UK, Spain Police Smash International Boiler Room Fraud

Stephen Little

3 March 2014

Police in England and Spain have made 110 arrests in a series of dramatic raids targeting suspected masterminds of boiler room operations which are believed to be responsible for millions of pounds of investment fraud.

The City of London Police and their Spanish counterparts from Policía Nacional co-ordinated strikes in Spain, England, the US and Serbia in one of the biggest anti-fraud operations ever staged, according to statements from official bodies.

Of the 110 arrests made last week, 84 were in Spain, 20 in the UK, two in the US and four in Serbia, with the majority of people arrested on suspicion of money laundering and fraud offences.

The operation also led to the closure of what are believed to be 14 boiler rooms in Spain, two in the UK and one in Serbia.

High value goods seized included an Aston Martin, Ferrari, Mercedes, BMW, Mustang, designer clothes, watches and cash in various denominations with a value in excess of £500,000.

In 2012, the City of London Police and the Policía Nacional began examining reports of investors worldwide being sold bogus shares in carbon credits, gold, renewable energy, forestry, eco projects, wine and land. Since then a number of arrests have been made across the UK, leading to numerous prosecutions where organised gangs have been running boiler rooms.

Prior to the operation, in the last year of the investigation City of London Police restrained £1.5 million in UK bank accounts believed to have been gained through boiler room activity.

“It is our most important investigation ever, targeting people we believe are at the top of an organised crime network that has been facilitating boiler rooms across Europe and which is suspected of being responsible for millions of pounds of investment fraud," said City of London Police Commander Steve Head.

“The scale of this operation has been years in the making and also significantly supported by the National Crime Agency, Financial Conduct Authority and Serious Fraud Office. The arrests made across four countries highlight how law enforcement can work globally in the pursuit of suspected criminals who seek shelter in foreign lands so they can target innocent people with investment scams that wreak financial and emotional destruction,” he added.

Advice

Following the arrests, UK wealth management lobby group The Wealth Management Association said it had updated and re-issued its two-page leaflet which offers investors a point-by-point guide to what they should do if they are contacted by boiler room fraudsters.

“Boiler rooms entice investors to engage in share deals which appear and turn out to be too good to be true. Their high-pressure sales techniques can convince investors to buy shares which are virtually worthless and the money is hardly ever recovered," said WMA director of regulation Ian Cornwall.

“Investors lose around £200 million each year to boiler room fraudsters, and their average loss is around £20,000. The dramatic swoop this week spearheaded by the City of London Police will help put a stop to this pernicious crime," he added.

The leaflet gives information on how to recognise boiler rooms and how people can protect themselves. It warns that boiler room scams may try to contact people by phone, email and letter to sell shares or other investments which are worthless and advises anyone that is contacted in this way to check the details of the firm on the Financial Conduct Authority's register to check its legitimacy.

Surge in fraud

In response to the recent surge in the number of clone firms and fraudsters out to scam investors, the UK watchdog, the Financial Conduct Authority, has issued a number of warnings of unauthorised financial services companies targeting UK investors.

Amongst the fraudulent firms were Mesirow Financial or Mesirow Financial International UK copying details from the authorised firm, Piccadilly-based Mesirow Financial International UK Ltd.

Fraudsters are also trying to scam people in the UK with the clone firm AMI FX, AMI Professional Services Ltd, AMIFX located in Essex and which is a copy of AMI Professional Services.

In addition, the boiler room firm LBV Asset Management, LBV is cloning LBV Asset Management LLP of No 1 Poultry, London, while dgfinancialservicesltd@gmail.com is abusing the details of the Durham, UK-based authorised firm, D&G Financial Services.

This follows the arrest in January of three individuals in connection with an investigation into boiler room activity. The FCA also said that the arrests are not linked to any other ongoing investigation and that no individuals have currently been charged.