It seems that gullible or desperate individuals aren’t the only ones who fall for advance-fee scams, as the US Federal Deposit Insurance Corporation has recently revealed that some financial institutions have become victims, too.
“The FDIC has become aware of multiple instances in which individuals or purported investment advisors have approached financially weak institutions in apparent attempts to defraud the institutions by claiming to have access to funds for recapitalization,” says in the special alert issued by the organization.
“These parties also may claim that the investors, or individuals associated with the investors, include prominent public figures and that the investors have been approved by one or more of the federal banking agencies to invest substantial capital in the targeted institutions. Ultimately, these parties have required the targeted institutions to pay, in advance, retention and due diligence fees, as well as other costs. Once paid, the parties have failed to conduct substantive due diligence or to actively pursue the proposed investment.”
In short, the fraudsters simply vanished with the money.
The advice for them is the same as the one for individuals: before entering into any agreements or paying any funds, it’s always a good idea to check the credibility of the investor group, their principals, and their representatives.
If the deal looks like it could be bogus, the FDIC asks institutions to submit a Suspicious Activity Report to the organization.