State shutters phony finance firms

The Idaho Department of Finance has ordered two companies to stop giving phony information to consumers.

Bankers Trust Escrow falsely claimed on its Web site to be fully licensed and accredited in Idaho and to be the state’s largest escrow company, according to the Department of Finance.

The investigation began when a consumer asked the Better Business Bureau to look into the company.

Network Financial Services, which did business as Network Investments, fraudulently claimed that its investments were insured through the Securities Investor Protection Corp., according to the department.

However, the SIPC does not insure investments, according to SIPC President Stephen Harbeck.

An investigation began when an investor saw the company’s ad for the company in the Idaho Statesman that claimed investments were insured. The investor contacted the SIPC.

“Since it’s a fake company they’re very elusive and difficult to find,” said Mike Larsen, consumer finance bureau chief for the Department of Finance

A June 21 attempt to find the offices of both businesses found no office building matching the address listed for Network Services and no suite matching the address given on Bankers Trust’s Web site.

The fake suite number for Banker’s Trust was listed at the address of the building where the Better Business Bureau is housed, so the Bureau knew immediately when they received the consumer complaint that the business was phony.

Bankers Trust Escrow’s Web site is identical except in name to another Web site for Federal Trust Escrow, which the Department of Finance is also investigating. Both used the same fake address in the Better Business Bureau office building. Both sites make claims that they have closed 50,000 transactions and work with eBay, Cars.com, AutoTrader.com and CycleTrader.com.

The Web sites state that because of credit card fraud, the company’s has a policy to only accept wire transfers. “Safer is always better!” it states.

Network Services’ Web site is no longer operating.

Staying safe

Fake escrow companies often work in cahoots with individuals who fraudulently offer vehicles for sale in online auctions, Larsen said. He recommends the consumer guide at www.carbuyingtips.com/fraud.htm.

Consumers should check with regulatory agencies to make sure the companies they do business with are appropriately licensed, said Gavin Gee, director of the Department of Finance, which regulates escrow companies and investment firms. He also recommends talking to people who have done business with the company in the past.

While fraudulent companies are common, Gee said, it’s unusual for them to make outlandish claims, such as being the largest escrow company in Idaho, or to claim they are licensed or insured when they are not.

Legitimate businesses can avoid making false claims about themselves by talking to their regulatory agency or a lawyer, Gee said.

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To contact the author of this story, send email to: lora.volkert@idahobusiness.net.