Thursday, March 26, 2009

Desperation plus Insularity Equals Gullibility

There is a community about 20 minutes from Jerusalem called Cheftziba that has many Charedi families. It also has a lot of unfinished homes built by a contractor who is now serving time in an Israeli prison for fraud. What he did was sell these unfinished homes to vulnerable young Charedi families of very modest means at a huge discount for cash.

The catch was they were not guaranteed. So that if anything happened to those homes there would be no refund. The builder had a decent reputation and so many Charedi families took a chance.

Shortly after they gave him their money he went bankrupt, stopped building, and left the country. Of course he knew he was going tom go bankrupt long before he sold these homes. But he wanted to take advantage of the moment. He took off with millions of Charedi dollars. He left these poor Avreichim with nothing but empty unlivable shells in various states of construction.

The builder is now paying for his crime. Not enough according to his victims - and I agree. He should be made to either reimburse his victims or find ways to complete the construction of those homes. But that’s another story.

I don’t think I have to say how dire the economic straits of Charedim in Israel are. It makes the world economic crises look like a full blown prosperity by comparison. This very public fraud should have been a lesson to a vulnerable community where every dollar spent is measured and scrutinized.

But apparently it wasn’t - as this article in Vos Iz Neias (VIN) clearly shows. In light of the exposure of Bernard Madoff’s 50 billion dollar ponzi scheme - an Israeli journalist went undercover to see whether that event had any impact on Charedim. How easy would it be to scam Charedi investors?

He found out. The answer was that it was quite easy.

Their naiveté persists when it comes to financial matters. Unfortunately there are all too many con artists who realize that Charedim are an easy mark. Fortunately for the victims in this story - the scam was not real and their money was safe.

It is, however, obvious to me that Charedim are particularly vulnerable to such scam artists. Their needs are great and their finances are low. So when they see what they think is a legitimate opportunity for a high return on their investments, they lose all perspective and take chances that I think most people would be pretty skeptical of.

What happened here that made it even more attractive was an official looking seal on the brochure by rabbis that endorsed the ‘investment. Of course that was fake too. But it looked real and that’s all they needed to push them over the top.

Part of this gullibility can be blamed on their insularity. They have little to no experience with the outside world. Many do not read, listen to, or watch secular media reports that expose many scam artists. Those that read anything at all - do so in the filtered accounts of Charedi publications.

I truly feel bad for the Charedi public. They need the money, are more naïve about finances than the general public, and are therefore overly vulnerable to fraud like this.

As I have said many times in the past, isolating oneself from the outside world has many pluses and minuses. But as we see here this is yet another minus. They are so skeptical of the outside world but when to comes to making a quick and easy buck their financial needs blind them and their skepticism turns into enthusiasm.

I hope this hoax by a journalist will be a lesson learned.