R. Paul Wilson On: The Fake Chip Collateral Scam

R. Paul Wilson On: The Fake Chip Collateral Scam

Late night in Las Vegas, in a dark corner of a
quiet bar, a discussion becomes heated until it is calmed down by a simple
compromise.

But when the three parties go their separate
ways, one of them has unknowingly lost (at least) a thousand dollars.

In a world where scams make real money with
mundane ideas, I was surprised to hear that this old swindle was still
circulating with a fresh (and clever) coat of paint and while it’s certainly
rare, it’s out there.

The Set Up

The story goes like this:

A group of ‘businessmen’ are looking to recruit
players who have clean accounts and player profiles at casinos around town and
are offering to trade high value casino chips for cold cash with a 20 percent
bonus for every stack they trade.

So for a $100 chip, the ‘businessmen’ will pay $120
in cash.

For $1,000, they’ll pay $1,200.

The only question you should be asking is: “Why?”

The Story

Reasons tend to fit a certain profile and so do
the characters making this type of offer.

Whether it’s a possible mobster, gang member or drug dealer; a dodgy stockbroker, a crooked dealer or casino employee and even card cheaters looking to clean their cash, but all these setups have the same apparent objective: To launder money without setting foot in an actual casino.

So whatever the story, their reason for not
spreading their cash in person is that they might be recognised or are wanted
by the law and so on, and this will make sense and help ease any suspicions of a
potential mark.

Here’s the hook:

We have large
denominations of cash that need to be cleaned. We need players who can increase
their chip buys but retain a large portion of high value chips over a month and
then exchange those chips at an attractive profit.

With a few dozen
players, we can run millions of dollars a year through casinos more safely than
doing it ourselves and even with a 20 percent loss, we’d be making more than
running our cash through other methods and sources.

All you need to do
is bring us $10,000 a month in black chips and we’ll trade those for cash
that’s untraceable and you can do with that whatever you want.

A common question might be: “If you don’t go
into the casino, what are you going to do with the chips?”

The answer is simple and easy to believe when a
mark is falling for the bait: That they have other people who cash out and
deposit funds into accounts they control and it’s impossible to trace those
funds back to where and who the cash originally came from.

The Meet

Somewhere far from the Las Vegas strip, away
from electronic eyes, the scammers meet their mark to exchange chips for cash –
but there’s more than one potential customer at the table.

The mark has been made an offer to enter into an
exchange that nets a healthy profit, but this deal is clearly not legal so in
order to meet the man he or she will do business with, and to verify that the
deal is real, he is invited to a late-night meeting where a second ‘player’ is
in the bar at the same time.

When the mark arrives, this ‘other player’ joins
them, supposedly to take advantage of the same deal but when they each present
their chips, the shill has a lot more than the mark.

The second ‘player’ offers the mark a degree of
comfort; that he’s not alone in this proposition but even better, the second
player has some hard questions for the man who’s buying chips and isn’t shy
about asking.

Why don’t you do
this yourself?

How do we know
this cash isn’t fake?

What are the
limits on how much we can exchange?

Naturally, the answers to all these questions
are aimed at satisfying the mark’s suspicions which creates a simple and
powerful effect on that person.

When we challenge someone directly, we tend to
be more contrary or suspicious but when we are separated from this challenge
(as an observer) we are more likely to listen (and believe) the response.

A psychologist might debate this or explain it
with a bucket of $50 phrases but as someone who has used this ploy hundreds of
times during real scams, I can confirm that employing a shill to dispel
expected suspicions is a well-proven and powerful tactic.

The tip off for this scam is actually a subtle
one: The scammers tell you where to play and buy chips.

The Twist

The role of the ‘other player’ is more than just
a shill in this case.

In fact, they’re critical to the outcome of the
scam since they will motivate everything that’s about to happen.

The second ‘player’ acts more suspicious and may
even accuse the mark of being part of a scam to trigger a natural response to
prove their honesty, which makes them even easier to manipulate as the scam
proceeds.

But the second ‘player’ has also brought a lot
more chips than the mark so when everything is counted on the table, the
apparent money-laundering ‘businessman’ tells his shill and the mark that he
only has enough cash to cover one of their stacks.

Immediately, the shill demands that his chips
are covered since he brought more and after a little byplay, the businessman
agrees to pay the shill and not the mark.

This is more than just theatre, it’s a test.

If the mark drives headlong into this argument
and demands that they’re paid instead, there’s an excellent chance of taking
that mark for much more than $1,000 (which they were instructed to bring in
black chips from a particular casino).

This is an important step since it tells the
scammers whether or not to rip and run or play their victim for more money.

The Sting

So, what happens?

The shill gets paid off in cash, with a 20
percent profit that leaves the businessman without enough cash to pay the mark,
so his chips are returned with an invitation to meet up tomorrow night and
complete the transaction.

This is also a blow-off if the con artists will
have read the mark as being too suspicious or too unpredictable to play for
more, which is doubtless the real objective of this con game.

If the mark is insistent and clearly hooked by
the idea, there’s a real possibility they might bring $10,000 instead of just $1,000,
in which case they would be allowed to return home with the same chips they
brought to the bar with instructions to buy $9,000 more with their hard earned
money then lose it all thanks to a bait and switch at the same bar.

But even when a mark is too difficult or isn’t
worth playing, the con artists can still walk away with a $1,000 thanks to a
devilishly simple switch of the mark’s real casino chips!

The Switch

Switching chips

The switch is what we call a ‘non-move’ and
(from the story I heard) seemed to go like this:

The mark’s (real) chips are counted, then the
shill’s (fake) chips are counted and stacked alongside.

After the discussion (or argument), a stack of
fake chips is simply passed back to the mark from the combined stacks.

Unless the mark is particularly suspicious, this
will work every time thanks to the delay caused by the shill’s questions and
demands.

If the hustlers are extra smart, they might use
a little added misdirection to adjust the stacks at some point, moving a stack
of fakes to the position previously occupied by the mark’s real chips.

Later, the scammer would apparently take the
mark’s chips and return them but even this is unnecessary if the mark is
completely convinced that all the chips are real.

The Blow Off

This was the clever part and it surprised me at
first but makes complete sense.

On returning home, the mark receives a call from
the businessman, accusing him of being in on a scam with the other player and
telling him all the chips are fake!

The mark receiving bad news on the phone

Sure enough, on closer examination, the chips
they returned home with now look a lot less convincing and the mark is now the
owner of $5 worth of rebranded house chips.

The beauty of this deception is that the mark
has nowhere to turn to report the crime.

He or she cannot go to the police because they
were obviously taking part in a crime themselves!

And they can’t go to the casino because they
would immediately be under suspicion there too.

Best of all (from the hustler’s perspective) the
fake chips are never revealed to the casino who would no doubt investigate
further.

That’s the beauty of the blow off – it stops the
mark from finding out they have fake chips at the cashier’s desk and causing
the casino to investigate further.

The Lesson

This scam is a simple test to see if someone
will take bigger bait but when it doesn’t work, they still lose a lot of money
to the scammers.

So what happens if the mark takes the bait and
returns with 100 black chips?

Well, it could go several ways from a straight
steal to a clever switch of chips or cash when the exchange is conducted –
perhaps in the car park from the trunk of a car, which has proved to be an
excellent location to switch entire bags or suitcases in the past.

A clever (but nasty) strategy would be to swap
the cash for a duplicate bag filled with cheap drugs mixed with innocent powder
but just enough that the mark would panic and never report anything to the
police.

How it ends is less important than how the scam
begins – with a believable story designed to hook a likely mark, then take them
on an expensive rollercoaster ride.

The harsh truth is that if you get involved with
something that is clearly illegal, you’re most likely just a bucket of chum in
shark infested waters.

Author: Glen Ferguson