Welcome to The Dark Side of Finance, where we uncover the hidden world of financial crime, revealing the deception and schemes used to prey upon unsuspecting individuals. Hosted by Darryl Lyons, CEO and co-founder of PAX Financial Group and a seasoned expert in the financial industry, this podcast explores the intricate and often insidious methods used by financial criminals to manipulate and deceive.
Key show highlights include:
- An explanation of the mission behind The Dark Side of Finance podcast.
- Personal stories and insight from Darryl Lyons that reveal the origin of his interest with financial crime.
- A historical look at the origin of the Ponzi scheme, tracing it back to Charles Ponzi and drawing parallels to modern-day schemes.
- The value of having practical tips and advice on how to identify potential financial scams.
- Emphasis on the importance of protecting vulnerable groups, such as the elderly and those who may be more trusting or less financially literate.
In the world of finance, staying informed and alert is your best defense against fin-crime. Keep your head on a swivel, and let’s navigate this dark side together. Tune into this week’s podcast and be sure to share with a friend!
Transcript:
Hey, this is Darryl Lyons, and this is The Dark Side of Finance, and I want to welcome you to the introductory episode of The Dark Side of Finance. It’s a spin off from the interest that I received from two episodes of another podcast I do called “Retire in Texas.” And these two episodes I discussed an NBA Hall of Famer who was defrauded out of millions and millions, and then, humble military families who were taken advantage of.
And in those two shows, I got the best response. Unbelievable. I mean, people were very much interested in this area of finance. The crime that existed in the financial space. And really, when it comes down to it, The Dark Side of Finance, it’s not a huge leap for me to produce this. I’m a genuine student of the financial industry.
I co-founded a firm called PAX Financial Group. So, I’m always bumping into finance content and finance people. And just like all of us, I loathe deception, excuse me, and theft. There’s something that’s been really, like, burning inside of me, over the last several decades that has a lot of interest in this financial crime space.
Now, we call this financial crime. And I’ll allude to this, fin-crime. So, just get used to that fin-crime. I really hope to train you to see these bad guys and bad girls, for that matter. That’s a goal of mine. I mean, they don’t wear a mask, these fin-crime people. They don’t carry a revolver. They don’t walk into a bank anymore. They are way much more clever than that. And you have to be aware of them. They’re very sneaky. They are walking liars dressed in half-truths.
And according to Barclays, this big global investment manager investment scams, they’ve increased 30% year over year and they’re not going down. Us consumers, the victims, we aren’t really getting smarter at this stuff. The perpetrators are, through very, very sophisticated, orchestrated strategies. And I’m really, I’m really here to help you get smarter, all of us. Because about 5% of us, probably more, fall victim to these fin-crimes. And it’s probably more because a lot of us, just so many, don’t even talk about it.
It’s embarrassing. It’s demoralizing, and it creates a lot of stress in all of our lives. And you know what? The reality is, is that the people who are victims, generally speaking, are smart people. Like these are not stupid people. For example, last year there’s a couple in California. They handed over $2.5 million to a guy that they thought was going to invest it. Turns out he took the money and closed on a dream house for himself.
This was just last year. These are smart people. These are you and me, all the time. So, my priority through The Dark Side of Finance is to teach you through stories, to see these fin-criminals who use different strategies, target all kinds of victims and apply various financial tools. Very interesting financial tools.
I mean, think of it this way, some car thieves, they use a crowbar or, others might hotwire an ignition. And these financial thieves, these fin-thieves, they have multiple methods as well. So, let me jump back in and help you understand “why” a little bit deeper. Why I got interested in this stuff.
Of course, over the years, over 20 years in the financial business, I have seen con artists. I’ve shaken their hand. And, I don’t know why I have a nose for it. Like, how do I bump into these guys? Or how do I see them? And like, something’s off there. And I was thinking about it because people in the organization know I tend to have a nose for this. It’s somebody that just rubs me the wrong way, you might think.
And I was thinking about it. How did I get like, how did I get interested in finding the bad guys? And it’s like, it’s like somebody who buys a truck, a red truck, and then they always see red trucks everywhere. Or somebody who likes certain types of birds. And let’s say they always see a cardinal. Like when I started to think about bad guys in the financial space, I start seeing them.
And it happened in college. That’s what I was thinking. I was like, where did I start developing this interest? And it was in college and, and I to pay my way through school, I had to work at a bank. That’s how I paid my way through school. I worked on the west side of San Antonio, which unfortunately is a beautiful family community, but there’s a lot of crime there. We had a few holdups at our bank, and, but most of the issues in the bank were fraud related. This bank, the bank that I worked at, treated me well. They actually promoted me at a very young age.
I started working there at about age 18, and I was a manager of the bank about 19 years old. I was responsible for opening and closing and supervision. And this supervision, 19 or 20, this required training. So, a lot of fraud training. So, imagine I’m 20 years old and imagine when you’re 20 years old. And I was being trained on how to spot a stolen check, fake money, how to respond to a bank robbery, which only happened once.
Just to look out for these bad guys and some of the tools and methodologies that they use. I was trained at that. And so, when you’re trained in something like that at age 20, it sticks with you. Like, okay, if you listen to music, like I listened to Matchbox 20 when I was 20, I still listen to it to this day. Or if you have close friends that you build relationships with, they’ll be your friends for life. So, stuff sticks with you at this age.
Well, this bank fraud training stuck with me and it’s still with me today. And just the, I guess, the shock, the shock of being responsible at such a young age for detecting fraud, never, ever left me. So, here we are fin-crime. And it’s nothing new. I mean, it’s a new word that we’re going to use, but this is nothing new. In fact, I can think of a notable guy that comes to my head. I’ve written about him in books before. Willie Sutton, he was a bank robber in the early 1930s who famously responded to a question, “Willie, why do you rob banks?”
And his answer? “Because that’s where the money is.” So, as history, as our guide, we’ll also tie in to current events. Another historical crime that we can learn from took place around the same time as Willie Sutton. This one ended up manifesting in the early 1920s. This Italian guy, his name is Charles, real name, he came from a well-to-do family, but they actually ended up falling on hard times.
And so he ended up working as a postal worker and was able to attend a university in Rome, but wanted to come to the States. So, with $2.50 in his pocket, came over and immigrated in 1903. And it’s the American dream. He eventually set up an investment company. And so because he knew of the postal worker environment, he was like, “I want to start making money with postage stamps.”
And he figured out a way to do that. And his market, his target market that he worked with were working class immigrants. In fact, 75% of the Boston police force used him for investments. He found a way, I know this sounds at first glance like, well, of course it sounds fraudulent, but he found a way that he could make 50% returns using postage stamps only after 45 days.
So, a month and a half on and making 50% is what he said. But it turns out that those returns were only coming from the new investors he got. And so, he was just turning this money over. When he got new investors money, he’d pay out returns to the existing investor, and then he’d pocket a little along the way. In fact, not just a little lot. He actually made $420,000 in 1920. Which is worth, that’s worth $6.4 million today. That’s how much he defrauded these immigrants. The scheme collapsed. Charles went to jail. The workers, the immigrants that got $0.30, $0.30 for every dollar they invested. And Charles’ last name, you might know this last name, was Ponzi.
So, we have a Ponzi scheme today named after him. This scheme, this scheme is still alive today. Bernie Madoff did it. And others do it all the time. They’ll do. I’ve seen it done. Again, I get news feeds of this stuff too, from all these various resources being in the financial space. Industry stuff, it’s still happening. It’s happening. It happens in small towns. So, I’m going to share these modern-day stories of the Madoff’s, and even the Ponzi’s. And we got to be careful because they’re sometimes, they’re targeting, sometimes it’s random. But a lot of times they go where the money is, like Willie Sutton said. So, where’s the money at today?
Well, it’s in the pockets of baby boomers. And as they age, cognitive declines. Maybe they’d be a little bit more trustworthy. If they’re religious, if they’re Christians, they let their guard down. You know, I have four kids. Three of them are girls. And I always tell my kids when they’re out and about and we go to cities and visit, “Hey, keep your head on a swivel.” Even in our neighborhood. “Hey, keep your head on a swivel.” And so, in the financial world, we’ve got to keep our head on a swivel. These guys are liars and girls. These fin-crime people they’re liars. And we’ve got to learn from these issues. And then these, these scams through stories. And we have to protect the people we love.
They look like normal folks. That’s the crazy thing. They look like normal folks, but they’re liars and thieves. Thomas Jefferson said, he said, hear me out, “He who permits himself to lie once finds it much easier to do it a second and a third time, till at length it becomes habitual.” And so fin-crime is the employer of choice for habitual liars.
In the book Spy the Lie, which was written by former CIA officers, they tell a story, and it was about a female employee that reported having $40 stolen from her purse. So not a lot of money, but it’s 40 bucks stolen from her purse. Two $20 bills. And this is while she went to lunch. And she told her supervisor there’s only one person that had access to my room, and she left her purse in the room, and his name was Ronald. So, Ronald sat down with the supervisor and his name was Phil to address, and they were addressing this allegation. Phil explained the circumstances and the accusation, and Ron said nothing. Just sat there and listened. Then Ronald said, “Hey, come out, Phil, come out to the parking lot with me for a second. I need to show you something.”
So, Phil’s like, “Okay, well, let’s go.” So, Ronald went out to the parking garage, went to his car, popped the trunk of his car, and it was filled with Bibles. Ronald said to Phil, “Every week I take these Bibles wherever they’re needed on behalf of my church. Why would somebody like that steal two $20 bills?” Well Phil, the supervisor, fortunately didn’t let up. Pressed the issue and pressed and pressed. And Ronald admitted to stealing the $40. That’s why we got to be careful. Nothing hurts me more than when the Bible is used, and religion in general is used as a coercion. It leaves a stain. This fin-crime has victims all over the place.
I’ve seen it. And I’ll share these stories with you. And it’s not only the stress of those people that have been stolen from, but peripherally. What it does, specifically those that have deeply held convictions and they’re coming in the church. We need to make everyone aware of this. It can be small money. It could be big money, it could be Bibles, it could be Ponzi’s, it could be grandma scams, it could be professional athlete scams, check fraud, bank impersonations, ID theft, investment scams.
It could be lotto scams. It could be real estate scams, sports card scams. We’re going to talk about all of them. We’re going to talk about all of them. I’m going to hit you with a ton of stories that are going to allow all of us to wake up with fin-crime and what’s going on in this country.
The next episode I’m going to share with you a very, very sad story of somebody who is not only victimized by a fin-crime, but tragically had his heart broken along the way. What could have been, what he thought was a love story, was nothing but fin-cime. So, that’ll be our next episode. I look forward to sharing that with you. Every fin-crime is introduced by a habitual liar dressed in half truths. It’s your responsibility to be on guard for your family, your kids, your grandkids, your friends, your neighbors, and your community. And to keep your head on a swivel. Thank you.
Resources:
https://biblehub.com/esv/proverbs/4.htm
https://www.spring.org.uk/2022/07/grifters-con-artists-7.php
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