ARE you middle-aged with more than a passing interest in stocks and shares? If so then you could be a prime target for a 'boiler room' attack. Amid tough financial times, criminals are increasingly using these share scams to steal millions of pounds from unsuspecting punters in search of a quick buck. And, as the economy continues to take a battering, anti-fraud experts are warning people to be extra vigilant as the level of ‘boiler room’ fraud looks set to grow, writes Andrew Mernin.
IN A poorly-lit villa somewhere in Barcelona, six young British lads in shirts and ties dance jubilantly around their desks before sitting down to work.
The musical warm-up is a daily routine to psyche up the gang before they pick up the phone and set about conning the vulnerable people of middle England out of thousands, and sometimes millions, of pounds.
The video footage, which is now in the hands of the police, is a snapshot of one of the thousands of so-called boiler room frauds currently in operation across Europe.
Det Const Simon Shields, of the City of London Police’s economic crime department, used the video at this month’s NEFF Credit Crunch Seminar in Newcastle to highlight the increasing threat of such fraudsters.
In contrast to the jovial scene in the Spanish villa, Det Const Shields also played a recorded police phone call from a woman whose husband committed suicide after losing his money to a boiler room scam.
The typical boiler room fraud targets middle aged, middle class men with a track record of investing in stocks and shares.
“It’s a cross border crime and people at the top of the tree are making substantial amounts. They are making a hell of a lot of money,” says Det Const Shields.
The most common victims of the scams are experienced investors, who typically lose £20,000 each to the fraudsters, according to the latest figures. Bogus stockbrokers, usually based overseas, cold-call investors and pressure them into buying usually worthless shares. Det Const Shields said: “The con tends to work because the victim does not expect an immediate return on his investment. But they are not the only victims.”
In fact, the smooth-talking cold callers are often living in a climate of fear, afraid to return home and sometimes under threat from violence if they try to quit the scam.
In one incident uncovered by the police’s national anti-boiler room project, Operation Archway, a boiler room boss used a baseball bat to threaten his under-performing, young workforce.
According to Det Const Shields’ “very conservative” estimate, British investors are conned out of £500m by boiler room operations every year.
Alan Brown, chairman of the North East Fraud Forum, believes there is a common misconception that high net worth individuals are the prime target for boiler room fraud.
“It could be a person who has some redundancy cash or people with savings – the allure is the making of more money for your investment so all of us can be vulnerable to that opportunity. If it looks too good to be true, it almost certainly is.” As tough conditions tighten the public’s purse strings and heighten the vulnerability of consumers looking for investment opportunities, the level of boiler room fraud could well rise in the coming months.
“The problem is that we have moved from a position where people felt confident investing their money in property,” says John Marshall, a senior partner at Dickinson Dees law firm in Newcastle.
“People looking for a return on their savings in the current climate are looking for other means of putting something away for a rainy day.”
One of the difficulties blighting people like Det Const Shields and projects like Operation Archway is the reluctance of people to admit that they have fallen foul of a boiler room scam. Mr Marshall says: “We don’t often hear about them because people are often too embarrassed to come forward and admit they have been conned.”
He adds: “If you receive a phone call, if you are asked to give your bank details, don’t do it.
“You should always seek professional advice before giving up your bank details.”
