Mundane Motivations

The roots of most financial frauds reach into motivations with which we are all familiar.

Few people who end up as Ponzi scamsters set out to become infamous. None that I know of aspire to be despised and imprisoned. They set out with something else in mind. And oftentimes that something else is something that we’ve all desired: to make it through a difficult financial stretch. Who among us, besides the Mitt Romneys of the world, has not wondered how we are going to make it through a time in which our expenses far exceed our income? Today, from the UK, comes a story about how that very familiar feeling led one man to infamy. According to the UK’s Serious Fraud Office: (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…)

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…)

Mavrodi Back At It

Like one or two guys you knew in college, their modus operandi is to proposition every person they meet and simply count on the odds to do their work.

My book contract limited me to 65,000 words. Among the stories of fraud I had to remove from the manuscript of The Vigilant Investor to make that length was the story of Russia’s MMM scam, which, with millions of victims, set a record for the most people defrauded by a single investment scam. Sergei Mavordi, the mastermind of MMM, spent four years in prison. He’s out now. And frequent readers will guess how he’s decided to make his living. According to BSR Russia: (more…)

New SEC Detection Tools Nab UK Hedge Fund Manager

Managers want the fund to be worth more because two percent of a bigger number is a bigger number.

The U.S. Securities and Exchange Commission has used the hard lessons it learned from Bernie Madoff to develop a way to catch hedge fund frauds earlier. According to an article in the Wall Street Journal, a recent case against UK hedge fund manager Michael Balboa: (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…)

Alleged UK Scamster Charged

Investment fraud is a global–not just an American–epidemic.

Based in Majorca, Gilher Inc. was the creation of John Neil Hurst. Hurst pitched the investment to British expatriates, citizens of Eurozone countries, and others, promising approximate returns of 20 percent per year. This week he appeared in a British court to answer charges that Gilher was a Ponzi scheme. According to an article in The Telegraph: (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…)

British Case Shows the Multi-National Nature of Financial Fraud

British Case Shows the Multi-National Nature of Financial Fraud

Britain’s Serious Fraud Office has announced the sentencing of Robert Allan Scott of Newmarket, England on charges that he cooperated in the sale of worthless securities by a boiler room operation based out of Spain.  According to the SFO: (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 Financial Services Authority Warns of Scamsters Impersonating Authorized FSA Firms

UK’s Financial Services Authority Warns of Scamsters Impersonating Authorized FSA Firms

The UK’s Financial Services Authority is warning investors about a new tactic used by boiler room stock operations, which use high pressure sales tactics to force risky securities onto unsuspecting investors.  According to the FSA, unscrupulous operations are posing as brokerage firms that are authorized by the FSA.  The illegitimate operation may even clone the website of an authorized firm, changing only the telephone number and address, to fool investors.  The FSA advises:

Should anybody receive an unsolicited call or email from a firm which they are not a customer of, the FSA is recommending that people should take the following steps:

  • ask for the contact details of the person calling you;
  • check the firm or individual’s status on the FSA register;
  • call the firm back on the switchboard number provided on the FSA register to make sure that the call came from the legitimate authorised firm.

Anybody who has been contacted by a suspicious firm or has any doubts should report the encounter as soon as possible by calling the FSA on 0300 500 5000 or reporting it online.

This warning from the FSA points out the challenge facing every investor: knowing who to trust.  Every scam artist portrays himself as someone he is not.  This is just the latest variation of that practice.  If all you know about a broker is what you learned from him or what you read on a website he or his employer created, you are at great risk of losing everything you have worked and saved for.  Learn what the broker his not telling you by asking an investor protection company to do a pre-investment investigation.

Austrian Scam May Have Claimed Thousands of Victims

You have something in common with the residents of the Austrian state of Styria.  Scam artists have been trying to separate them from their nest eggs.   According to the Austrian Independent, investors in Styria have fallen victim to a pyramid scheme that promised them a return of 100 percent return after one year in exchange [...]

You have something in common with the residents of the Austrian state of Styria.  Scam artists have been trying to separate them from their nest eggs.   According to the Austrian Independent, investors in Styria have fallen victim to a pyramid scheme that promised them a return of 100 percent return after one year in exchange for introducing two other investors to the supposedly profitable program.  Investigators have so far found 400 victims with losses totaling $2.5 million euros.  The authorities believe that they have only scratched the surface of this scam and that victims will eventually number in the thousands. (more…)

 

UK’s FSA Bans London-based Hedge Fund Manager

The UK’s Financial Securities Authority (“FSA”) has banned London-based hedge fund manager Simon Treacher from the securities industry and fined him £140,000 after finding that he materially altered trading records to make it appear that his trades were more profitable by approximately $27 million. According to the FSA’s press release:

The UK’s Financial Securities Authority (“FSA”) has banned London-based hedge fund manager Simon Treacher from the securities industry and fined him £140,000 after finding that he materially altered trading records to make it appear that his trades were more profitable by approximately $27 million. According to the FSA’s press release: (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 Investigating Cayman Islands Hedge Fund

In the United Kingdom, the Serious Fraud Office (“SFO”) has the ability to file criminal charges against those suspected of engaging in financial fraud.  Recently, the SFO announced that is conducting a criminal investigation of a hedge fund operated in the Cayman Islands, Dynamic Decisions Capital Management Ltd. (“Dynamic Decisions”).  The SFO’s press release reads as follows:

In the United Kingdom, the Serious Fraud Office (“SFO”) has the ability to file criminal charges against those suspected of engaging in financial fraud.  Recently, the SFO announced that is conducting a criminal investigation of a hedge fund operated in the Cayman Islands, Dynamic Decisions Capital Management Ltd. (“Dynamic Decisions”).  The SFO’s press release reads as follows: (more…)

 

Press Release from UK’s Serious Fraud Office Suggests an International Fraud

The UK’s Serious Fraud Office (“SFO”) is very effective at detecting and stopping investment fruad.  It tends, however, to give less information than would its American counterparts.  In a press release issued November 13, 2009, the SFO suggest that it is on the trail of a major investment fraud.  The release reads as follows:

The UK’s Serious Fraud Office (“SFO”) is very effective at detecting and stopping investment fruad.  It tends, however, to give less information than would its American counterparts.  In a press release issued November 13, 2009, the SFO suggest that it is on the trail of a major investment fraud.  The release reads as follows: (more…)