scam

Con-Culture Experts On the History and Future of Scamming

The so-called ‘Summer of Scam’ is just the latest in a strong American tradition

The year 2018 was an exceptional one for scammers. Consider the wide-eyed coverage of grifters like New York City socialite Anna Delvey, who fooled her monied friends and a few international banks into paying for her lavish lifestyle. There were some serious legal breakthroughs, as with the indictment of blood-testing startup Theranos’ founder, Elizabeth Holmes, who built and sold a lie that raked in hundreds of millions of dollars. And then there were the formal fraud charges brought against Fyre Fest mastermind Billy McFarland, who’s sitting in prison right now probably brainstorming another get-rich-quick scheme after his island music festival went belly-up.

In reality, the so-called “Summer of Scam” is just the latest in a strong American tradition, one with a bright future in 2019 and beyond. Experts say that more than half of all cell phone calls will be from scammers this year, tax email scams are still on the rise and that cryptocurrency is sketchy as ever — just for starters. Call it the “Spring of Scam,” if you will. But one issue is that we’ve been throwing out words like “scammer,” “grifter” and “scheme” without a clear sense of meaning or hierarchy. Is it a scam when an arrogant Instagram influencer markets her own social media class and screws up everything for her paying guests? What are the ethics of a character like Delvey stealing cash from the ultra-rich? Do people still fall for marketing pyramid schemes and widespread fraud like that innovated by Charles Ponzi?

To help me figure out where con culture is today — and where it’s going — I reached out to a trio of experts who research scams and the people who engineer them. And while they differ on some definitions, what’s clear is that very little has changed in the last 100 years of scams in America, whether we’re talking the perps, victims or motivations.

“Well, technology has definitely made it easier, in terms of being able to find victims and successfully posing as a con artist yourself, because there’s so much information you can manipulate,” says Maria Konnikova, a journalist, psychology expert and author of The Confidence Game. “But that’s really it. It’s all decorations. Because at the end of the day, con artists are storytellers and storytelling hasn’t changed. We’re still telling the same stories now that we were telling thousands and thousands of years ago.”

How Did Scamming Get Big in America?

To Konnikova’s point, scams go way back: The earliest recorded instance of a scam dates back to 300 B.C., when the Greek merchant Hegestratos tried to commit insurance fraud by sinking his own cargo ship. But there are distinct reasons why scam culture grew so rapidly in the early 20th century in the U.S., and why some of the greatest scam artists we know today honed their trade back then.

Nate Hendley, author of the historical scam guide The Big Con, points to the rise of an economic middle class as creating more motivation for potential con artists. While many classic scams were in use in the Victorian Era, for instance, the majority of the population worked for very little money, limiting the victim pool to a smaller gentry of well-off people (“Unless you wanted to con, like, a few dollars or something,” Hendley adds).

Average people had more money in the 20th century, but they also had bigger appetites for profit than in the past. A “get-rich-quick” mentality became common, fueling the stock market and giving way to business schemes. Then there was the advent of train travel, which provided a dynamic setting for scammers to ply their craft. “Almost everyone traveled by train in the early 20th century, so you’ve got a ready market of people to scam,” Hendley says. “The American economy is sort of exploding in the 1920s, and it was very common to have a businessman from Manhattan taking the train to San Diego and talking about their business. Naturally, con artists began to do their thing.”

Best of all, the most proficient scammers could practice in a variety of cities, always staying on the move, and simply clean up while dodging media attention and the authorities. This was made even easier if the scam could happen remotely, as with “The Spanish Prisoner,” which was conducted through letters with help from the U.S. Postal Service. The variations were endless, but the basic narrative featured someone stuck in a far-off prison who needed money to bribe his way out of captivity. Spain was a popular locale in these letters, which also portrayed the prisoner as having access to riches once out of prison — riches that they would share with their helper. All the scammer needed was a handful of people to reply with a cash-stuffed envelope, no long-term manipulation needed.

If this sounds familiar, it’s because the famous “Nigerian Prince” email scam of the 2000s is an almost verbatim retelling of “The Spanish Prisoner.” And technology has allowed scammers to expand on this idea, notably with crowdsourcing fraud that asks a wide network of people for money, usually to benefit someone who is sick or homeless, as with a couple who were caught last year pilfering funds after raising $400,000 for a homeless “Good Samaritan.”

Another timeless scam, dubbed “The Modeling Agency” by Hendley, is an example of a relatively low-risk operation that targets the vulnerable and naive, as it asks for advance fees to be paid by modeling hopefuls in exchange for representation and work opportunities. The rise of Instagram and amateur modeling on social media has made this a lucrative scam for a lot of people, though the warnings are clear.

As it turns out, Instagram has been particularly fertile soil for all kinds of cons. This includes Instagram “influencers” who cut book deals or plan events that fall apart, leaving people scrambling for their money back — as with the case of Caroline Calloway, who spent much of a book advance before revealing she wasn’t going to write the book, and then botched a fan event in heinous fashion. There is some gray area with these incidents, Hendley says, but it still qualifies as a scam if the perpetrator had a good idea that they would fall far short of an agreement.

Why “Grifters” Are A Cut Above

A “scam” or “scam artist” is the broadest term, often associated with fraudulent acts that don’t require extensive research, setup or deceit. It used to be that the term “grifter” was interchangeable with “scammer” or “swindler,” but in 2019, the word is associated with long-term, personality-driven manipulation thanks to characters like Delvey and William Baekeland, the latter of whom conned fellow people he traveled with into believing he was a filthy-rich heir who could, for a price, connect them to exclusive destinations.

“Often a grifter exploits human weaknesses and vulnerabilities, especially greed and loneliness, to extract money from the mark, and does it with a routine so convincing that the police frequently have a hard time convincing the mark that he or she has been the victim of a crime,” as research blog Word-Detective.com puts it.

In the case of Delvey, who faces a trial later this month, her natural ability to lie and charm her way out of seemingly obvious discrepancies made all the difference. The 28-year-old Russian-German, born Anna Sorokin, infiltrated New York City’s elite socialite scene by booking expensive suites in top hotels, dropping $100 cash tips to anyone who treated her right and simply showing up at enough VIP events of a certain caliber, be it at Art Basel or Coachella. “She introduced herself, and she was a sweet girl, very polite,” Tommy Saleh, a NYC marketing director who met Delvey at Fashion Week, told New York magazine. “Then we’re just hanging with my friends all of a sudden.”

Did it matter that she claimed she was from Cologne but spoke poor German? Or that she had a habit of asking her rich friends to pay for her flights and hotel rooms on their credit cards when she also claimed to be flush with cash? A lot is forgiven, and forgotten, when someone has the right personality, Hendley says. “The public loves some of these stories because a lot of con artists are quite charismatic and charming. Anna, I understand, was just a lot of fun to be with. That’s one reason she got away with her con: She was the type that you just loved to have at your party, or at a dinner, as your personal guest.”

It was a similar story with Baekeland, who carried himself with such rich-boy composure that the people he met on vacations fell head over heels for the act. Even though the community of people who spend tens of thousands traveling to remote locations (aka “extreme traveling”) is small, he somehow slipped into the crowd and became one of them. In reality, he was Jesse Gordon, a 26-year-old from England who changed his legal name in order to associate himself with an immensely affluent family. He forged an online identity that backed up his bold talk of traveling to places unseen by even the most dedicated voyagers. And his newfound friends were hungry to buy the intrigue and adventure Baekeland sold.

“Con artistry works because we want it to work, because it appeals to something that’s very deeply human, which is our beliefs, our need for hope, our optimism, the fact that we see the world differently than it actually is,” Konnikova says. “Everyone is vulnerable to this, even if you don’t think you are.”

The most obvious blueprint for both these grifters is Frank Abagnale, the wunderkind whose brilliance was depicted by Leonardo DiCaprio in the 2002 film Catch Me If You Can. Abagnale traveled the country getting rich off fraudulent checks, and the con led him to impersonate a Pan-Am pilot and a doctor (among other identities) and even break out of federal prison… without any use of force.

Delvey, like Abagnale, tried to rip off banks by lying about her background as well as manipulating withdrawals and deposits to convince people she had a certain amount of money. And while Abagnale wasn’t trying to scam travelers, he and Baekeland share an important trait of all grifters: People described them as “the best liar they had ever met.” You can lie about your identity in any run-of-the-mill scam (like the Nigerian Prince), but the crux of a great grift lies in people truly buying a false identity.

When a Grifter and a Business Scheme Unite

People like Delvey, Baekeland and Abagnale found success while targeting individuals and institutions, like banks, but the real danger of an effective grifter comes when they’re able to fool much larger groups of people with an elaborate business idea. The con artists who run these schemes don’t need the chameleon-like acting skills of someone like Abagnale, or even the adherence to an invented character as in the case of Delvey. What they do is commit to the scheme itself, and sell it with every ounce of their charm and wit.

So it was with Charles Ponzi, who stole $20 million from investors in 1920 by literally taking money from a new group of people in order to pay old investors whom he had promised big returns. Unlike a legitimate investment opportunity, there was no product or service being sold in order to generate funds. We call this a “Ponzi scheme” for a reason — while he didn’t invent the scam, he sold it with his personality, even going so far as to sue a Boston journalist for libel when he raised suspicions about Ponzi’s financial promises (stunningly, Ponzi won the case for $500,000, quieting critics for a while).

No wonder, then, that Bernie Madoff succeeded in a scaled-up version of this scheme in the mid-2000s, wooing investors into his seemingly legit wealth-management fund only to defraud them of several billion dollars. And the parallels between old fraudsters and their new-school counterparts don’t end there. Hendley compares showman P.T. Barnum, who often fooled crowds with fake sideshow acts, to Fyre Fest’s McFarland for the way they both were able to generate wild hype and ticket sales around their half-baked events.

“Barnum’s concept was basically, if people are willing to fall for this stuff, then why not take their money? What’s interesting about Barnum is that he was fully aware that a lot of the stuff he promoted was nonsense, and he wasn’t trying to con little old ladies out of their life savings,” Hendley explains. “It was more like, ‘Okay, pay 50 cents to see some stupid attraction, and if you feel kind of ripped off, well, you only lost 50 cents. Which is not far from the Fyre Fest situation, really.”

Perhaps the most instructive case of a grifter who sold a business scheme is Elizabeth Holmes of Theranos, who rose to mainstream fame thanks to a pitch about how she could revolutionize the blood-testing industry. By requiring only a tiny amount of blood, processed through state-of-the-art machinery, Holmes claimed that Theranos would create sweeping change in preventative medicine. She raised $700 million from venture capitalists and private investors, with Theranos being valued at a stunning $10 billion in 2014. And then it turned out that Theranos’ claims were not only bunk, but had been wildly exaggerated from the start, all under the gaze of Holmes herself. The sheer scale of her fraud makes Holmes, in the eyes of Konnikova, “the best con artist of our time.”

“I mean, she sold a fairy tale to some of the smartest people in the United States and the world. They lapped it up because she packaged it so beautifully. She’s the essence of what a scam is. Talk about storytelling. Talk about selling hope. Talk about selling a vision of the world,” she says. “I’m guessing there are so many more Silicon Valley scams out there — so many Theranoses that we haven’t discovered yet. The same thing that fuels venture capital is exactly why very smart people fall for scams.”

Will Anything Change?

While Holmes orchestrated the con, it’s the culture around Silicon Valley that gave her an invisible hand in pulling it off, Konnikova and Hendley point out. The industry wants to believe in stories of the next big thing from the next big iconoclast innovator, Hendley adds. “Some of these fast-talking dudes with big visions actually turned out to be correct. Look at Bill Gates, Steve Jobs. These guys, in one sense, you might think they’re crackpots, but they actually kinda knew what they were doing and established great things,” he says. “So there’s a predisposition to think that person is out there today if you look hard enough.”

The thread that ties small cons to big ones is greed, says A Concerned Citizen, the anonymous creator of the podcast Swindled, which investigates fraud cases and con artists through American history. “Your classic con man is selling dreams back to their victims. On the corporate side of things, they’re selling a product that isn’t really beneficial to anyone but the shareholders or the person in charge. But the motivation is always the same. It’s greed. Everyone’s trying to make money for themselves, and whether it inflicts damage or pain on others, that’s just not a primary concern,” he says.

Sometimes people don’t start their scams with the intent of letting them grow so big, he says, as with Allen Stanford, the financier who masterminded the second-largest Ponzi scheme in American history. And while Swindled has covered con artists from all kinds of backgrounds, Concerned Citizen notes that the unifying factors seem to be that so many scammers learn the power of lying at a very young age, and later fall in love with a social culture that values getting rich as quick as possible — “Something like the Wall Street world,” he adds.

“Especially for those in a corporate scheme, if you’re not seeing the victims first-hand, it becomes pretty easy to just close your eyes and pull the lever on your scam,” he says. “As far as accumulating wealth in America, it’s definitely a sickness that can overtake you in terms of, I don’t know… I always compare it to scoring points in a video game. When is enough, enough?”

He remains worried about how technology can create more wrinkles in scams, as with cryptocurrency fraud that has led to people losing their money when a coin exchange gets raided or merely disappears overnight. Konnikova has a slightly different take: There are no fundamentally new scams, just disguised ones, but people aren’t capable of noticing when something is too good to be true. “When something good is happening to you, when something you want to believe is happening, your skepticism goes out the window because you don’t even realize that you should be skeptical,” she says.

Maybe it’s some small blessing, then, that so many scammers get caught. After all, as New York Times cultural critic Amanda Hess concludes while discussing Delvey, Holmes and McFarland, there’s little artistry in our most modern scams. You just have to look at the history to see the fingerprints of old con artists in the shiniest new grifts. “They’re just young people who wanted to make something incredible, failed and couldn’t accept it,” she writes. “In a word, unexceptional. These days, there’s a scammer born every minute.”