Warning - Boiler Room Scams
By Richard Hunter | 01 May, 2008
When things are just too good to be true – they probably are!
I believe the recent £34M share selling scam masterminded in the US and the more recent expose on BBC’s Working Lunch programme is just the tip of an iceberg which is why we have been warning our clients to beware of strangers bearing gifts for several years.
The bare faced cheek of these fraudsters is quite amazing, yet at the same time they appear ever so plausible and charming. They often target the life savings of pensioners (interestingly they target men, believing women to be more sceptical). How they sleep at night is beyond me.
We have been able to thwart some of these scams when clients have tried transferring monies. Detailed analysis is sometimes able to identify the patterns used by boiler rooms. In addition, we monitor bulletin boards for clues as to how these fraudsters are working. A common technique is to set up a website for both the ‘broker’ and the company being invested in. We encourage clients to use nominee accounts which deprive the fraudsters of the names on share registers, which is where they usually start.
The reaction of some investors has been disbelief that they might be in the middle of a scam, particularly since the fraudsters sound so plausible. In fact, I believe that this is the tip of the iceberg and that this is an under-reported crime due to peoples’ reluctance to report it. Many pensioners are proud people and see speaking about it, let alone reporting it to the police, as calling themselves foolish and greedy. Having heard about these fraudsters I believe that this shouldn’t be the case as they are remarkably plausible and usually very pushy not giving their victims time to reflect. We would urge all victims to make others aware because only with greater public awareness will these criminals be thwarted.
Having defrauded someone once, the way they come back 2 or 3 times to try and get further monies is quite astounding. Even claiming to be from an agency that is close to tracking down the fraudsters and just needing one last payment which they will trace and use as the final piece of evidence to close them down and release all the money so far invested.
We have advised our clients that “under no circumstances ever invest with someone who makes an unsolicited call to you from a firm you have never heard of.” Making £10,000 to £30,000 out of each successful call means that they only need to be successful in a very small percentage of cases in order to be very profitable.
We are simply asking our clients and all investors really to remember one of the golden rules of investing which is ... ' if you are contacted by someone offering to sell you shares and the deal sounds just too good to be true... then it probably is".
Anyone receiving such an approach should report the incident to the City of London Police on 020 7601 2222.
