Thursday, September 1, 2005

Katrina Will Also Spawn Fraudulent Schemes

As if the human suffering caused by Hurricane Katrina is not enough, the disaster will be a catalyst for any number of different fraudulent schemes that take advantage of those seeking to contribute to the relief efforts, offer investors a chance to get in on the ground floor of new "investment opportunities," and allow false or inflated insurance claims.  An article from Reuters (here) notes that spam e-mails have already gone out touting penny stocks that will take advantage of the disruption in the energy markets and rebuilding programs.  If past relief efforts are any guide, fake charities will be set up to take money and goods with no intention of providing any help.  The property-casualty Insurance companies generally approach these types of disasters with a "pay first, investigate later" method of operation, which is probably the best way to handle the situation but it opens the companies up to fraud.  (ph)

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