Iraqi Currency Plays...And Other Scams
“I’m moving to Panama (or some other country) as soon as my Iraqi dinars revalue.”I’ve heard this comment maybe a half-dozen times over the last year or so. Someone (I don’t know who) came up with a great, plausible scenario to get people to “invest” in the Iraqi currency. Telling a story about the Kuwaiti currency revaluing after the first Iraq war, this brilliant marketer started selling Iraqi currency “in anticipation” of a revaluation in that country.
I do admire the marketing vision behind this scam. But that’s what it is. A scam.
When it was launched, I was contacted by several people I’ve known a long while, folks who have been around the block a few times, getting in touch to tell me I should invest. “Golden opportunity”…”chance of a lifetime”…those were the pitches. I couldn’t understand how guys I knew to be smarter than average had bought into this.
It wasn’t clear from the initial information I received whether the dinar “investment” involved buying the currency directly or buying into some fund that was buying the currency. It didn’t matter to me. Either way, the proposition made no sense.
Buying and receiving physical currency? That’s a joke, right? Taking physical possession of a suitcase-load of Iraqi dinar? Who was going to buy the currency from you when it “revalued”? No one. Few currencies are easily convertible. Try walking into a bank anywhere in the United States to sell them leftover euro notes from your trip to Europe. Unless you’re in a big city, most bankers won’t have any idea what to do.
Better, try walking into a bank, even in Manhattan, to sell them leftover cordoba from your trip to Nicaragua. Good luck with that.
So…if most banks aren’t going to buy your euro…or your cordoba…which ones are going to buy your dinar?
If the investment was in a “fund,” then your money was simply being scammed away without even the worthless paper notes to show for it.
These kinds of Internet and other scams abound all over the world, including in the United States, but people seem to worry about getting conned only when they leave their home countries. However, you leave your home country looking for opportunity, right? So is the pitch you hear for some investment an opportunity or a scam? That’s the tricky question.
Over the years, I’ve known honest-to-goodness con men. The first guy I’d qualify this way was an employee hired on the recommendation of a long-time friend. Fortunately, we fired the guy within a few months, because, as far as we could tell, he was incompetent. Little did we know that that was far from the real problem. This guy was super competent…only not at what we’d hired him to do (manage our office at the time in Quito, Ecuador). He was no good as our Man in Ecuador…but, boy, was he good at what he really did–which was to scam people. We didn’t find out what he was up to until a few weeks after we’d fired him. Once we realized what had been going on, we were able to look back over his “story” and see how preposterous so much of it had been.
What Had We Been Thinking?
As I said, he was brought to us by a friend we’d known and done business with for years, which was how we rationalized our lapse in judgment. Our friend had no idea what he was getting us involved with, but the guy we hired was a master. He had been living his con for almost 20 years.
Not all scammers are as well groomed or as patient as this guy was. Most are looking for the short-term score…like the guys selling Iraqi dinar over the Internet right now.
How can you spot the scammer? There’s no foolproof strategy. Again, we were taken in by the American in Ecuador. Today, though, I’d say that our scam radar is more fully developed. We don’t jump into anything new with both feet…ever. We develop new relationships slowly. This is why, if you attend one of my wife’s conferences, you’ll hear us refer to so many of the speakers and experts at the event as our friends. They aren’t there because they’re our friends. They’ve become our friends because we’ve been working with them for years…in many cases, for decades.
We take our time these days. We don’t do business with people we don’t know…and we don’t recommend people we don’t know to you, either, not in these dispatches and not at the live events. Then, even after we’ve gotten to know someone, we limit our exposure for a long time to follow, never investing any substantial percentage of our overall net worth with someone we don’t have a long track record with.
Still, there are no guarantees. Testing the waters doesn’t always work. You can still get hooked by the long-con. Your best strategy for defending against this, as is the case with so many things, is diversification. Even if an opportunity seems to be working out really well, don’t put too many of your eggs into that one basket. Taking a second bite of the apple (if you’ll forgive my mixing metaphors) sometimes makes sense, but putting all of your money with one person or group doesn’t. Not ever.
P.S. The Iraqi dinar scam is still playing out. If someone approaches you with a chance to make 1,000 times your money by buying Iraqi currency (this is the promise), just say no.