Boiler room fraudsters sent to prison

This week saw two boiler room fraudsters slapped with prison sentences, after a three-month scam saw them pocket £300,000!

Nearly a year ago, something strange happened. I was cold-called two weeks in a row by boiler rooms trying to push over-priced or non-existent shares my way in return for tens of thousands of pounds that I would not see again. Of course, they didn't put it in quite that way. They told me I would make huge gains in the usual 60 to 90 days – perhaps even sooner.

So what was strange about that? My phone is always hot with persuasive investment sellers promising the earth for just a few thousand – anything from phoney bonds to phoney land via phoney carbon credits.

Regulated by the FSA

But what made those boiler rooms last April different from the norm was the similarity of method.

Both firms – Worldwide Risk Consultants (whose name was meaninglessly vague and impossible to track) and Weizmann & Young (probably a unique name but still well hidden from search engines) attempted to reassure me that they were legitimate by telling me they were regulated by the Financial Services Authority, giving me names and numbers.

They weren't, and while some of the names and registration numbers existed, they had been stolen by the boiler rooms – innocent firms and individuals had had their identities ripped off and cloned.

This week, two individuals were sent down to serve prison sentences for their part in these two boiler rooms, almost certainly operated from the same premises and involving the same personnel.

They targeted British investors because they had a list of phone numbers and addresses of UK residents they thought would be susceptible. Investments the pair claimed to be selling included Anheuser Busch Investment Bonds which did not exist, Medusa Mining shares and Burberry Group shares – the last two were sold at prices which were inflated compared to their official stock market prices. They did the same with ITV shares.

In any case, the price did not matter. There were no shares anyway.

Jairo Alfonso Bonilla-Bonilla, 32, from Bogata, Columbia and Evelyn Fallas Rodriguez, 36, his girlfriend, from San Jose, Costa Rica were jailed following a City of London Police investigation which exposed their crime.

The pair had set up a boiler room in Barcelona, Spain, cold-calling British residents to sell their “stocks and shares” with the promise of high returns and the assurance of FSA regulation. 

Living the high life

According to police, the pair (and employees/associates who did not figure in the trial) took £300,000 from 25 victims in just three months, using high-pressure sales techniques and targeting the usual trusting elderly and vulnerable investors. The average loss was £12,000 – in line with their sales patter which suggested investing £10,000 to £15,000 to gain lavish rewards.

The police became aware of the pair after intelligence, in part prompted by the lovemoney.com articles, linked them to investment fraud.  Detectives noted the lavish lifestyle they enjoyed, despite having no obvious source of legitimate income.

This was a comparatively short-lived operation – they were arrested on European Arrest Warrants in August 2011.

The pair were extradited from Spain to the UK three weeks later, where they were formally arrested, charged and remanded. They pleaded guilty to Conspiracy to Defraud and Conspiracy to Money Launder at Southwark Crown Court. Bonilla-Bonilla was jailed for three years and Fallas Rodriguez was sent down for two years.

Detective Inspector James Clancey, who led the investigation, said: “These fraudsters lived the high-life in Spain, and no doubt felt insulated from both the plight of their victims and any police investigations. That assumption proved badly misplaced. Not only were police aware of their crime, but officers were building up a clear picture of their deceit, ensuring the pair traded tapas bars for prison bars.” 

Wire taps in Spain suggest the pair were boasting to associates how they would soon be pulling in £250,000 or more a month – equal to £3 million a year – once their scam was fully up and running.

Returning cash to the victims

Now for something else that's really unusual. Detectives were able to prevent the victims' money from reaching the fraudsters. This cash can now be returned to the victims.

Clancey adds: “By intercepting the so-called investments before they reached the fraudsters, police will now be able to return the money to the victims."

Sadly this type of happy ending is an exception to the rule, and anyone tempted to invest in shares offered by cold-callers should be under no illusion that they will ever see their money again.  This was a case that saw criminal justice partners from around the world working together to bring these fraudsters before the court.

Luke Dockwray, CPS Lawyer from the Central Fraud Group said: “This case demonstrates the complex and international nature of these scams, as well as our ability to fight fraud across international borders. No fraudster targeting British victims should consider themselves safe from the British justice system.”

But just because one set of boiler room owners has been put behind bars and victims have been reunited with their money, no one should be fooled that the boiler room crooks have been beaten.

These frauds are all too easy to perpetrate. And like the multi-headed hydra of Greek mythology, cutting off one head can all too often mean  two new ones will grow in the space vacated by those who are caught.