Police thwart suspected drive to recruit share scam workers
By Michael Peel, Legal Correspondent
Published: December 17 2007 02:00 | Last updated: December 17 2007 02:00
Fraud investigators have broken up a suspected drive to recruit workers for overseas "boiler room" share scams, which police say are a growing "plague" costing British investors at least £150m a year.
The City of London police action was part of a year-old operation to tackle fraudsters who typically trick wealthy and well-educated investors into buying fake or near-worthless shares.
Growing official concern about the impact of so-called boiler rooms on British nationals has prompted the creation of an anti-fraud taskforce comprising law enforcement agencies, banks, regulators and government departments.
Steve Wilmott, head of the City police's economic crime department, said he had seen a surge in boiler room activity over the past few months, with US authorities telling him they were receiving more calls from British victims than from any other nationality. Mr Wilmott said: "It's an absolute plague at the moment."
A City police team executed search warrants and questioned two suspected boiler room recruiters at a central London hotel on Friday. Young people had come there for interviews after learning through a recruitment agency of an opportunity to work in sales in Madrid, the Spanish capital.
Applicants said they were shocked to have been duped by suspected fraudsters, adding that recruiters had told them they could earn annual commissions of £30,000 or more. Andre Morais, 25, a former building society worker from Birmingham, said he thought the offer was a genuine and exciting chance to work in another country. He said: "My mum said to me: 'Don't go'. My mum's always right. Now I am embarrassed."
Boiler room fraudsters typically cold-call people on company shareholder lists to offer them the chance to buy stock in other businesses that is either bogus or has little value.
Many boiler rooms that target British nationals are based in Spain or other foreign countries, where they often attract little attention because they do not defraud domestic investors.
City police's Simon Shields said boiler room victims' annual losses were probably at least £150m, although he said this was a conservative estimate. The City crackdown, known as Operation Archway, has received more than 1,500 e-mails since it started in January, with individual investors' reporting losses rising as high as £1.3m.
Bob Wishart, head of the operation, said fraudsters called their victims "whales", because once hooked "you can get a lot out of them".
The Archway team said it was in daily contact with investors, law enforcement officers and regulators from around the world, trying to deal with boiler rooms that can close down suddenly in one country only to pop up under a different name in another. Following a US clampdown, the problem has migrated to some degree to other English-speaking countries, such as Britain and Australia.
To report concerns about boiler room scams, you can e-mail: operationarchway- @cityoflondon.pnn.police.uk |
