The fraudsters that will scam you TWICE!

Carbon credit trading scams are far from dead. What's more, thanks to recovery room scammers, victims are being hit twice!

I thought carbon credit trading was history. I first warned against it in late 2010. The Financial Services Authority issued an alert shortly afterwards in 2011.

I was wrong about the disappearance of this scheme which has caused huge sums of innocent investor money to disappear. Indeed, one of the longest running comment threads on Lovemoney is on the very subject, over in the Q&A section, asking whether one carbon trader is legitimiate or part of a Ponzi scheme.

It is well worth reading both for the erudite comments from those genuinely involved with carbon (to sum up, they say don't touch these investments with a bargepole) and for the angry posts from those, presumably in credit trading firms or their friends, who say they have made all the money promised and lots more besides.

Is it a Ponzi scheme?

I can say categorically that carbon trading is not a Ponzi scheme. A Ponzi involves claims of extravagantly implausible gains where early entrants are paid out with the money that comes in from subsequent investors. Those first into a Ponzi can win – witness the multi-billion scheme run by convicted US crook Bernie Madoff over nearly fifty years where some private investors made millions.

That is the end of the good news.

Just because a plan is not a Ponzi, does not make it legitimate. Investors lose, whether they are first in or last. No one other than the promoters has profited from this form of carbon trading, at least not according to the Financial Services Authority, which like me, needs to be able to verify any claims to the contrary.

I have strived here (and also elsewhere) to tell investors never to fall prey to the clever-talking salesmen (always men) who call out of the blue offering “guaranteed” 20-30% returns in a year via carbon trading.  As a result I have been rewarded by personal legal threats from some of England's most renowned solicitors, and by personal abuse on certain other websites.

I have no desire to repeat those words – many obscene – but it is a reasonable suspicion that, behind the cloak of anonymity, lurk the very carbon scamsters I warned against. The same applies to those messages stating that I must be wrong as the writer had made the guaranteed amounts and more without problems. As I have said often before, if I could make a guaranteed return like that, I would not be spending my time phoning folk to tell them how they could too.

The scam isn't dead – it's growing!

I was wrong in my belief that everyone had moved on to rare earth minerals or wine or land in Latin America. Carbon trading firms still hit investors with their gilded words which combine 'save the planet' with 'make a fortune quickly'. And while many of these companies have disappeared, been forcibly shut down by the Insolvency Service, or maintain a ghostly presence where no one answers the phones or responds to emails, there are still plenty out there pushing the same easy route to riches line.

Their number is set to grow – there is increasing evidence that “recovery rooms” are phoning victims who have lost money with the promise they can restore their savings, plus some more, if only these investors send £5,000 or a similar sum for 'legal costs'.

Recovery rooms have operated for years in the wake of share scams where someone pretends that there is a takeover bid for the worthless shares investors were scammed into, with access to the deal contingent on more money upfront.

Recovery rooms are often operated by the very people who hit investors in the first place – they just change their names and phone numbers.

Fraudsters work on a simple premise. Someone who has been taken in once by a too good to be true deal, will move heaven and earth to get their money and promised gains back. Even if that means they have to fork out more cash. It's the same as a loser at a race meeting, doubling the bet for the next race to get back on the winning side – casino players do the same.

If I was a fraudster and had taken someone for £10,000 – a typical carbon investment – then I know it would be worth an hour or two of phone time trying to convince the victim to part with a further £5,000.

This week, the court case of another, unrelated carbon firm, in provisional liquidation to safeguard the public interest, started. But whatever happens to the directors, shareholders and staff – they tend to be the same people – it is unlikely that investors will ever see their money again.

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