Destined for the Prison Band

The really dangerous characters look exactly like legitimate businesspeople.

What if you discovered, in your parent’s basement, a recording of unreleased tracks from The Rolling Stones, The Beatles, and Carlos Santana? Those would be worth something, wouldn’t you think? So did many other people who invested with Marino deSilva, who said he owned those recordings. deSilva told prospective investors that part of the money generated from the digital remastering and release of the recordings would benefit charity. Instead, he spent the money living the life of a rock n roll star, and keeping up appearances by making Ponzi payments to early investors. According to a Forbes story about the scam: (more…)

A Troubling Evolution

More than half of all Ponzi schemes start out as legitimate enterprises.

The SEC has filed an enforcement action in a case that paints a picture of a company that started out with good intentions, but by ignoring laws intended to protect investors morphed into a full fledged illegal boiler room. According to the SECs news release: (more…)

Double Affinity Fraud

Chances are that, by that point, many members of the group have already set fire to their nest eggs without even knowing it.

You name the group and the chances are that it has been targeted by an affinity fraudster. On this blog we’ve written about affinity frauds targeting immigrants, ex-patriots, retired bus drivers, Ferrari owners, the blind, the deaf, Jews, Muslims, Christians, Hindus, and many other groups. Last week came word from the Commodity Futures Trading Commission (CFTC) of an alleged affinity fraud that targeted members of two distinct groups, both of which have been the target of affinity fraudsters before. According to the CFTC: (more…)

A Gold Medal in Boiler Room Operation

Every competent investment scamster uses those tactics.

The games of the 30th Olympiad have begun, and the UK is putting it’s best foot forward. It is a wonderful place, no doubt. But, like every country, it has a segment of the population determined to live off of the misery of others. A recent case prosecuted by UK’s Serious Fraud Office tells a story that is familiar to securities cops worldwide. The press release is far too long to reprint in its entirety, but I highly recommend that you read the whole thing. We’ve reprinted part of it below. (more…)

U.S. Scamsters Plucking U.K. Pigeons?

The best thing you can do to protect yourself and your loved ones from cross-border investment fraud is to learn more about how they operate.

Last week, one of our regular readers from the United Kingdom asked that I remove a comment he had written on one of my posts. His reason was that he did not want U.S. scamsters being able to target him. I removed the comment promptly, of course, wondering whether the alleged scam we report on today was the motivator. According to the SEC’s press release: (more…)

Anglican Bishop On Trial in Ponzi Case

An impressive resume says very little about whether a fallible human will make ethical decisions under pressure.

Pretend that I’m an investment adviser. You come into my office and I tell you that I’ve just met with a man who has an investment that seems perfect for you. It involves making loans to businesses at very high interest rates. The investment has a track record of success. Now, consider whether the following facts would add credibility to the investment: (1) the promoter of the investment is a licensed attorney, and (2) the promoter of the investment is also an Anglican Bishop. Those facts convinced many investors to invest in an investment called the British Lending Program, which was offered by Missouri attorney and Anglican Bishop Martin Sigillito. He is on trial now in St. Louis. According to stltoday.com: (more…)

The Insurance Company Won’t Pay Your Fraud Claim

The promise that an insurance company will pay in the event of fraud is a 100 percent accurate tip-off to a fraud.

I am serving as an expert witness for an attorney who practices on both sides of the Atlantic. He is well acquainted with the epidemic of financial fraud that has engulfed all of the UK as well as the United States. During our last meeting he shared with me a tactic that he has seen UK fraudsters use, and he granted his permission for me to share with you. (more…)

Guilty Plea in Record Breaking UK Ponzi Scheme

Scamsters know that nothing succeeds like success.

The case broke in 2009 when London police raided the Knightsbridge offices of Business Consulting International. In the weeks that followed it became apparent that famous, wealthy, and financially sophisticated Britons had invested through BCI, in addition to many Mom and Pop investors. As is typical in such cases, angry investors, unwilling to come to grips with such devastating news, lambasted the police and securities regulators, insisting that the cops had gotten it wrong and were impeding BCIs ability to continue generating legitimate profits. This week, the 41year-old mastermind of the con put all such thoughts to rest. According to the BBC: (more…)

UK Fraud a Veritable Scam Encyclopedia

Investors who think that they’ve done a thorough due diligence investigation are left scratching their heads and wondering how they missed the fraud.

Investment fraud is not an American problem; it’s a world problem. While American frauds give us more than enough cases to discuss on this blog, there are even more cases overseas. Recent guilty pleas in the United Kingdom show that overseas scamsters are just as adaptable, prepared, and audacious as the American characters I describe in The Vigilant Investor. The next book might be about scams in other countries; I’ve certainly got enough material. According to Britain’s Serious Fraud Office: (more…)

Have You Heard the One About the Attorneys and the Bishop?

You are hardwired to fall for investment fraud, but also hardwired to believe that you are immune to it.

In a case that reminds us that investment fraud has gone multi-national, a federal grand jury in St. Louis has indicted men from Missouri, Kansas, and the United Kingdom in connection with an alleged $52 million Ponzi scheme.  Defendant Martin Sigillito is an attorney who lives in a St. Louis suburb.  He is also an ordained bishop in the American Anglican Convention.  Defendant James Scott Brown is an attorney who lives in a Kansas City suburb.  Defendant Derrick J. Smith is a real estate speculator in Oxfordshire, United Kingdom.  According to the indictment, the defendants told investors that their money would be invested in various real estate projects through a program called the British Lending Program.  According to the St. Louis Business Journal: (more…)

Ponzi Across the Pond

Investment fraud is a worldwide epidemic. We’ve seen it on every continent except Antarctica.

Investment fraud is a worldwide epidemic.  We’ve seen it on every continent except Antarctica.  A recent case out of London looks very much like the mini-Madoffs that have dotted the headlines here in the States over the past three years.  According to LondonNet: (more…)

The ‘Sucker List’

You may think of your own defenses as impenetrable. You may dismiss the chances that you could ever fall victim to one of these schemes. If that is you, you are in serious jeopardy.

The U.K.’s Financial Services Authority (“FSA”) has discovered a list of prospective victims in a case involving schemes to sell shares of nonexistent companies.  There are 38,000 names on the list.  According to columnists from the UK’s Mail.co.uk, “This hit list consists of intended targets largely living in London and the south east but also with many names in Yorkshire and Lancashire.”  Investors in those areas, beware.   (more…)

You Are On The List

Britain’s Financial Services Authority (“FSA”) has exposed a reality that few appreciate: scam artists know your name. According to a press release from the FSA: The Financial Services Authority (FSA) and City of London Police (CoLP) have contacted 1,000 people across the UK to warn them that their personal details are on a ‘master list’ being used by fraudsters to target and sell them worthless shares.

Britain’s Financial Services Authority (“FSA”) has exposed a reality that few appreciate: scam artists know your name.  According to a press release from the FSA: (more…)

UK’s Serious Fraud Office Charges Seven in Connection with International Fraud

British authorities have charged seven people with conspiring to defraud UK investors out of more than $100 million through a series of boiler room operations.

British authorities have charged seven people with conspiring to defraud UK investors out of more than $100 million through a series of boiler room operations.  The brokerage firms involved, Tresadern & Partners SL,  Pricestone Group SL and Anderson McCormack SL, were based in Spain.  Through those firms the defendants allegedly sold UK investors shares in sham American companies.  The authorities alleged that the market for the shares involved was created through market manipulation involving false press releases and artificially created trading volume.  The allegations sound very much like the pump and dump schemes that constantly plague American investors. (more…)

UK Case Highlights Characteristics of a Modern Ponzi Scheme

A jury in Harrow Crown Court northwest of London has convicted Kevin Foster of operating a Ponzi scheme that defrauded hundreds of investors out more than 34 million pounds. Foster’s scam is a good primer on how many high profile scams operate today.

A jury in Harrow Crown Court northwest of London has convicted Kevin Foster of operating a Ponzi scheme that defrauded hundreds of investors out more than 34 million pounds.  Foster’s scam is a good primer on how many high profile scams operate today. (more…)

UK’s Serious Fraud Office Investigates Possible 20 Million Pound Financial Scam

The island of Majorca is off the Mediteranean Coast of Spain.  For many years it has been a favorite vacation spot for Brittons seeking sunshine and retirement.  The UK’s Serious Fraud office has launched an investigation into a possible 20 million pound fraud that targeted British retirees living on the island.  Specifically, the SFO believes [...]

The island of Majorca is off the Mediteranean Coast of Spain.  For many years it has been a favorite vacation spot for Brittons seeking sunshine and retirement.  The UK’s Serious Fraud office has launched an investigation into a possible 20 million pound fraud that targeted British retirees living on the island.  Specifically, the SFO believes that John Hirst and his firm Gilher, Inc. “targeted British nationals and other expatriates” living on Majorca with a scheme that promised guaranteed returns.The Times of London described Hirst as follows:

Hirst, who ran the fund for seven years while living on the island, was a well-known figure in the expat community and was a keen cricketer. Most of his clients are thought to have been friends or social acquaintances. It is understood he has returned to Britain but has not contacted the authorities. He told investors he had been diagnosed with leukaemia.

That description is typical in three respects.  First, notice that Hirst was well-known and socially active.  Scam artists are big hits on the cocktail circuit.  They are naturally gifted at engendering trust.  You like them right away.Second, notice many of the alleged victims were friends or social acquaintances.  Running a scam is all about establishing creditbility and trust.  Those who consider you a friend are those most likely to believe that you would never betray their trust.  They are therefore less likely to do a pre-investment investigation that might warn them away from the scam.Finally, notice the claim to have a deadly disease.  Scam artists, when caught, often try to fake their own death or offer some reason why victims ought to pity them.Those who entrusted their money to Hirst are smart people.  They worked hard and saved to afford a comfortable retirement.  Yet, if the SFO finds a fraud, those people likely fell for it because they believed the one thing that all victims of financial scams believe — that it could never happen to them.  If you want to protect what it took you so long to save, do what banks do when they move cash: hire private protection.

 

UK’s Serious Fraud Office Obtains Convictions Against Five Who Operated a Global Financial Scam

The United Kingdom’s Serious Fraud Office (“SFO”) has obtained convictions against five people who defrauded about 1.93 million pounds from 56 investors. Operating under the name Prudential Commercial Investments, the scam targeted retired British ex-pats all over the globe — from the Czech Republic to Malaysia, from Brazil to Pakistan. The scamsters told their victims that [...]

The United Kingdom’s Serious Fraud Office (“SFO”) has obtained convictions against five people who defrauded about 1.93 million pounds from 56 investors. Operating under the name Prudential Commercial Investments, the scam targeted retired British ex-pats all over the globe — from the Czech Republic to Malaysia, from Brazil to Pakistan. The scamsters told their victims that investments would go to make loans for the purchase of valuable commercial property. Instead, the scamsters wired the money off-shore and used it for their personal benefit. The men convicted in connection with the scam are Peter Roope (sentenced to four years and eight months due to an early plea), Gareth Matthews (sentenced to six years reduced to four years due to an early plea), Charles Frisby (sentenced to four years and six months), Douglas Miller (sentenced to three years and six months), and John Roope (sentenced to two years). (more…)