‘Don’t let boiler room scammers get away with it’

The Wolf Of Wall Street poster seen in New York. Picture: ScratchNSniff/Flickr

INVESTORS are falling victim to “boiler room” scams despite government pledges of a crackdown on the firms. Thousands of people have lost millions of pounds to boiler rooms who have cold-called them selling worthless or non-existent shares.

Most victims have been picked from lists of people that own or have previously owned shares or funds. There are fears that confidential customer files recently stolen from Barclays have been sold for use in boiler room scams.

The average victim of share sale or boiler room fraud loses £122,000, according to the most recent figures from Action Fraud, although it believes most people fail to report their losses.

One recent victim of boiler room fraud contacted Scotland on Sunday last week to share his story and urge others to take action if they think they have been targeted.

Craig Jamieson, of Edinburgh, was acting on the recommendation of a friend when he invested in carbon credit shares. Those shares were bought early last year through a broker who said the money should be paid to a third company, called Eco Asian Carbon Consultancy. He was then contacted by Eco Business Management with confirmation of his investment.

In all, Craig made three investments last February.

“I became concerned when I was further contacted by the broker to buy shares which appeared suspicious. This investment would be immediately sold ‘in house’ to smaller investors, giving me an instant 30 per cent profit.”

Craig was given more details in writing and told not to tell anyone. This request is typical of such scams, as it helps the fraudsters keep the reality of their scheme hidden.

Craig then alerted the Financial Conduct Authority (FCA) and reported the companies to Action Fraud.

“I contacted Eco Business, asking them to sell these investments for me. When I was told they couldn’t do this I said I would visit their offices to discuss this in person.”

He then received an email stating that he couldn’t visit because the offices were closing down.

“I did manage to get through again on the phone, but the person answering refused to tell me where the company was based and hung up when I asked further questions.”

The company website was soon taken down too and the email address disabled. Shortly afterwards, in April last year, the FCA warned that Eco Asian Carbon was unauthorised and possibly a scam.

Invariably, the addresses provided by boiler rooms differ to those on their Companies House listing, with many actually operating from outside the UK. In many cases the various companies the investor is dealing with all trace back to the same individual or small group.

Some boiler rooms con investors by pretending to be reputable, well-known companies. Last month, leading broker Chelsea Financial Services was cloned by a boiler room giving the firm’s genuine address as its own, while Hargreaves Lansdown has been exploited for similar purposes.

Earlier this month, Aberdeen Asset Management warned investors of emails from fraudsters claiming to be from the firm and offering false investments.

The regulator has told investors to be especially wary of unsolicited calls, as boiler rooms rely heavily on “cold-calling” tactics.

But with boiler room firms highly unlikely to be FCA-regulated, victims don’t have the protection of the Financial Ombudsman Service or Financial Services Compensation Scheme.

The regulator has been able to return some funds to investors ripped off by boiler rooms, but the vast majority will never get their money back.

Many victims fail to report the fraud, however. One reason, believes Jamieson, is that they are embarrassed. But he urged victims of an investment scam to take action.

“Please do something as it may help protect other people. Go to Action Fraud and report the fraud, and contact your MP. Not enough is being done and these fraudsters are cheating people out of their life savings.”