such distress, he has so little hope, that he's willing to grab on to anything that might save him from the situation.  He used the Pascal's Wager on me on the phone, too.  He asked me, what happens if the firm does turn out to be real, they do win the case, but he didn't join?  It's the only way he can lose!

Religious people are like our friend here.  They desperately want somebody to save them from a danger, real or imagined, and they're willing to flat-out ignore all of the red flags that the solution is an absolute fraud.  The fact that somebody is simply offering to help is enough for them to part with their money/time/sanity.  And according to my girlfriend, he's evangelising because he won't feel so fucking stupid if other people do the same.

1 comment:

Darshan Chande said...

Wow! That's very interesting post and with good comparison!