LEARNING THE HARD WAY bangkokpost.com
One of the victims of a boiler-room operation in Thailand tells how he fell for the scam
Story by KRISSANA PARNSOONTHORN
BUSINESS NEWS - Thursday 07 April 2005
It was in the summer of 2001 that Douglas Gillies received the call from a stranger who would change his life for the next four years.
The Brisbane businessman listened as the voice launched into a spiel about international investment, about his company, the Bangkok-based International Asset Management (IAM), about the prospects of doubling one's money in 12 months.
``They didn't say much at first, only about IAM and the chance to make a lot of returns,'' Mr Gillies recalled.
``I remember the man asked at the end, `Are you interested to invest?' I gave him my email, and well, that's how it started. I suppose they heard it from my voice that I was interested.''
The hook was in. Over the next several months, IAM would send Mr Gillies more information by email and telephone about the prospects of huge investment returns.
``He kept ringing me up and contacting me for a couple of months, and I eventually decided to fly to Bangkok to visit IAM's offices.''
The IAM office suites both boasted respectable addresses, one at Bangkok City Tower, the other at CP Tower. Mr Gillies remembered a clean, modern office, filled with American and Australian expatriates all working deliberately at their role as securities brokers.
It looked professional. They all do. Mr Gillies was now well embroiled in the world of the boiler room.
Hundreds of investors around the world have been targeted and victimised by illegal boiler rooms based in Thailand. The Securities and Exchange Commission has identified dozens of companies reported to have engaged in unlicensed securities trading and outright fraud, with an extensive section of its web site dedicated to helping educate investors from being deceived.
Boiler rooms refer broadly to operations where salespeople make unsolicited ``cold calls'' to investors to convince them to commit money to investments in securities, properties and other assets.
In many cases, the assets are worth a scant fraction of what is promised, or in some cases, do not exist at all. The boiler rooms identified in Thailand to date have been little more than virtual offices and phone banks, with the investors and the fund transfers all occuring overseas.
Mr Gillies's story, while not unique among boiler room victims, is notable in that he is one of the few people who has actually been able to recover some of his money. After a three-year court fight, Mr Gillies, together with a dozen other Australian investors, were able to recover around 30% of the funds they invested with IAM.
While it may seem the height of naivety for anyone to be caught up in such a scam, a closer look at the tactics used by IAM could persuade anyone.
Most of the companies that IAM pitched for investment were touted as having strong growth prospects. One such company on the investment list was Evive Corporation, a US-based producer of biometric security solutions, while another was Thai Herbal International, a Thai company which produced herbal products for local and export markets.
An IAM executive told Mr Gillies that Evive had appointed IAM to sell two million shares in Asia to help raise funds for growth.
``I investigated the information that IAM told me. Its operation was legitimate, and the companies they presented to me did really exist. I phoned Evive in the US and someone there confirmed to me that IAM was appointed to sell their shares,'' Mr Gillies recalled.
Several weeks later, Mr Gillies, now back in Australia, was visited by a Richard King, described as one of the top people at IAM.
Mr King and his associates invited Mr Gillies to an ``exclusive'' investment seminar, where they delivered a polished, professional presentation to the investors, answering each question calmly and comprehensively.
``After the seminar, I felt 100% confident to invest with IAM. Yes, it's too good to be true, but it sounded like something that you couldn't miss. I asked many people at the seminar and they felt the same as me,'' Mr Gillies said.
He later transferred 12.9 million baht to an IAM account with Standard Chartered Bank's Bangkok branch.
Several weeks later, news emerged of a massive boiler room bust in Thailand. Mr Gillies, starting to become nervous, contacted the Australian securities authorities, as well as the Thai police, both to little avail.
Surprisingly perhaps, he was able to reach Mr King. The suave salesman told him to calm down, that his share certificates were safe, his investment was fine.
But his investment wasn't fine. It was gone, and Mr Gillies steeled himself for a complete loss. ``I had actually given up already. But I later consulted with Sukhothai Inter Law, and decided to fight through the court system,'' he said.
The Civil Court in February finally made good, returning 11.7 million baht in funds to the dozen IAM investors. The payments are the first to be made to investors involving a boiler room operation in Thailand.
Mr Gillies said he had since invested his share in the Australian stock market, mostly in conservative, blue-chip companies, and is pondering writing a book about his experience to help others from repeating his mistakes.
``I have learned a lot from this case. It happened because I was greedy. I want to tell people about my story, so that they will get some tips and cues to avoid investing with boiler rooms,'' he said.
Frank Davis, a partner at Sukhothai Inter Law, said boiler room operators typically worked from intricate scripts with prepared answers to ferry off questions.
Sellers try to learn a bit about each victim from their conversations to help build a rapport and elicit trust in the pitch.
``Don't trust cold calling and don't invest with them. If someone called you and said that he could help you earn a lot of money in a short period, he lied to you,'' Mr Davis said.
Mr Gillies swore that he would never again invest in this kind of investment channel, but that he was actually interested in receiving calls from other boiler rooms in the future.
``It's a big world, but who knows? I may bump into these guys again one day. It may even be Richard King. I would like to talk to him again,'' he said with a grin.
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