Investment fraud: £23.5 million losses reported to Action Fraud
£23.5 million reported stolen to Action Fraud during the past financial year through share sale or boiler room fraud.
£23.5 million was reported stolen to Action Fraud over the past financial year through share sale or boiler room fraud. The average loss reported by a victim is £122,000, with the highest single reported loss at £8 million. [31 March 2011]
With a new financial year about to begin, it is important to remind potential investors how to protect themselves from these types of fraud. A share sale or boiler room fraud happens when fraudsters cold call as many people as possible to persuade them to invest in shares that are either non-existent, or so worthless they are impossible to sell.
The fraudsters may provide false share certificates and other documents to make the investment seem credible. Once they’ve taken as much money as they can, these fraudsters then disappear.
Earlier this month, following a joint investigation between City of London Police, US and Spanish authorities, one of Britain’s biggest fraudsters pleaded guilty to an £80 million boiler room fraud that accounted for at least 2,300 victims across the UK.
The City of London Police, which is the National Lead Force for fraud, leads the way in combating boiler room fraud, running major investigations in partnership with law enforcement across the UK and abroad.
Here are some tips on how not to be a victim of share sale fraud:
- If you’re considering any type of investment, always remember: if it seems too good to be true, then it probably is. High returns can only be achieved with high risk
- Legitimate investment schemes and stockbrokers do not cold call you - only deal with professionals you know
- If you’re suspicious about a scheme’s authenticity, you should investigate the company’s status and contact details.
- The Financial Services Authority regulates stockbrokers based in the UK. You can check a stockbroker’s authenticity by visiting the FSA’s:
- Register of authorised firms
- List of unauthorised firms and individuals
- List of unauthorised overseas firms
- Alternatively, call the FSA’s consumer helpline on 0300 500 5000.
If fraud has been committed, report it to Action Fraud.
Dr Bernard Herdan, CEO of the National Fraud Authority said: “The deals these fraudsters are offering are always too good to be true. Unfortunately, they know what they’re doing. They call people out of the blue and sound professional. They pressurise you into making a rush decision through hard sell techniques. Even experienced investors are tricked into making investments
“Fraudsters aim to make their business seem legitimate so they will often use technical jargon, impressive job titles and mock websites to appear credible.
“Some of the largest losses that Action Fraud has recorded were from people who have been duped by share sale fraudsters.”
Commissioner Adrian Leppard, from the City of London Police, said: “Boiler room fraud continues to ruin lives and deprive UK PLC of hundreds of millions of pounds of investment. This is a deeply destructive crime that sees some of the most ruthless criminals preying on some of the most vulnerable in our society.
“We strongly advise not to invest money as a result of being cold called - no matter how attractive the opportunity appears to be. Once you let a boiler room fraudster into your life it is very difficult to get them out until they have taken all your money.”
Ends
For more information, please contact Sarah Mackie, NFA on 020 3356 1032 or sarah.mackie@attorneygeneral.gsi.gov.uk.
Notes to Editors:
A case study is available. For more information, please contact Sarah Mackie, NFA on 020 3356 1032 or sarah.mackie@attorneygeneral.gsi.gov.uk.
For more advice or to report a fraud, visit the Action Fraud website or call 0300 123 2040. Action Fraud is run by the National Fraud Authority and takes a full crime report from victims of fraud. It also provides individuals and small businesses with advice about how to protect themselves becoming victims of fraud.
What should you do if you’re a victim of share sale fraud?
- Report it to Action Fraud.
- Break off all contact with the fraudster at once.
- Alert your bank immediately if you’ve given the fraudsters your bank account details.
- Keep any written communications you’ve received from the share sale fraudsters. This may help you give evidence to the authorities.
- Because many boiler rooms are run from abroad, they’re not covered by UK jurisdiction or compensation schemes. Therefore, you’re unlikely to recover any lost investment.
- Be aware that you are now likely to be a target for other frauds. Fraudsters often share details about people they have successfully targeted or approached, using different identities to commit further frauds.
- People who’ve already fallen victim to fraudsters are particularly vulnerable to the fraud recovery fraud. This is when fraudsters contact people who’ve already lost money through fraud and claim to be law enforcement officers or lawyers. They advise the victim that they can help them recover their lost money - but request a fee.
The National Fraud Authority (NFA) is the Government’s strategic lead organisation on counter-fraud activity. For more information on the FSA please visit the FSA’s website.