Phony Web Site Targets Madoff Victims, Claims $1.3B Discovered In Hideout
SIPC says 'look-alike' site is another Madoff scam.
March 10, 2010 — -- Victims of Bernard Madoff's Ponzi scheme are being warned of another possible scam – a suspicious Web site claiming $1.3 billion has been recovered from a Madoff hideout in Malaysia and asking investors to submit personal information to obtain their share of the money.
The "look-alike" site copies the artwork and structural design of the Securities Investor Protection Corp. (SIPC), the group formed by Congress to assist customers of insolvent brokerage firms that has issued the warning. It claims to represent the "International Securities Investor Protection Corp." in what is described as a classic phishing site.
"We know from information provided to us by individuals that this bogus group is already attempting to obtain funds and confidential financial information from investors in the U.S.," SIPC president Stephen Harbeck said. "We intend to use every available means to shut down this illicit operation."
A phishing site is a form of identity theft, Ben Greenbaum, the senior research manager at anti-virus provider Symantec said. Scammers build an authentic-looking Web site to mimic another in hopes of tricking people into providing personal information, like credit card numbers.
The bogus site, which was located at I-SIPC.com, has now been disabled and a message reads "This Site is Temporally Closed." The group behind the site claims to be located in Geneva and associated with the United Nations, among other organizations. A voicemail left for a number posted on the site and e-mail were not returned.
"Whoever is behind this scam definitely invested a lot of time and energy stocking the Web site with content to make it look legit," said Alison Southwick, a national spokesperson for the Better Business Bureau, who added that scammers often create look-alike sites to pose as genuine businesses or organizations.
There were, however, various grammatical errors made throughout the fake site, such as failing to properly capitalize "Madoff," forgetting periods, or replacing commas with underscores. Greenbaum said consumers should look out for these types of mistakes as a possible indicator of a phishing scam.
"Often all of the effort put into mimicking the spoofed site does not seem to keep the attackers from making simple spelling and grammatical mistakes," said Greenbaum. He said attackers in these scams "are often known to pick on the desperate, as well as prey on people who have already experienced some form of loss," essentially victimizing them all over again.
Images published on the site showed huge stacks of U.S. currency, which were claimed to be recovered in collaboration with Interpol. An Interpol spokesperson did not immediately respond to inquiries by ABCNews.com.
To support claims that the group has been successful in dispersing money, the site took testimony from actual Madoff victims – only the quotes apparently were lifted from a New York Times article and used out of context. It appears the group plagiarized an entire section of the Times article, originally published June 2009, which focused on investors struggling to recover losses.
Burt Ross of Englewood, N.J. was one of those quoted by the Times about his Madoff losses, but said he never talked to anyone from "I-SIPC."
"I have never even heard of that group before and I just can't believe they would use my name in support of this when I don't know anything about it," Ross said. "Apparently there is no end to the evil in the world."
In an attempt to add additional legitimacy to the site's claims, the group quotes and paraphrases Madoff trustee Irving Picard of law firm Baker Hostetler, who is tracking losses from Madoff's Ponzi scheme. In several articles on the bogus site, Picard appears to support the claims that more Madoff money has been found in Malaysia, but he also said he has never talked to anyone from "I-SIPC."
"I have never talked to anybody purporting to represent that entity," Picard said, "I did not give them the information. I don't know where they got it."
Picard declined to say whether Madoff money had indeed been found in Malaysia or if he had been in contact with the Malaysian government, as the site suggested.
"We conduct our investigation quietly," Picard said. "We do not share the information with the public in any way."
But some believe Picard's refusal to provide victims with detailed information about his investigation, outside of periodic briefs on the matter, could lead to such scam Web sites.
"Picard has been keeping his information extremely close to the vest, so it is a situation that can fuel the sort of rumors and conjecture," said Rob Stein, whose in-laws were victimized by the Madoff scam. Stein founded the non-profit Web site "Madoff-help.com" to help other victims.
"Part of the problem is that there hasn't been a more comprehensive disclosure on the trustee's part about what he's doing and who he's going after," Stein said.
