The following conversation was scripted for salespeople to persuade potential clients to invest in oil wells. These actual scripts were filed in federal court by the SEC (Securities and Exchange Commission) as evidence to obtain a temporary restraining order against the company:

Potential Customer. I don’t know anything about drilling for oil.

Con Artist. Have you ever wondered why they call crude oil black gold? Do you think it might have something to do with making so many people rich?

Potential Customer: What if you hit a dry hole?

Con Artist: We are drilling through fifteen pay zones. To give you an analogy, let’s say your wife went into the kitchen and whipped you up a fifteen layer cake with chocolate icing between each layer. Then you took you index finger and stuck it from top to bottom. How many layers could you go through without getting icing to your finger?

The same thing applies here. You’re not going to drill through fifteen pay zones and not hit oil and gas…to be very frank with you, we’re not going to pay $100,000 for the rights to hit a dry hole…Many people tell me that realistically we’re looking at a 95 percent factor. You’d have that much risk putting your money in the bank.

Potential Customer. I need to talk my accountant.

Con Artist. Well, I certainly hope you’re not going to ask your accountant whether or not you should make this investment. That’s not a fair position to put him in, because he knows nothing about the program.

Let me ask you this. Do you have the funds readily available to lock up a share? Where do you stand from a financial standpoint?

If NO – (suggest borrowing funds.)

If YES – Well, let’s get the ball rolling for you. This well is just about sold out…If we procrastinate in taking advantage of this opportunity, there won’t be any shares left!

Let your accountant worry about saving your tax dollars, which is my business. Let me worry about making money for you, which is my business. Fair enough?

Allen Henderson in his book, Film Flam Men – How Con Games Work writes: “The con man has little sympathy for his mark’s losses. He speaks happily of butchering, stripping and beating his victims…even more than money, he loves the sense of conquest and power he derives from making others bend to his will.”

Con artists in selling are not new. The earliest records found about sales swindlers in America were recorded around 1800 when a peddler name Dr. John Tennant of Virginia promote the sale of Rattlesnake Root which guaranteed the cure of pleurisy. What’s new is that con artists in selling are a) raking in more money faster than any time before, b) moving the operations quicker than the legal apparatus can stop them in their tracks, c)deploying new con methods designed to outwit even the most prudent and experienced victim, d) running a lower risk than ever before of spending an extensive period of time in jail.

A spokesman of the FTC (Federal Trade Commission) in Washington D.C. told Personal Selling Power that the estimated annual figure for telemarketing fraud exceeds $1 billion.

A nationally known telemarketing trainer told us, on the condition that he not be identified, that there are currently 50 to 75 major “bucket shops” (boiler room telephone sales operations) in Southern Florida alone. Many of them have moved from California where a more stringent legislation now requires that certain telemarketing firm register with the authorities. Experienced telemarketing salespeople working for hard core scam operators can earn from $250,000 to $400,000 a year. A successful bucket shop can defraud $20 million from its victims in the course of a year.

Personal Selling Power reviewed documents from the United States District Court, Southern District of Florida, where the U.S. Oil & Gas Corporation was accused of inducing people to invest up to about $12,000 per “advisory” contract to win leases for the oil and gas rights on a parcel of U.S. Government land. Between September 1982 and June 1983 some 12,000 people sent checks that put approximately $56 million into U.S. Oil & Gas Corporation’s accounts. According to public record, only about 60 people actually got leases.

District Court papers reveal that it was a part of the scheme that the defendants would employ the services of a “singer” for use as a reference by the sales force. A “singer” is a person who provides testimonials for the sellers and who advises prospective clients that he or she had used the services of the sellers and had won a valuable lease. A “singer” highly recommends use of the sellers’ services. “In truth and fact,” states the court document “such testimonials are false in that the “singer” usually had not won any leases, was actually an agent of the salesman and was paid 10 percent of the salesperson’s commission for false testimonials if a sale resulted from the use of the ‘singer’s’ services.”

But the operator’s scam design did not stop there. Time magazine reported this story in connection with the above case: “Ironically, U.S. Oil and Gas was backed by the Better Business Bureau of South Florida. But the U.S. Attorney’s office alleges that the endorsement was part of the scheme. Henry Harris, president of the South Florida B.B.B. was indicted for taking bribes from U.S. Oil and Gas to ‘eliminate or alter’ telltale information about the company in his files.”

The key operators in this case, including some of the salesmen, were given prison sentences to be served in minimum security prisons. The major losers in this operation: the unsuspecting prospects.

Although the Federal Trade Commission has increased its efforts over the last five years and has put over 100 individual and corporate defendants involved in such scams under federal court order, their actions have secured only $30 million for redress of scam victims. Since the majority of such scam cases have been brought before civil courts, and since criminal actions are much more complex and costly to prepare, only a very few of the con artists in selling actually have been put behind bars for a significant amount of time. (Recent trends, however, indicate that there will be more criminal court proceedings in the future.)

Many con salesmen go straight from the courtroom to the next “bucket shop” where in some cases a line of cocaine is dropped right on the desk as reward for another sale closed.

Telemarketing fraud is not the only game the con artist in selling knows how to play. Every new invention since the wheel has inspired the creativity of the con artist.

Item: On June 9, 1931, Ramon Yzaguirre swindled a Nevada sheep man out of $6,000 with a machine that was supposed to turn 10 dollar bills into 20s.

Item: In November 1929, Babe Ruth (of baseball fame) lost $91,000 on a new race track swindle. He immediately established an irrevocable trust fund with a New York bank to protect his daughters against any further withdrawals or depletions to his earnings.

Item: In 1935 a New York State veterinarian had built up a large and exceedingly profitable dog hospital with a brand new X-ray machine. When an ailing dog, even though he may have needed only a teaspoon of Epsom salt to restore his health, was brought to the establishment, the “Doctor” immediately put him under the machine. The finished plates revealed that the dog had swallowed an alarming collection of key rings, watch springs and even razor blades. An immediate operation was advised, to be followed by a long and expensive hospital stay.

But what type of people fall for sales scams? Mike McCarey, associate director of the Bureau of Consumer Protection at the FTC in Washington says: “When I got into this five years ago, I was under the impression that most of the people who fall for these scams must be uneducated, unsophisticated, uncritical people. I have since teamed to my amazement that the people who get hurt by these scams are businessmen, teachers, lawyers, economists, government officials, NFL football coaches, doctors, dentists…a broad section of the population.”

Why do scams work? Why are people so easily fooled?

McCarey explains: “Con artists are pitching a message that we all want to hear. They are very skilled at creating the illusion of legitimacy. They don’t tell you only lies. They take truthful statements and interweave them with lies in such a way that the whole message seems very legitimate.”

Gwynn Nettler, Professor of Sociology, notes in his book Lying, Cheating, Stealing: “The con artist’s weapons are words. He creates images with them and promises a better life. The famous con man Yellow Kid Weil once justified himself to the novelist Saul Bellow by saying, ‘How was I to live? My power lay in words. In words I become a commander.”‘

The professional con artist in selling is labeled “Sociopath” in the psychiatric literature. The internal battle between conscience and impulse over control is similar to the games played in a gambling casino. The odds are always in favor of the house (conscience) and the house always wins in the long run, while the player (impulse) is always destined to lose. In real life, with any ethical salesperson, the odds are that integrity will win over impulse. Only when the impulse to exploit others wins over conscience, does the con artist, the Sociopath, begin to emerge. (See box below.)

Often con artists cover their feelings of low self-esteem with “masks of sanity.” Some suffer from a grandiose sense that their actions will actually contribute to greater justice. Glenn Turner, the fast talking, exuberant “Dare To Be Great” sales pyramid entrepreneur once asked defiantly: “Does it bother George Washington that so many people get killed when he fought for independence?” After a short pause he added, “I’m not asking for their lives, only their checks!” Turner and his sales cohorts did indeed make a killing. The FTC estimated that people who invested in Turner’s enterprises lost some $44 million.

When Personal Selling Power spoke to sales managers about the high incidence of sales scams, con artists and sales swindlers, many stories emerged, yet nobody wanted to get their names in print in connection with this article.

A sales manager from the pharmaceutical industry told us: “We have a major problem in our industry with ‘drug diversion’ in which salespeople or doctors sell free samples to drug diverters who repackage the drugs and sell them to pharmacies.”

According to the sales manager, the typical scam involves wholesale distributors who have, in addition to their staff of regular buyers, a “diverter” whose job is to find sources of diverted merchandise. The problems with the diverters are that they mix different lot numbers and even expired drugs together.

What’s even worse is that some of the drugs get punched out of their original plastic containers and get dropped on the floor, then get repackaged into plastic bags before being sold to pharmacists. Industry officials worry that if there is a recall of a certain drug, people who buy the diverted merchandise have no idea if they are dispensing to a patient a drug that has been recalled.

One sales executive told us a joke after he admitted that “we are probably all guilty of either tolerating misconduct among our sales staff, or guilty ourselves for some minor transgressions.” He told of two Russians standing on Red Square: “Comrade, can you explain the difference between Capitalism and Communism?” “I don’t know, you tell me!” “Well, I see it this way: under Communism man exploits man. Under Capitalism it’s the other way around.”

It may be part of human nature to abuse power and to exploit others, but it’s also part of human nature to defend the injured and to write laws that protect us. What’s most puzzling, however, is our society’s way of dealing with the con artist. The con artist not only suckers a victim into a vulnerable position from which he can easily execute his scam, he also suckers society itself into a vulnerable position.

As professional salespeople we can do a great deal to increase our strength. The road to ethical salesmanship should not begin by asking other salespeople to say no to scam employment offers. It should not begin by telling sales trainers that they should not pass on their knowledge to scam operators. We should not expect that telemarketing associations develop a code of ethics first, or begin by demanding that law enforcement agencies remove all the rotten apples from the barrel.

Telling others what to do only increases our self-righteous indignation and our growing sense of helplessness. If we sincerely want to live in a better world, we need to begin its improvement by improving our own code of ethics and adhering to it day by day.

Society is a place of mutual reflections. The con artist’s image is reflected in it and so is the shining example of the person with 100 percent integrity. One of the shining examples was the late Senator Sam Ervin, Jr., who in turn, was once inspired by this little poem written by Edgar Guest. The poem became his motto which he faithfully followed throughout his life:

I want to live with myself and so

I want to be fit for myself to know,

I want to be able as days go by,

always to look myself straight in the eye.

I don’t want to stand with the setting sun,

and hate myself for the things I’ve done.