ACFE Public Information Officer
Fraud is always an unfortunate occurrence that shakes the confidence of its victims. They often doubt themselves and wonder how they could have missed the signs. While every type of fraud is damaging to the psyche of those fleeced, insult is added to injury when victims are defrauded by friends or loved ones. In honor of the Ides of March, the infamous day Julius Caesar was stabbed by members of the Roman Senate led by his friend Brutus, let’s look at some fraud cases where personal betrayal may have hurt more than the loss of money.
A “Gross Breach of Trust”
If you hear one of your friends is in the hospital, what would be the first thing you would do? Visit? Send flowers? Steal their credit card? For one unfortunate woman, her friend chose the last option. Rebecca Johnston was convicted of several counts of fraud after using her hospitalized friend’s credit card. The friend had reportedly asked Johnston to run a couple errands and get some personal effects from the friend’s house while they were in the hospital. Johnston in turned racked up around £1,000 worth of charges and was seen on CCTV using the card for unauthorized purchases. The Derry Journal reported that during the trial District Judge Barney McElholm said Johnston was guilty of a “gross breach of trust.” That may be putting it lightly.
“The Hardest Thing was Not Just the Money, But the Betrayal.”
Former Canadian financial advisor Jacques Scribnock took the money and trust of 19 investors, including family members and close friends. Scribnock reportedly defrauded his victims of $2.8 million over the course of four years and used shell companies to cover his tracks. One of his victims, Diane McMartin, was his cousin and other victims were friends and family of those friends. Richard Meehan, one victim, told CBC, “The hardest thing was not just the money but the betrayal after knowing this person, this fraudster, for over 15 years. That's what hurts the most." Another victim, Susan Brownrigg, had also referred her siblings and elderly parents to Scribnock. Brownrigg said, “He stole the future of so many people. Our family has been damaged irreparably … How do you bounce back when you are 83, 84 [years old]? You know you are frail, you believe in people, you trust people and he charmed people, he really did, including us by the way.”
“He Went Into Their Homes, Shared Meals With Them, Attended Their Weddings and Built a Tremendous Level of Trust With Them.”
Joseph Castellano was sentenced to almost six years in prison after defrauding victims of more than $1.4 million. He was an accountant, but reportedly in 2007 began offering his clients, some of whom were friends, investment opportunities in various businesses and real estate schemes. He promised returns of 6-8 percent, but he spent their investment money on international trips for himself instead. The federal prosecutors said in the sentencing memo, “He went into their homes, shared meals with them, attended their weddings, and built a tremendous level of trust with them. He had prepared their taxes and served as a financial advisor for them for many years.” Many of the investors and former friends said they lost most of their retirement savings.
While it might be tempting to trust friends and family with investments, unfortunately there are many examples of this trust going wrong. When it comes to matters of money, it is always advisable to do research and vet any offers for help that might cost you dearly — both your money and a relationship.