Investment Fraud or Boiler Room Fraud.
Although this is not a new crime it is growing as a result of demographic trends and advances in modern communications. The fraud is based around cold calling investors and potential investors and takes two basic forms.
High yield investment opportunities.
- Deposits on a special inter-bank market with high rates of interest.
- Exotic investments, especially obscure securities, with a high rate of growth.
- Exotic investments with a high rate of interest or other income.
Investors will be told that they have been specially selected and will often be told that returns are "guaranteed". Investors may be subsequently contacted and informed that their investment has increased significantly in value and offered further investment opportunities. Initial income payments may be paid as an incentive to make further investments.
Buy back of poorly performing investments.
Investors are offered the opportunity to sell poor performing investments at or above initial cost. The investments will frequently be overseas securities. Prior to sale they will be informed that there are outstanding warrants or additional shares that must be purchased and that there is a local tax liability to be met. Once these payments are made there is no further contact with the salesman although they may be invited to make a payment to a shareholders action group to seek to recover the funds stolen.
Contact will generally be via internet or phone.
Even if potential investors are aware of FSA authorisation of investment advisers they may be told that the "firm" operates outside the FSA framework in order to avoid undue "Compliance Costs".
Individuals should seek advice from the FSA, Police fraud squads and their own banks before considering making such investments.
For details of three examples of this type of fraud please see below:
PROVIDENT CAPITAL
In April 2006, XXXX was contacted by a company called PROVIDENT CAPITAL, an investment company based in Singapore. The company purported to invest in the futures market and in particular trading in fuel futures. XXXX had in excess of 5 years experience dealing in the futures markets and initially invested 10,000 Euros, which he believed was to be used purchase options on the fuel futures market. These options would then be sold for a profit following an anticipated price rise.
The initial funds were to be transferred to an HSBC account in Singapore, the beneficiary being a company called ABC TRADING COMPANY LIMITED. Shortly before this transfer however XXXX was instructed to transfer the money into a Swiss bank account with the beneficiary being STANDARD CORPORATE GROUP LIMITED (Later changed to WORLDWIDE TRADING CORPORATION at the same bank).
Over a period of several weeks XXXX was induced to believe that options had been purchased and that the value of these options had increased. XXXX invested further funds into the scheme and introduced XXXXXX who also invested £40,000. Between April and June 2006, XXXX parted with £340,000. When XXXX tried to contact PROVIDENT CAPITAL with a view to realising his apparent assets there was no reply at the companies contact numbers and the web site had been closed. XXXX and XXXXXX then contacted Northumbria Police.
Enquiry Results
A Other victims of this fraud were found in other regions of the country.
B Julius D’PEREZ (born 29.1.70 Portugal) LKA MBE Suite 425, Phrom Phong, Unit E No 5-11/3 Sukhumvit Road, Bangkok, was circulated as wanted in connection with an advanced fee fraud involving several companies including PROVIDENT CAPITAL. There are also links with STANDARD CORPORATE GROUP LIMITED and ABC TRADING COMPANY LIMITED.
C Enquiries with Interpol regarding the status of PROVIDENT CAPITAL in Singapore was made. The reply stated that the Commercial Affairs Dept of the Singapore Police had ascertained that a “foreign entity” had engaged the services of a Singapore service provider to provide a virtual office. The telephone numbers relating to PROVIDENT CAPITAL were traced to the service provider and registered by a “foreigner” through the Internet. The mobile telephone number was using a prepaid card with no particulars of subscriber known.
D Victims of this fraud were contacted by a company called BENCH GROUP NEW YORK who offered to sell their options. The victims were duped into parting with more money after being told to complete tax forms and make a separate tax payment prior to funds being released. Both transferred funds to an account in the Isle of Man which was opened by D’ PEREZ.
E Both XXXX and XXXXXX have been contacted on several occasions by a John SIMMONS who purports to be from PROVIDENT CAPITAL. He has stated that he is tasked with releasing the funds held but in order to do so tax forms have to be completed and tax payments have to be made. The instructions given to XXXX and XXXXXX was to deposit these payments into WORLD ASIAN TRADING LIMITED account at DBS Bank in Hong Kong.
MIDAS FUTURES LTD
On 27th June 2006 a Mr XXXX XXXXXXXXX reported that he had been the victim of fraud, involving a company called Midas Futures Limited (MIDAS).
MIDAS had approached XXXXXXXXX by means of a cold canvas telephone call in April 2006 purporting to offer him the chance to invest in the futures commodity market. Subsequent to the phone call XXXXXXX was sent a professional ‘glossy brochure’ outlining what the company did. The directors of the company were given as XXXXX XXXX and XXX XXXXXXXXXX.
XXXXXXXXX decided to invest and sent two money transfers to a German company xxxxxxx xxxxx Limited, totalling £35,000. The monies on receipt were then transferred to a bank in Latvia.
In June 2006 XXXXXXXXX tried to contact MIDAS by telephone and e-mail without success.
Enquiries conducted so far have revealed the following: -
1) The persons behind MIDAS have cloned the company name and address by accessing bona fide companies from the Companies House register.
2) The MIDAS web site is hosted from the British Virgin Isles and has been closed down by the Trading Standards Office, Islington, London (where MIDAS registered address is).
3) The Latvian bank account has been closed by the offenders.
4) The London telephone numbers quoted by MIDAS appear to be ‘Skype’ numbers.
The following actions to date have been carried out:-
1) An alert has been sent to all the relevant agencies and police forces.
2) Liaison has taken place with the Metropolitan Police Fraud Squad.
3) A press release has been provided to the Evening Chronicle.
MAXONGLOBAL.COM
While legitimate companies may make cold sales calls, be this over the telephone or via the internet with a view to selling a cornucopia of investment options, it can not be understated that you must know with whom are dealing. Remember, all that glitters is not gold. False investment companies will be able to send you the most detailed and highly polished brochures. Website addresses will lead you to the smiling faces of company members and contain investment advice and history. Take one case recently reported to us where www.maxonglobal.com is shown as the website of one such fictitious company. In this instance a potential customer/victim was contacted by telephone and then sent a glossy magazine profiling the company. In reality the website was entirely false, contents, including details of staff members had been cut and pasted from a legitimate company’s website. Furthermore, the company attempted to present a reputable standing by claiming membership of a trade organisation. This trade organisation was quoted as the Offshore Financial Services Association. If you conduct a worldwide search on Google, of the “Offshore Financial Services Association” you will receive only one hit www.o-fsa.org/. This solitary hit leads you, not unsurprisingly, to the Offshore Financial Services Association based in Switzerland, which does seem exceptionally strange for an association that claims to have three decades of experience. The telephone number provided upon the site does not work.
The upshot of such examples is that essential checks need to be made. The true existence of such companies or trade organisations must be established. Just as a false or hijacked company website may be erected with the utmost simplicity, then so may that of a trade organisation. The moral of this tale is that checks can and must be made through reputable and well known sources.