September ScamWatch

Hello, dear readers, and welcome to a fun new feature about a not-so-fun but very important topic: scams. Nary a week goes by where we don’t see articles about a new kind of fraud reeling in unsuspecting folks or Ponzi schemers bilking mom-and-pop investors (and NFL stars married to pop stars) out of their hard-earned savings. Forewarned is forearmed, so we bring you this, the first installment of scam news and notes.

Fake MyChart Emails!

First up, something making headlines nationally: a “phishing” attempt targeting folks who use MyChart to access their medical records online. If you have ever seen a doctor, gotten a scan or had any other procedure done at a hospital system, you have probably used this patient portal for billing, test results and communication with your healthcare provider. A huge user base is catnip for scammers, so it was probably only a matter of time before crooks zeroed in.

Here is how it works: The perpetrators send patients emails purporting to be from their doctor, instructing them to login to MyChart to check test results or something else that would warrant immediate attention. The email includes a MyChart logo and link. It is quite real looking. Click on that link, though, and it takes you to a fake MyChart site that looks virtually identical to the real one and instructs you to enter your login credentials, resulting in a fake identity verification process that installs malware on your computer. An alternate version offers a free “Medicare kit” to lure you into giving personal payment information.

All bad! But there is also some good news. MyChart itself wasn’t hacked, so if you receive one of these emails, it doesn’t mean your actual medical records were compromised. It just means you need to be careful and practice basic online safety:

1. Don’t click on links in unsolicited emails even when the email claims to be from someone or an institution you know.
2. If you are uncertain whether an email is legit, close it, then open your Internet browser and go directly to the company’s website and log in as normal. If you have the company’s app on your phone, open it and log in that way. You can then look at the message center page to see if there are any actual alerts you need to deal with.
3. Don’t run computer commands or download programs contained in unsolicited emails. Go through the normal, official channels if you need to download your bank’s or medical provider’s app.
4. Train your children/grandchildren/parents/everyone who would benefit to follow these best practices.

Stars Are Just Like the Rest of Us

For Kansas City Chiefs tight end Travis Kelce, life is pretty good right now. He got hitched to a very famous lady this summer. He notched a 59-yard catch and a 13-yard touchdown in Week One. He hosts a popular podcast. But proving no one has it all, he is also one of 64 people named publicly last week as a victim in a multimillion-dollar Ponzi scheme. Some headlines are poking fun, as if Kelce’s wealth and status should have prevented him from being gullible, but we are old enough to remember how many celebrities got swindled by Bernie Madoff. The list was … looooooong. We also know that while Ponzi schemes are easy to spot if you know the signs, it is all too easy to silence disbelief and fall for them.

So let us take a quick look at what prosecutors say happened here. A fellow named Siddarth Jawahar founded an investment company called Swiftarc Capital, which in 2015 put all of its investors’ money into one stock: Philip Morris Pakistan. That stock tanked, but Jawahar told his clients they were in the black. Which meant he needed new funds to pay those early investors. And so, according to the US Attorney’s Office for the Eastern District of Missouri: “From about July 2016 through December 2023, Jawahar took in more than $35 million from Swiftarc investors but invested only about $10 million. Jawahar used money from new investors to repay older investors and to fuel an extravagant lifestyle that included travel on private jets, stays at luxury hotels, a luxury apartment in Austin and New York City, memberships at multiple private clubs across the country, spending sprees at clothing stores and expensive outings at fancy restaurants.”^[i]

Ugh! But also avoidable if you know the common red flags to avoid.

1. Never give custody of your money to someone peddling an investment. Always ensure your money is held at a reputable brokerage house in an account in your name that you set up. A fraudster can’t steal what you don’t give them custody of.
2. Don’t get blinded by flashy tactics. A 2021 Forbes profile of NBA vet Gary Harris, which noted him (and fellow ballers Tim Hardaway Jr. and Mason Plumlee, along with Kelce) as Swiftarc investors, referenced “the Swiftarc Ventures Labs Fund, an early stage vehicle sponsored by Swiftarc Ventures,” which described itself as a venture capital fund.^[ii] It claimed to be invested in a biosafety company, a consumer electronics company and a personal hygiene startup. Not only does this appear to have been a false claim, based on the judgment, but startups aren’t liquid. You can’t measure real-time returns among untraded companies. It would be impossible for this portfolio to generate whatever returns he was boasting.
3. Beware of investment professionals targeting your peer group, a practice known as affinity marketing. Harris found Swiftarc through his NBA buddy, Plumlee. Based on the Forbes piece, it smells to us like Jawahar was targeting NBA players and athletes in general, playing off their interest in pursuing outside businesses as they prepared for retirement from professional ball.
4. We don’t know what returns Swiftarc boasted, but they were probably too good to be true, either sky-high or steady upside with no downside. That is Ponzi schemes’ other big tell.

Beware ‘Celebrities’ Advertising Crypto

Last but not least, if you see a celebrity advertising cryptocurrency on social media, beware. A new study from finance professors at Vanderbilt and the University of Nevada, Reno, found cryptocurrencies claiming a celebrity “endorsement” were five times likelier to be fraud than their pedestrian peers. “While about 10% of all the coins launched turned out to be outright scams, the figure for those endorsed by so-called celebrities was a staggering 45% to 48%.”^[iii]

We aren’t blaming the celebs (or influencers or whatever) here. Those who participated willingly are in the business of taking checks to get in front of the camera and say their lines—not doing due diligence on every product or investment they are asked to represent. Others may have participated unwittingly, via the Cameo app.

No, we blame the bad apples, who know our society looooooves celebrity endorsements, which give a dodgy offering more gravitas. This is why clothing labels use actors and musicians as models. And why prediction markets and online gambling outfits have retired athletes and actors in their endless glossy commercials. So of course scammers who want to make a quick buck will find a B-list reality tv star to be their official spokesperson.

We suggest always being skeptical of any security you see marketed directly to consumers. But if you see one seemingly pitched by a celebrity, be extra skeptical … and remember investing isn’t about getting rich quick.