Vertical Markets

Investment fraud op

by Mark Rowe

Some of London’s most high-profile addresses in the main financial districts could – unknowingly – be housing criminals working on scams, say the authorities.

City of London Police, City of London Corporation Trading Standards and Metropolitan Police visited 25 office premises in the Square Mile, Canary Wharf and Westminster in what they termed long-term, coordinated, intelligence-led work to uncover suspected boiler rooms, working out of virtual and serviced offices.

The City of London Police, which is home to Action Fraud and the National Fraud Intelligence Bureau (NFIB), has calculated that each City-based boiler room is making, on average, almost £1.25m. Victims may be duped out of a few pounds, or hundreds of thousands.

Investment fraud victims are fed with the promise of being able to make high percentage returns on investments – in commodities such as art, wine, diamonds and precious metals. In reality the money is used to cover the running costs of the boiler rooms and fund a life of excess and luxury for the criminals.

Hence ‘Operation Broadway’ by police and agents from the Financial Conduct Authority, the HMRC, Tower Hamlets Trading Standards, the National Trading Standards and Tri-Region Scambusters.

Uniformed City of London Police and Metropolitan Police officers joining staff from partner agencies in distributing 16,000 flyers outside London transport hubs during morning rush hour and the lunchtime break.

The leaflet campaign was focused on an appeal for office workers to be on the look-out for criminal groups who set up shop in their buildings and work around the clock trying to pressurise people.

Tell-tale signs of an office being used as a boiler room include companies that make up front cash payments and choose short-term leases, have unusual hours of business and do not display their name in reception areas.

Workers tend to be young, brash and unruly, use false names for themselves and the company they are supposed to be representing and read from pre-prepared scripts.

The authorities warn that prestige addresses in the virtual and serviced office sector run the risk of being criminal enablers.

City of London Police Detective Superintendent Maria Woodall, who is overseeing Operation Broadway, said: “Operation Broadway is a coordinated multi-agency partnership using intelligence to identify and target investment frauds in the making, before they properly get off the ground and really get their claws into people who are simply looking to put their money in a safe place where it will give them a decent rate of return.

“To do this we are working closely with mail forwarding and serviced office providers, stressing the importance of them being fully aware of how their premises are being used and the need for them to act quickly if they have evidence that their office space has been turned into a base for a boiler room fraud.

“At the same time we are also drawing in more and more intelligence from workers who are increasingly operating as our eyes and ears in London’s office blocks. We are finding this multi-faceted approach, also drawing on a combination of Police, Trading Standard, Financial Conduct Authority and HMRC powers, to be a powerful and effective way to tackle investment fraud and stop callous and ruthless criminals stealing and then blowing money that many of their victims had put aside to sustain them through retirement.

DCI Andrew Gould of the Met’s cyber crime and fraud team, FALCON, said: “Investment fraudsters are manipulative, persistent and convincing, so we’re working with our partners across London to raise awareness of these scammers. We are asking people at home to be wary of any unsolicited calls from people offering investment deals and people at work to be vigilant for any suspect activity in their office buildings.”

City of London Corporation Public Protection Director, Jon Averns, who has responsibility for Trading Standards, said: “City of London Corporation Trading Standards is a key player in the clampdown on boiler room fraudsters, and the public can help us make sure we eradicate these abusive practices in the City. This day of action is raising public awareness so that we can all do our bit and report those that we think are involved in this miserable practice.

“We’re creating a hostile environment for investment scammers who use City addresses to create an illusion of respectability that plays an important part in persuading people to part with their money. Consumers, who are often elderly and vulnerable, are actively targeted by these scammers, and persuaded to trust them and transfer very large sums – typically over £50,000 – in the hope of gaining a little more income from the savings. Our message is simple: don’t send your money to someone you don’t know, for a product you haven’t seen. If it sounds too good to be true, it probably is.”

And Georgina Philippou, Acting Director of Enforcement and Market Oversight at the Financial Conduct Authority, said: “Victims of financial scams often lose everything, with a ruinous effect on people’s lives. That is why it is so important that we work closely with the Police and other regulators to crackdown on scams. But we can’t act without intelligence: it is vital that everyone is on the lookout for the tell-tale signs of investment scams in order to protect themselves and to help us protect consumers. These scams are sometimes run from prestigious London addresses to give them an air of legitimacy.”

What you need to look for:

Companies that conduct unusual hours of business
Companies that do not display their name in reception areas
Staff that are young, brash and unruly
Staff who read from pre-prepared scripts
Staff using false names
Staff using a company trading name that is false and/or use multiple names
Companies that make up front cash payments and choose short term leases.

Report it

If you suspect an office is being used to run an investment scam visit www.actionfraud.police.uk or call 0300 123 2040. Quote ‘Operation Broadway’.

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