Bogus stockbrokers con victim out of £½m

Published on Thursday 10 April 2008 01:38

COLD-CALLING bogus stockbrokers have fleeced £500,000 from an investor in a classic "boiler room" fraud – a multi-million pound international crime that police warn is on the rise in the UK.

The scam, made famous in the Hollywood film Boiler Room , involves criminals, usually based overseas, using high-pressure and illegal sales techniques to con people into buying shares in non-existent or near bankrupt companies.

About 2,000 people in the UK have lost approximately 3.5 million since a major police crackdown operation began last year. Most victims are male and aged over 50.

The victim, from Edinburgh, was encouraged to make an initial investment of around 20,000 before being persuaded to hand over the remainder of the cash after being promised a greater return on his money.

In a separate incident a 77-year-old man lost 150,00 after being telephoned by bogus stockbrokers.

There have been a dozen cases in the Lothian and Borders area over the past month with losses totalling approximately 750,000.

Yesterday police issued a warning to investors to use only recognised stockbrokers.

Detective Inspector James Gilchrist, of the Lothian and Borders Police specialist fraud unit, said: "The man who lost 500,000 made a smaller investment and was told it was successful, but a huge deal was coming and he was conned into wiring a much bigger sum to a foreign bank account.

"The man who lost 150,000 made a series of smaller investments and was encouraged to continue in a bid to recover his losses."

DI Gilchrist said the criminals looked up share registers online to identify shareholders who were playing the stockmarkets.

"They then use cold-calling telephone or e-mail techniques and encourage people to invest a small amount at first. The targets are given 'personal account managers' and everything is conducted on first-name terms. It all appears very professional, with glossy portfolios with photographs of the alleged account managers and of the company's headquarters.

"There will be elaborate websites, professional-looking correspondence, and e-mails and telephone numbers being given out for the company's 'registered' office. The victims are usually always given a user-name and ID to get into the site. But the shares don't exist at all and the money is paid into an offshore account.

"Potential investors should be aware that if something sounds too good to be true it's usually because it is," warned DI Gilchrist

Last night Robert Wishart, deputy head of the force's economic crime department, said: "Boiler room fraud involves a cross-section of people.

We are working with the five big banks asking them to take more of a robust stance on unusual transactions."

The fight against boiler room fraud is being co-ordinated by the City of London Police's Operation Archway.