wisconsin troops home

• Fake companies set up in ‘boiler-room’ frauds
• Telesales teams target those with money to invest

The recession is fuelling a rapid growth in hundreds of millions of pounds’ worth of share frauds run by financially astute conmen, who target pensioners seeking a better return on their dwindling savings and the newly jobless with redundancy cheques to invest.

A detailed review by detectives at the economic crime unit, based in the City of London, has revealed that so-called boiler-room frauds are soaring. Police are warning the public to exercise extreme vigilance when considering buying stocks and shares, as the criminals involved are intelligent, devious and intimidating.

Four men were due to be sentenced yesterday at Southwark crown court in London after one of the first convictions for a boiler-room fraud, in which ?2.5m was swindled from 500 victims, most of them pensioners. In the two years the case has taken to investigate 10 of those who lost their life savings have died without recovering their money.

Every week at least 100 new victims contact police with stories of losing anything from tens of thousands to millions of pounds to the fraudsters. But the full extent of the crime, which is costing the UK economy hundreds of millions of pounds, is difficult to determine as victims are often too ashamed to come forward.

“We certainly believe what we see is the tip of the iceberg,” said Detective Chief Superintendent Steve Head. Last year the economic crime team uncovered the case of Britons Paul and Zibiah Gunter who were arrested in Miami for an alleged boiler-room fraud worth over $100m (?68.3m). Their 2,500 victims were predominantly British pensioners.

Imported from America and Spain, the scam involves financially knowledgeable criminals working in small groups of eight to 10 in offices set up as call centres either in the UK, or abroad, many in Spain, the Caribbean and eastern Europe. They cold call victims and persuade them to buy shares in companies which either do not exist, are nearly bankrupt or are financially unstable.

When the victims want to cash in their portfolios they discover the company has disappeared with their money.

Many of the victims are financially astute themselves and despite checking up on the firms they fall victim to multi-million pound scams because the criminals are skilled in setting up glossy fake websites, organising fake “shareholders meetings” and are increasingly using British banks for victims to deposit their money.

Head said: “Some of the speculation at the start of the recession was that people would not be buying shares so this crime would decrease. But it is quite the contrary. We have seen a large increase.

“Pensioners whose savings are not earning any interest are more vulnerable to this kind of fraud because they are looking in desperation for somewhere to invest, and we have seen these frauds targeted at people who have just been made redundant. They can lose everything. This is one of the biggest types of fraud we see.”

But boiler-room frauds are notoriously difficult to investigate. Fraud officers have lists of scores of fake companies which have been created to defraud more than 5,000 new victims a year. Many have a virtual office base in London – often just a door with a brass plaque.

The companies can disappear without trace instantly, and often one group of fraudsters will sell details of its list of “clients” on to other organised gangs, so victims are repeatedly targeted and intimidated.

The four men awaiting sentence at Southwark crown court were Henrik Botcher, 37, from Denmark, Fraser Jenkins, 28, from Wales, Roozbeh Yazdanian, 38, from Hemel Hempstead and Claude Greaves, 51, from London. Jenkins, Botcher and Yazdanian are businessmen with no criminal records. Jenkins drove a red Ferrari paid for by his crimes. The men set up their boiler-room in Barcelona and were advised by Greaves on how to run the operation.

Greaves, who called himself a tax adviser, was serving three years in prison for VAT fraud and guided the scam from his prison cell. The four recruited telesales people with an advertisement in a London newspaper asking for “telesales terrorists” to contact them.

The ?500,000 victim

Elizabeth Day began by investing ?5,000 after receiving approaches from a share adviser at a company called Parker Lane. Over four years Day, a former health service worker, was encouraged to build her portfolio and find increasing amounts of money to pay over. Parker Lane said she was building a portfolio out of shares reserved for corporate buyers. To stay in and not lose her money she would have to find more money, they said.

It was only last year, when one of her sons said she might have been a victim of fraud, that she contacted police. By then she had invested ?500,000 in her share portfolio. She is unlikely ever to see a penny of it again. Day, 64, said: “The man who phoned me was very convincing, he was educated and said he had been contacted by another company to offer me advice. I wasn’t making that much money on my savings so eventually I thought I would have a punt.”

Over the years Day was taken on by different “companies” as her adviser passed her over, saying it was in her best interests. All the time he was pressing her to raise more funds to stay within the corporate share area, and maximise her profits. In reality her details were being sold on from one boiler-room gang to another. Police believe she might have been targeted by at least 10 groups. “I’ve lost all my money,” she said. “It never goes away. I wake in the knowledge of it every morning. I am still being targeted by these people.”