Fraudsters exploit trust in overseers by forging faux regulators
Evidence
Many securities swindles use this ruse (Bennett 1985; “How Bank of America” 1985). Those seeking investments in a relatively unknown company represent to potential investors that funds will be insured by “Fidelity Fiduciary Guaranteed Trust Insurance, Inc.” (with a corporate logo that closely resembles that of the FDIC). In reality, this guardian of trust is a straw company with no assets, frequently run by the stock swindlers themselves or by their associates. This added feature often convinces many investors that the prospect is safe and induces their commitment. It is curious that even the most cautious in conferring trust can be easily taken in by trusttrusteeship scams. — Shapiro, Susan P., The Social Control of Impersonal Trust, 125
Categorization
- CANDY: A fake FDIC-lookalike insurance company run by the swindlers themselves is a delightfully absurd scam detail good for a cocktail-party one-liner.
- XREF: connects to: Gatekeeping mechanisms like licensing and peer review make trustees reproduce themselves in choosing successors. — Shapiro, Susan P., The Social Control of Impersonal Trust, 84; Guardians of trust are themselves wide open to bribery and cooptation. — Shapiro, Susan P., The Social Control of Impersonal Trust, 116; Impersonal trust emerges where principals lose direct power to regulate agents. — Shapiro, Susan P., The Social Control of Impersonal Trust, 51 (+5 more)
Related
Broader Connections
- A cheater’s success is parasitic on surrounding trustworthy institutions
#exemplifies(0.90) - A cheater’s success depends on parasitizing a trustworthy system
#exemplifies(0.85) - Mechanisms for controlling impersonal trust themselves create new opportunities for abuse
#exemplifies(0.85) — Shapiro, Susan P., The Social Control of Impersonal Trust, 1 - Parasitic cheating thrives where trust is generalized from trustworthy settings
#corroborates(0.80)