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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…)

Former Wells Fargo Broker Shown the Door

Vigilant investors long ago jettisoned romantic notions of the stockbroker as protector of the nest egg.

A recent enforcement action from the Financial Industry Regulatory Authority (FINRA) answers one of the questions I get most often: “If I’m with a big name brokerage firm, I don’t have anything to worry about, right?” According to FINRA, Ralph Edward Thomas Jr., while a representative for Wells Fargo Advisors, stole money from many of his clients. One of the accounts from which he stole was set up to benefit a child suffering from cerebral palsy. According to a story from Investment News: (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…)

Former Raymond James Broker Indicted

The reality of the securities industry is nothing like the portrait firms paint in commercials that air during golf tournaments.

You can slice and dice the characters who commit investment crimes any number of ways; by modus operandi, by personality traits, by size of their cons. In The Vigilant Investor we divided them into five categories: the Professional Criminal, the  Golden Boy, the Fibber, the Bungler, and the Thief. Prosecutors in Indiana have indicted a man who, if the allegations against him are true (he is presumed innocent), would fit solidly into the Thief category. According to journalgazette.net: (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…)

Kiwi Ponzi

There are no threats faced by American investors that aren’t also faced by Irish, Russian, or Australian investors.

Forty-seven percent of our regular readers live outside the United States. We love that; it helps us spread the lessons of vigilant investing across the globe. There are no threats faced by American investors that aren’t also faced by British, Russian, Chinese, Canadian, or Australian investors. This week, we learned of an alleged scam in a country we’ve yet to cover: New Zealand.  According to stuff.co.nz: (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…)

The Wide World of Fraud

We’ve investigated investments on three continents and know first hand that investors worldwide are in the path of a tsunami of investment fraud.

Most of our posts are about U.S.-based fraud. There are more than enough of those to keep us busy. But, scamsters are just as busy overseas. Today we’ll look briefly at two that have been in the news recently, beginning first in Malaysia. According to AsiaOne News: (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…)

A Russian Wake Up Call

The Commission’s complaint alleges that BroCo Investments, Inc., its president Valery Maltsev, and/or individuals acting in concert with them hijacked the online brokerage accounts of unwitting investors using stolen usernames and passwords and subsequently placed unauthorized trades through the compromised accounts to manipulate the markets of at least thirty-eight issuers between August 2009 and December 2009.

The U.S. Securities and Exchange Commission (“SEC”) has filed an emergency enforcement action against a Russian company and its president, charging them with hijacking investor brokerage accounts for use in a market manipulation scheme.  The SEC’s press release described the alleged scam: (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 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.