The Art of the Con

[sinkspur]

https://ivorydoveblog.wordpress.com/2016/02/19/the-art-of-the-con/

The Art of the Con

Posted on February 19, 2016 by ivorydoveblog

I’ve produced a meme that highlights the key elements of a typical con, and done so in an image taken from Donald Trump’s “The Art of the Deal”. Now why would I do that?



I’ve seen it done before and will relate the experience.

One day during a family get together, my brother who owns his own business and has been extremely successful in running that business, had also accumulated a few million dollars of wealth with which he intended to retire. He told me that he had just found a deal that was “unbeatable”. It required that he invest a massive sum for a minimum number of years, but would recover 20% growth.

My immediate response “Sounds too good to be true”.

“Oh no..”, he tells me, “I’ve looked this thing up one side and down the other! You can’t lose. And if I get additional investors, my guaranteed return will go up 2%/year per investor!” – Now I KNEW it was a con.

I told him so. His response, was to get angry at me and tell me I was an idiot and didn’t know a good thing when I saw one.

Two years ago, the man who had convinced my brother to invest his life savings was found dead of an apparent suicide. At that time, authorities concluded that he had been running a massive Ponzi scheme where he took in investors, used their funds to make some payouts to older investors, lived off a large portion of the investment, and cooked the books on investor’s accounts to convince them they were making big $$ when in fact, their money was gone. He ran out of other-people’s-money, and the system was about to collapse, at which point he committed suicide.

It was a huge awakening for my brother, who lost millions and found himself at 64 years old and completely broke. He still had his business, so rebuilding is possible, but his retirement plans were completely gone.

Reviewing the process that man had used to get my brother, an intelligent and wary customer, to invest in a Ponzi scheme was illuminating, especially as I see it happening to millions of Americans..being sold on a man who has made a living conning people out of their money, and trus

[Gov Bean Counter]

#1 worked on Jeff Sessions...

[ABX]

I've pointed out and sourced before about how, when I was in B-School in the late 90s, Trump was held up in my Business Ethics class as an example of riding the very thin line of unethical business practices and "The Art of the Deal" was given as a 'what not to do' example. It is mostly a business book for the masses that really relates to used car salesmen and MLM promoters, but is looked down upon in professional circles. It is for the low educated mom to think she is learning something about business so she can sell Thrive or Amway to her friends.

[ABX]

I've never heard of Thrive.   That's ok.  I'm sure I don't want to know.

Just the latest diet pill scam everyone seems to be posting all over facebook lately. This one is a patch like a nicotine patch. Probably just an OD of B and A like most of those pills to give you an overpriced buzz.

[andy58-in-nh]

As H.L. Mencken famously wrote: nobody ever went broke underestimating the intelligence of the American public.

But many have enriched and empowered themselves, however tenuously, by appealing to the boundless capacity for human vice and willful self-delusion.

Once a Con Man has succeeded in making his targets fully invested in promises of unearned riches and effortless comfort, he knows they will become his fiercest defenders.

At least they will until the shattering moment when they realize they've been had - when the bottom falls out and their hope turns to fear, and then to anger. Oftentimes, and owing also to human nature, such anger is directed first not at the scam artist or even at themselves, but is pointed instead at those who vainly tried to warn them of danger.
 

[Formerly Once-Ler]

Dan Scotto ‏@dscotto10 Jun 20
Reminder: Donald Trump once said that he thought he could make money on a presidential bid.
http://www.nytimes.com/2016/02/06/us/politics/donald-trumps-campaign-billed-as-self-funded-risks-little-of-his-fortune.html





Trump is Running His Campaign Like a Real Estate Deal
And why this means bad things for his chances at the Presidency

https://storify.com/KC_EDM/trump-is-running-his-campaign-like-a-real-estate-d

So a lot of people don't have much experience with real estate developers. Donald Trump is basically a walking cliche. I'll explain.

First, remember that at a certain scale, developers aren't pitching land or location. They're pitching themselves.
What this means is that as far as their mouths are concerned, they always produce fantastic improvement and they always have giant wallets.
Their first job is to get investors to buy into them -- their vision, their capability, their magic. They sell themselves first and always.
 
But the next developer who doesn't hit a snag will be the first. Trump has hit a lot of snags in his life.

So Trump falls back on one of the traditional escape routes: Make this all about the investors and not him.
This works more often with sophisticated investors than you'd think, because they are still composed of humans.
So the problem isn't the project and never the developer, it's a lack of investment, a stingy attitude, pick your horse-hockey.
"If you won't back this project enough to get over the ordinary bumps, I'LL DO IT MYSELF."
Invariably, when you hear that, it means a few things. (1) The project is in danger. (2) There's no easy way out. (3) The developer is thin.

Having represented more than a few developers and banks, I've gotten to see this in real time and forensically. It's a cliche.

Now, the next step -- when the investors don't immediately fall for this garbage -- is something showy to prove the dude still can throw.
Maybe he puts $1m of his own money (NOTE FACE VALUE; $200M; PERSONAL GUARANTY) down to show he's not afraid to commit.
The likelihood of that million ever showing up is roughly half.
The point isn't to cover 1/12 of the shortfall. It's to convince the investors that the brave developer sees a bright light ahead.
Why else would he have invested [$1M/the first tranche of $250K] if not?
This is in itself a surprisingly effective tactic, which is to say, it sometimes works at all.

Rational humans recognize what a sunk cost is. Trump, like most developers, is betting that he's not dealing with that kind of human.
A lot of [bankers/investors/elderly/middle aged marks] will be moved both by the personal investment and sunk costs and double down.
This gives the developer room to do one of three things. (1) Structure for bankruptcy/exit. (2) Turn it around. (3) Keep screwing up.
Remember: At this point, his goal isn't seeing the project to a successful conclusion. That would be great, but it's not his goal.
It's to stay alive and keep himself viable for the next project.
 
If you step back and look, he's saying that if you won't give him money, he'll give himself money and you won't be part of him.
That's the real tell: This isn't about paying the note or mitigating damage. It's about him. It's always about him.

We are at that stage with Donald Trump now.
Mr. Trump is falling back on his playbook because he invested in a bad project and got a lot of marks to buy in with him.
He may or may not launch his own Hannity News Channel, he may or may not do anything in particular the rest of the race.
What I guaran-damn-tee he's not going to do is liquidate $750M of his own assets in a fire sale and push through to the end.
As far as he's concerned, that's *our* job.

This, right here, is what's so depressing about the Trump phenomenon. It's just a mixed-use project in a far outlying county.
The whole project was sold on the idea that people would go out of their way to exist around something they never wanted anyway.
Our nominally expert-level political class was outpaced and out-maneuvered by a penny-ante real estate developer on autopilot.
This proves either that they're not controlled by bankers (who know this game) or that they're just really bad bankers themselves.

So now we have to somehow get a 1/3-done shopping center to market for the big season because foreclosure ain't gonna do jack.
And the developer has already structured himself to file a Chapter 7, skip the guaranty, and still own his yacht.
Of course, the shopping center/condo complex is three counties away from the nearest major suburb and there are no roads to the site.
So even if we get the thing built up, the locals don't want it and can't afford it, there are no anchor tenants and no accessibility.

The only bright spot: Sean Hannity will TOTALLY buy one of those condos.

[Henry Noel]

As H.L. Mencken famously wrote: nobody ever went broke underestimating the intelligence of the American public.

Read my tagline. That's a quote from Mark Twain's "Huckleberry Finn," spoken by one of the two con-men who very nearly swindled three poor orphans out of everything they owned. A true classic.

[andy58-in-nh]

Read my tagline. That's a quote from Mark Twain's "Huckleberry Finn," spoken by one of the two con-men who very nearly swindled three poor orphans out of everything they owned. A true classic.

Like Mencken, Mark Twain had a rather capacious understanding of the human capacity for self-deception.

Lately, I find myself wishing that many others possessed the same ability.

[Idaho_Cowboy]

Two years ago, the man who had convinced my brother to invest his life savings was found dead of an apparent suicide. At that time, authorities concluded that he had been running a massive Ponzi scheme where he took in investors, used their funds to make some payouts to older investors, lived off a large portion of the investment, and cooked the books on investor’s accounts to convince them they were making big $$ when in fact, their money was gone. He ran out of other-people’s-money, and the system was about to collapse, at which point he committed suicide.

Social Security?