Step 1/ Establishing a
foot-hold
Armed with several registered corporate entities under different names but detached from the individuals themselves, they establish what appears to be credible, registered companies. Now they can open bank accounts, lease resources and rent offices to begin operations. They rent office suites in Sydney, register domain names, begin construction of dodgy web sites hosted offshore and begin printing false and misleading marketing literature. At no time do they ever intend to pay for any of this.
Once the office is set up, they’ve established a commercial address from which they can have mail and phone connections redirected to elsewhere. Now they look legitimate. In 6 months, they’ve been evicted from the offices for lack of payment on the rent but this doesn’t matter because they’d already established secret premises on the other side of the city and all of the mail and calls are being redirected. Now nobody knows where they really are but they still look legitimate to anyone who checks. The companies are detached from the actual players so there’s now no way to find out who these people are, where they are and if anything is discovered, there’s nothing to connect them to the crimes yet to be committed. They’re ready.
Step 2/ Launching a market presence by “passing off”
The scammers research the market to find out who the legitimate operators are, who’s the biggest and most successful, and who they’re connected with in terms of suppliers and strategic corporate allies. They find out everything they can about their legitimate competitor’s operations and how they do business. What they offer, for how much, and who supports them.
They then get to work creating a “copy-cat” operation. They copy the artwork and colour schemes of the real web site, steal intellectual property directly from the real web site and paste it into their “fake” web site.
They register every conceivable derivative of the real site’s domain names with slight differences to fool the public into believing that their site is the real one.
They not only make false statements that they are the preferred representatives of all of the major venues hosting formals, and are authorised to take bookings on their behalf, but they add a whole list of venues that aren’t even licensed to conduct formals. Of course they never even speak to these venues and nobody at these venues knows who these people are or what they’re doing.
They go live with the web site, register it with Google, launch profiles on all of the popular social networking sites and flood the market with brochures, videos and other marketing materials to gain the attention of teenagers.
They do this in every state that they have established operations, and they launch simultaneously in a well coordinated effort with synchronicity and efficiency that would be the envy of any legitimate national business.
They’re open for business. They look good, they attract attention, the calls and registrations for more information start flooding in but it’s all a lie.
Step 3/ Distracting and stifling the competition
They launch a bogus lawsuit against the legitimate operators, claiming that those people are the ones passing themselves off as the scammers.
This is purely tactical and serves a double purpose. The scammers of course know that there’s no way that they could win such a civil court case because their evidence would never stand up to scrutiny, however winning is not their goal.
Their primary purpose is two-fold. Firstly, this action causes distraction to the only entity that could potentially damage their fraudulent plans. The “real” guys cannot keep their eye on business while they’re busy fighting off a hostile lawsuit, and the fact that they’re the ones being sued will make them look like they’re the bad guys if they alert the market to this fraud. Secondly, the scammers know that defending lawsuits is expensive and they fully intend to drag the process out as long as possible in order to starve the real guys of cash flow. Of course the scammers keep changing lawyers during the process because they never pay any of them so this process costs them nothing.
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The result the scammers seek, in launching the bogus lawsuit, is that if they manage to cause enough financial hardship to the real guys that their company may fold, leaving the scammers an open market to move in and claim the leading position, all of the domain names, intellectual property and good will. Basically it gives them a chance to take over the territory. This is an age-old tactic that has been employed by organised crime worldwide for as long as commerce has existed.
Step 4/ Taking the bookings and the cash
Here’s how the scam actually starts to cause an affect. This is a typical scenario, and one which was played out for unsuspecting school formal committees all over the country.
The committee sees the false marketing materials, looks at the web site and even goes as far as to check with ASIC that the company is a real entity. At face value everything checks out so far. They look through the web site at the variety of nice-looking venues seemingly available to them and choose a 5-Star hotel that’s of interest. They contact the scammers.
"This is a typical scenario, and one which was played out for unsuspecting school formal committees all over the country"
The scammers ask which venue the kids are interested in and offer to give them a free walk through of that hotel.
Of course the committee members are excited and make an appointment to meet the scammer at the lobby of that hotel.
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