Watch out for this boiler room scam

Tony Levene receives a phone call urging him to invest in ITV shares.

The phone rings. There's a lot of noisy voices in the background – my instinct, honed over the best part of three decades, tells me it's a boiler room pushing rubbish or non-existent shares.

But perhaps I'm wrong. The caller, who has an American accent, names himself as Jack Sutton, from the corporate desk at WRC. He has my name and the first line of my address – strangely not the town.

WRC stands for Worldwide Risk Consultants. And he reassures me by quoting the firm's Financial Services Authority registration details. So it must be for real, mustn't it?

And, he hastens to add, this call is about analytical research, not sales. Apparently, I had been contacted by Susan Wighton at WRC back last autumn so this was not a cold call. Needless to say, I remember nothing of Wighton or the firm.

He said he worked in the City of London but gave his address as Canada Square which is on Canary Wharf – a few miles to the east. So maybe, if he does not know where he is, then he's somewhere else.

Sutton told me he was on the corporate trading desk every morning but called small investors in the afternoon, an interesting, if very unusual, job description. For some reason, he told me he had a signed copy of the first edition of Seven Pillars of Wisdom by T.E Lawrence (of Arabia fame).

I must admit that I am still not clear exactly what Sutton was suggesting I should do – by the sound of him, I don't think he was that clear himself. Perhaps he had been powdering his nose.

But he said he was “up to his hips” in ITV shares due to huge buying from Asian banks. His treasury department was “under-writing” the shares at 98.30p, an odd figure as that day the TV firm was trading at 79p. He told me ITV was “aggressive” and would soon offer Sky Sports at a low price. If true, it would be new, but I can find no evidence for this, although last summer there was some talk about Sky Sports 1 and 2 going onto the FreeSat TV platform on a subscription basis.

Whatever. Sutton said I would make money out of it in a 45 to 60 day window and this would be a “cornerstone” for future business between WRC and myself. His terms were 2.5% of any profit I made after the first 10%.

Sutton told me he “was used to dealing with banks” - so I suppose I should have been flattered by his attention. Half an hour later he called again – but he was in a state of even more incoherent excitement. Despite promises, Sutton has never explained why, if I wanted ITV shares, I should buy through him at 20p above the market price.

FSA regulations ban cold calling. But the website had an FSA number. So I looked up the register on the www.fsa.gov.uk website. And sure enough, the number matched Worldwide Risk Consultants. However, this WRC was a Hamburg, Germany based firm specialising in re-insurance mediation. It had nothing to do with investment and its website looked quite different.

I contacted the Germans who told me their firm has “no connection to this company. We have been cloned. We have reported this to the FSA.” The German WRC has an FSA registration due to its work in the insurance and re-insurance markets (primarily Lloyd's of London).

Sutton and friends had stolen the Hamburg firm's identity and FSA number. But there's a fair chance those called by Sutton and associates will believe the FSA story because they won't check the FSA register website to see how it stacks up.

A Manchester couple had been contacted by the false WRC a few weeks earlier. They had been persuaded to buy £6,600 worth of shares in Tullow Oil, a very large exploration and production company. They happily got cold feet when they saw the bank transfer documents which told them to send their cash to Transfertex Far East Ltd, a small Hong Kong firm (not to be confused with a Chinese textile firm of a similar name). This was set up last June, leading to suspicions that the boiler room is Hong Kong based and backed.

Although the Tullow price quoted by the false WRC was fair, would they have ever seen their money again? Almost certainly not.

Sutton called again a few days later – a little more coherent but still failing to explain why I should pay 20p over the top for ITV shares.

ITV says its name has been used by boiler rooms and it warns investors to check.

The FSA says cloning is on the increase, with fraudsters using the details of real individuals and firms to give potential victims the confidence to deal with them. You can read more about cloning at the FSA website.

Award-winning scams expert Tony Levene explains why he's writing a blog about scams and why he is The Scam Magnet!