Confessions of a scammer

Boiler rooms, bogus wine investments and land banking scams have all hit the headlines this year, but who are the people behind them?

A ‘trader’ who worked in boiler room operations and a bogus wine investment company has detailed the ease with which 
they were able to con investors out of millions.

The 25-year-old joined a Frankfurt-based ‘stockbroker’ in March 2009, cold-calling British investors with offers of pre-IPO shares in companies which existed on paper only.

“We would use shareholder lists to find leads, although the best came from the ‘suckers lists’ – people who had been scammed previously,” he said. “If they did invest, we would always come back to them after a few weeks to get them to put in more.”

He admitted the traders, most of whom were under the age of 21 and not university-educated, would target the ‘naïve, gullible and vulnerable’, typically over the age of 60, making at least 300 calls per day.

“Some were fairly wealthy and thought they could make their retirement pot even bigger, although others really didn’t have a lot of money and were quite desperate,” he explained.

After six months, he moved on to a business in London which was offering investments in bulk quantities of consumer wine, which would then be sold for a premium in China, where there was said to be plenty of demand.

Again, however, investors were unlikely to ever see their money back as very little wine was purchased or shipped.

He said: “If someone had invested with me while I was in Frankfurt, I would call them again at the next place as I knew there was a good chance of getting a deal done.”

After eight months, the London company was raided by police and closed down, yet most of the people continued to be involved in scam operations, with a number forming land banking businesses.

He is now critical of the lack of action by the FSA and particularly the ease with which firms regulated in other European countries were able to passport into the UK, such as the stockbroker in Frankfurt.

“Because they have an FSA number and can be found on the FSA register, it gives them a veneer of legitimacy,” he said.

He has also warned that scammers are now moving beyond land banking, which has attracted plenty of FSA attention in recent years, onto new ventures, with a number of former associates now trading carbon credits.