Motley Fool Hidden Gems Investing - How a Scam Spreads

Episode Date: August 20, 2023

A good scam works like a magic trick. There’s a beautiful, complex story being sold, but the truth is disappointingly simple. The Oman Ghana Trust Fund raised hundreds of millions of dollars. Investors hoped their money would help unlock Ghana’s inheritance and billions of dollars worth of gold. Many were sold 10-to-1, even 100-to-1 returns on this promise.  Yepoka Yeebo is the author of “Anansi’s Gold: The Man Who Looted the West, Outfoxed Washington, and Swindled the World.” Ricky Mulvey caught up with Yeebo to discuss: - How a scammer builds credibility. - The investor biases can lead someone to be defrauded. - How the money in the trust fund scam’s scheme actually disappeared. Host: Ricky Mulvey Guest: Yepoka Yeebo Producer: Deidre Woollard Engineer: Tim Sparks Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. 10 to 1 returns let alone 100 to 1 returns are a bit of a ridiculous promise but also the workings of the investment are so like complex and baroque and involve lots of like gaps in knowledge you can't really put the very straight like money is going here and then coming to me this way if you like a good story about a scam then i think you're gonna like today's show i'm I'm Ricky Mulvey, and that's Yapoka Yebo, the author of Anansi's Gold, the man who looted the West, outfoxed Washington, and swindled the world. It centers around John Aka Blainiza, a scammer who raised hundreds of millions of dollars

by telling investors that, hey, he just needed some funds to unlock a bank vault with billions of dollars worth of gold. It was the inheritance of the country of Ghana to which he was the rightful heir. You may be able to guess how this played out for investors. centers around this Wile E. Coyote type figure and reveals some of the timeless qualities of a fraud and how investors' biases can lead folks to walk into one. I enjoyed the book and the conversation. I hope you do too. So this is fundamentally a story about a swindler and how people got trapped into this web of lies, a scam. But to set the table, can you introduce us to our man?

Our man is Dr. John Acker Blay-Maser, although he wasn't a doctor and that wasn't his real name. And between the 70s and the 90s, he built hundreds of people around the world of hundreds of millions of dollars and basically that entire time got away with it. And the way he ran this fundamentally was an inheritance scam. Before we get into the complexities of bestowing the title of doctor upon yourself, what's working is an inheritance scam. How does that work? it's the standard like you've seen this in your email i have a giant inheritance i need to pay bankers or lawyers to get hold of it um if you if you help me pay them i will pay you and so this happens all the time like with nigerian princes and it goes all the way back to the estate of sir francis drake who was like a great british mariner and the minute he died People traveled the country, finding every Drake they could and promising them that it was their inheritance. They had a right to this. And that eventually moved to the United States in the 1930s.

And the inheritance that Blemisa was promised that he was entitled to was the entire wealth of the nation of Ghana. The entire wealth of Ghana. He said that Kwame Nkrumah, the first president of Ghana, had squirreled away all this money because he knew he was about to be assassinated or that there'd be a coup d'etat and he would be out of power. And so he didn't want this money to get into the wrong hands. And apparently the right hands were Swiss bankers. And so President Nkrumah made this deathbed confession and told him that he was in charge of getting hold of the money. And so there was so much of it. And the sums changed pretty regularly and got bigger and bigger and bigger.

There was so much of it, he'd be able to return all of Ghana's money, but also give anyone who invested in helping him do this 10 to 1 return. sometimes 100 to 1 returns. And fundamentally, what these investors were, I should say, what Blameza was able to play on with this story, this lie, was investor biases, because he was going for folks who had no understanding of even the nation of Ghana, or how the money would be unlocked. Yeah. It was pretty remarkable that people were happy to make significant investments in a place they didn't know about. But if you did know anything about Ghana in the 1970s, it's that there was Kwame Nkrumah, that he was deposed in a coup d'etat and that he was accused of massive corruption.

And this was covered in the States as well. And for a lot of people, that was enough. A few more people did actually travel to Ghana, but they were kind of taken on a very controlled tour. I one investor said that they went on this specific route past lots and lots and lots of billboards for Blamey's company and so it looks like he was all over the country and he wasn't it was just a very specific catered route he did this all the time he set up these like theatrical situations to make it seem as if the scheme was legitimate people would be in Swiss bank vaults or be left alone with a briefcase that was unlocked

so they could like take a peek at these documents that were ultimately forged. He was very good at putting on a show and sometimes he wouldn't have to say anything. He would turn up in traditional wear, especially after he was made a chief in his part, in his hometown, like covered in gold, wearing all these lush fabrics and just sit there silently.

And somebody remembered that like, he didn't actually have to say anything for a group of German bankers to conclude that this is exactly what they were looking for. Let's get into the scheme specifically, because like any good story, any good scam, there's a little bit of truth and a lot of lie in the story. And the story that Blameza was selling was that there is this tremendous amount of gold locked up in this Swiss bank account that investors can get access to. And it was tied to this corrupt, this allegedly corrupt president of Ghana. What was the lie in that story?

so after the coup d'etat that unseated president Nkrumah the military and the police who staged the coup as well as the people who paid them like widely thought to be like the CIA and also British intelligence just kind of flooded the media in Ghana and around the world with ridiculous stories about Nkrumah's personal wealth and so they said he had homes all over Africa he had gold taps and gold toilets and he lived this lavish life and what's a gold Cadillac which I thought was bizarre but really evocative because what would you do with a gold Cadillac yeah and so they made him sound like an absolute scammer who was living a very lavish life but Nkrumah was actually like a very very low-key humble person like he well once he was in exile he lived in a like

crumbling villa in another part of west africa like the ceiling leaked it was a very humble place like lots and lots of his documents got destroyed and he died with a pretty modest estate left like maybe a few thousand pounds that came from royalties from the books he wrote and that was it and the fact of that didn't matter because everybody remembered the gold cadillac and the gold taps and the mistresses and the palaces and all the things he was alleged to have done and it also was helpful that a lot of the people who told these stories and like kangaroo courts and weird press conferences were people that Nkrumah had thrown in jail for fraud and And these would be the people who helped Blaymeza run this scheme.

Yeah. And Blaymeza may have picked up some of that when he would accuse various police officials of bribery and promising to end corruption in his home nation. Focusing on that lie, there was an inheritance for the nation of Ghana, but it seems that someone may have taken that. yes that is widely thought also because just ghana once not so much anymore had like massive gold reserves and after all the colonial wars and by the time independence rolled around there was just such little money left everybody was confused because surely if your country produces resources there would be evidence of that but that's not how colonialism works like that money was long gone it was like in london in manor houses and like home counties and so this is this is sort of ridiculous the british basically around the time president

and everybody else involved was they were like negotiating the terms of independence the british insisted that they would hold and invest like a specific sum of money that would then be returned to ghana and it was basically just to prop up the pound because post-war britain was going through it it was a it was an absolute mess and they needed the gold reserves and this agency the crown agents just they were supposed to invest it and at least keep stable and they ended up just losing colossal sums of it over very short periods of time to the point that it just look crooked like I will pull up the numbers because I'm blanking on them completely but it's like they took a decent sum of money and threw it in a hole and then went down the hole like a year

afterwards and found what was left yeah that's how ridiculous it was yeah and so by the time that Nkrumah was president after independence and he went looking for the money it was such a paltry done that he sent a bunch of officials to like double check what had happened to it and it just wasn't there anymore and so there was like a whole inquiry by a british judge and it looks like a very small sum of money actually made it back to ghana it it feels a bit like the story feels a bit like a magic trick where you have this this completely elegant tale being told in a severe mystery but then you find out the explanation is incredibly simple. And it was that there were bad investments made around colonialism, and now there is no money. It was honestly deflating to find out

that was what had happened. I thought I would have loved a big scheme or some complicated tale. But no, the Crown agents were just terrible at investing. There were prosecutors that went after him. There were ambassadors, including the former child star, then Shirley Temple Black. Why is this guy... Clearly, he's running a scam. Many people know that he's running a scam by swindling these investors, but why do you think Blamiza was so difficult to prosecute and keep in jail? I think this plays out into why modern-day financial scammers often are in a similar situation. Yeah, so he was really good at sort of borrowing credibility from powerful people. there was a he had a stint in prison in the mid-1960s like among all the other people that

president kumar had thrown in jail and lots of them were prominent politicians and wealthy people and he seemed to have like soaked up their stories and their mannerisms so he looked and acted like a very wealthy prominent person and then the first thing he would do was get either seem to be bankrolled or actually be bankrolled by someone important so he would go to prominent businessmen or former politicians or really well-connected people and either pay them to support him or turn them into investors and have them support him that way um so this happened with former guardian politicians there was the owner of um across like first guardian owned brewery lots and lots of other people and so the minute he went into a meeting with somebody

you used to be the attorney general or like owned a really gigantic business even if the story was bizarre you you'd be like well these people wouldn't make a terrible choice it just doesn't make sense that somebody who was the attorney general would line up with a con man but they did and this gave him lots and lots of cover because then when he did get hemmed up or caught or actually like imprisoned or tried he like throw as much money and as much support behind getting out of jail he would get those people to call everybody they knew and try and bring him he would hire the most prominent lawyers and like flood the court with them he'd bribe anyone and everyone he was pretty spectacular about it the last

like significant stint in jail in 1979 there was like a there was another coup d'etat after he was thrown in jail and he managed to like bribe a prosecutor and a judge to conclude that he was too ill to be in jail. And then they flooded the media with stories about his constellation of diseases and said, but like, the funniest thing was like, this poor, very wealthy man is ill and it's not fair to punish him for being very wealthy and ill. So he should leave jail. Yeah. He knew how to borrow credibility. I think that was a big one. And also make the scheme so complex that as you mentioned in the book, the people who were supposed to be prosecuting him at some points were completely unaware of whether or not this this story was real

yeah right the way through like charlie temple black for example was pretty sure it was fake but she would write diplomatic cables to henry kissinger who'd be like did we actually look that up and somebody check if there are any gold bars yeah and it also got to the point that the people backing him was so prominent and well thought of and this is in like philadelphia and london as well that people would be like, I just don't want to rock the boat. He seems like a con man, but he's got all these very serious seeming people behind him. And I don't want to look stupid if it's true. One key difference between the Nigerian Prince scam, which is also known, and the trust fund scam that Blameza was running, was that in the Nigerian Prince scam,

occasionally investors would get some amount of money back. And in the case of Blameza, there was absolutely no money returned ever, and Blameza realized, I don't even have to return any money to keep people buying into this. Perhaps first, why were people getting money back in the Nigerian Prince scam? Yeah, this is a thing that really surprised me. But basically, an investor told me that inheritance scams, and he found this all over the world, would actually be a smokescreen for a colossal amount of money laundering by like criminal enterprises and so what you would be doing instead of like being taken by this absurd scheme would be just laundering money for a drug cartel and then sending it to another

part of the world where it would be used sometimes to actually build government infrastructure and the investigator said that he he would call people up and say you know the money for this is is coming from like a known criminal enterprise and people would tell him like, like, it's not our fault, but there's a drug problem in the U S or the UK, like money doesn't stink. So his American business partner, Robert Ellis did end up paying a few people back, like people who made themselves a nuisance or insisted or just had lost so

much that it was cruel to not give them the money back. But there were countless others who never saw a penny at all. Getting to today, in some ways, as your book captures, the story is still going on. And I think that for investors, they may counter Anansi, which is your character in the book, and also a mythological figure, the trickster, who's a spider and weaves these lies that are so complex that even the people and the trickster find themselves trapped into this web. What are some signs that an investor, someone looking to protect and grow their money is dealing with a Nazi? The biggest one is that it just sounds too good to be true. That was the clear biggest sign because 10 to 1 returns, let alone 100 to 1 returns are a bit of

a ridiculous promise but also the workings of the investment are so like complex and baroque and involve lots of like gaps in knowledge you can't really put the very straight like the money is going here and then coming to me this way kind of like equation together and also like somebody who is and it's incredibly like difficult to tell when somebody is putting on a show but if somebody is putting on a show that you maybe hopefully realize is playing on your biases or even convincing you that you have won over on this person way mazer would be really good at playing like the worldly but inexperienced like guardian prince who just wanted to like make this investment happen well and he looked surprisingly young for the age he claimed and

a lot of people just assumed he was an idiot. And that helped that for a lot of people made for beneficial investment, or at least they thought it would. Any kind of manipulation that requires you to fill in so many of the gaps that there is no real story. Those feel like the biggest tells that I came across when I was researching this. One thing I also was thinking about reading your book is liquidity in terms of these scams. If you're dealing with something where you can't take your money out of the investment as easily as you put it in, then that's usually, or in some cases, a massive red flag that you're dealing with something a little unsavory. It's a huge one.

As I read and thought about your book, I kept coming back to crypto and that I would think that if Blay Miza were alive today, he would be a cryptocurrency millionaire. We think of the FTX scam. We think of these staking scenarios where, hey, you're going to put up your Bitcoin and then And in an inexplicable way, I'm going to provide you a guaranteed 6%, 10%, why not even 15% return, even if I can't prove exactly how I'm going to deliver that to you. Because it's based on a technology that you might not understand that well. Yes, you might not understand that well was a huge part of it with both crypto and like the Blamaze's scam, like everything passed through a black box that nobody fully had seen inside or understood. and they relied on this being a thing that existed even if they didn't understand it fully and i was actually kind of surprised so few people asked questions about the stuff they

didn't understand you'd think that would be a very basic like point to cover when somebody is trying to sell you on an investment that's significant but it definitely wasn't for crypto and it definitely wasn't for the scam either our guest is upoka yibo the author of anansi's gold man who looted the West, outfoxed Washington, and swindled the world. I like books about scams. I like books about history. I liked your book as well. Happy to recommend it to listeners of Motley Fool Money. Yapoka, thank you so much for your time and your wonderful book. Thank you so much. It's been fun. As always, people on the program may own stocks mentioned, and The Motley Fool may have

formal recommendations for or against, so don't buy or sell anything based solely on what you hear. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.