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Thinking Ahead–Letter from Chaille: Beware -- The Scammer
Risk avoidance is becoming harder with the creation of the Internet and fewer transactions involving face-to-face encounters. You can become a victim if you are not vigilant to screen new accounts and don’t have secure collection policies in place.
By Chaille M. Brindley
Date Posted: 7/1/2008
Risk avoidance is becoming harder with the creation of the Internet and fewer transactions involving face-to-face encounters. Tough economic times, limited police resources to target fraud, new communication technology, globalization and clever scam operators are forming the perfect storm for the increase of fraudulent business transactions. From Chinese operators wanting pallets shipped offshore to domestic scammers buying across state lines, you can become a victim if you are not vigilant to screen new accounts and don’t have secure collection policies in place.
Probably, the most infamous scam impacting the pallet industry involves a man operating out of Chattanooga, Tenn. He has used the names of Larry Alvin Harris, Bob Harris, Larry “Bo” Harris, Al Hicks, Alvin Harris, and L.B. Harris, This individual has hit at least 14 pallet companies over the last four years. According to the victimized companies, he bought pallets under false pretenses and did not pay the bill. This scam has impacted pallet and trucking companies in Illinois, Iowa, Wisconsin, Ohio, Virginia, New Jersey, New York, Florida, Texas, Pennsylvania, Kentucky, North Carolina and Maryland.
Alvin Harris used the business name North Star Distribution in the most recent transactions while previous incidents involved Cherokee Distribution Center and Southeastern Warehousing. The scam artist avoided detection by claiming to represent viable businesses.
The good news is that police in Chattanooga, Tenn. recently conducted a sting operation and caught Alvin Harris (aka Larry Alvin Harris), who was charged with two counts of felony theft. The bad news is that Harris skipped bail and is wanted for failure to appear in court for arraignment. Local authorities have indicated that without federal charges being brought, the accused likely will not spend much time in jail even if apprehended. That is where you can make a difference. The industry needs more people like the manager of Austin Pallet Co. in Austin, Texas, who helped the authorities set up a sting to catch the pallet scammer.
Now federal authorities are looking into the matter, and they need help from any company that may have been impacted. The FBI encourages affected pallet and trucking companies to file a report with the local police in their area. This starts a paper trail that the FBI can follow later as it seeks to determine the scope of the scam. Secondly, the staff of Pallet Enterprise has agreed to help coordinate the investigation with the FBI. Please contact me at 804-550-0323 or Chaille@ireporting.com to notify us of your particular situation. Our staff will keep your information confidential and will only share it with the authorities unless you also authorize us to publish your story. If you want, you can also file a police report with the Chattanooga police by calling 423/698-2525.
It is important that affected companies file a police report and contact us because the greater the scope of the crimes, the more likely the FBI will be able to get a federal prosecutor to take the case. Because the transactions cross state lines, there is little that local authorities can do about many of the incidents. It will take federal authorities to really clamp down on the problem.
Scams can come in all shapes and sizes. This includes international situations where bogus operators try to pay with a credit card and then charge back the amount or use stolen cards. Credit cards are not the best way to get paid from someone that you don’t know.
A number of pallet companies have reported receiving suspicious-looking e-mail messages from Chinese companies wanting to buy orders of pallets. This might make sense for some pallet companies located near port cities. I have wondered about the viability of sending pallets to China in sea containers that are backhauled for future exports to the United States. This might be a real business opportunity, but it would take a lot of work to make it happen. That is why most of the unsolicited e-mails about shipping pallets to China look more like bad business deals or possibly outright fraud than a real business opportunity.
Some West Coast pallet companies have reported sending shipments to Asian markets. One leading recycler in the Pacific Northwest told me that he regularly sends pallets to South Korea via an established broker. He requires payment in advance because collection from foreign locations can be nearly impossible if things go wrong. You have to also be careful with letters of credit because there is no substitute for cash in hand.
There used to be a time when you could pretty much take people at their word. While that still may be true for the majority of the cases, it isn’t true for everyone. The bottom line is that you have to be willing to walk away from bad business unless you are willing to get stung.