The scammers who thought I was a Knight of the Realm

These scammers took a novel approach, by addressing me as if I'd been knighted and by flogging an 'investment' in a massive bank.

At last I have the recognition I crave! It's goodbye Tony Levene and welcome to “Sir Anthony Levene”. I don't believe the Queen, or those that advise her, is up to speed yet on my knighthood but that's how a couple of crooks claiming to call from Switzerland have addressed me.

Besides the new title, Aaron and Robert certainly lavished time on me. Each of their five calls lasted around half an hour, although what they really said could have been summarised in about three minutes.

Working out of a $365-a-month 'virtual office' in Zurich – a maildrop which allows 'tenants' to use its prestige address as if they genuinely occupied space – and using a cheap internet phone line, Aaron and Robert set up a firm whose website is search engine proof. It's one of those that take three or four of the most common words used in finance (such as equity, bond, corporation, capital, fund, investment, asset, development, venture, resources, private, or bank) and juggle them to confuse search engines.

Doing things differently

But their boiler room approach is novel. Instead of some high-tech wonder with a miracle product or a company listed on the Frankfurt second market, or even a non-existent US penny stock, they are pushing the massive Bank of America.

They want me to invest in the bank. And leaving aside the cold call – always a triple red alert – they came up with what sounded like a real analysis, almost certainly a copy and paste job from a genuine investment bank.

Aaron stressed the move away from emerging markets to US stocks, the US consumer looking happier than for five or so years, and that lots of fund managers are backing banks as a recovery idea.

The scam skill is to come up with concepts with which you cannot disagree. Aaron was great at this. “You have to invest in the right companies” and “look at how US fund managers are investing” are two truisms in this mould.

Aaron, who wore his enthusiasm on his sleeve, was on shakier ground when he informed me that “we only use FSA-registered institutions”. Even if true, that is no protection. He promised me “an appointment with one of our asset managers”.

Flattery will get you nowhere

He kept his word. A day later, Robert phoned. He started with flattery – “Aaron said he was very impressed with you” – before announcing he was an “asset manager for nine private equity funds across the globe”, whatever that means.

“I promised my broker I would give you a few minutes,” he said before embarking on a 45-minute monologue on Bank of America. He informed me: “We don't speculate”. In view of what he was trying to sell me, that could be true. He was not speculating as he would take my money (variously discussed as between £5,000 and £20,000) and I would not be speculating as I would be on to a guaranteed loss.

Robert did not explain how he could take time off managing all those multi-million private equity funds to talk to me for so long. Nor did his long speech explain why I should use his services rather than find a UK-regulated broker and buy Bank of America shares.

Contracts for difference

His next call finally clarified this – after another 15 minutes of Bank of America. I would not be buying shares but “contracts for difference” – highly speculative gambles on share prices.

Robert confidently forecast Bank of America shares would be worth at least four dollars more by December. If I put $10,000 into the shares, then I would be worth about $13,000 at Christmas. But using highly-geared contracts, I would turn that same money into $64,000. And that was just for starters.

Now, you don't have to be an investment expert to know that taking positions that might win a lot exposes your cash to extra risk – it's like backing 100-1 outsiders at horse racing.

“And how much do the shares have to drop before I lose my money?” The answer was $1.30 or less than 10%. That is not much in volatile markets.

“So how much does this cost?” I innocently asked. “We charge a percentage of your profit,” he replied. When pushed that was 30-50%.

But they won't need to wait that long. Assuming the contracts are genuine (doubtful), they just need to bet against them.

Here's a warning: “Significant conflicts of interest exist between you and your introducing brokerage firm, dealer and/or counter-party. For example, the dealer may and frequently will act as counter-party and take the other side of transactions.”

Here's another: “Contracts trading is a zero-sum game. For every dollar of profit, there is a dollar of loss. Some studies have shown that more than 85% of small investors ultimately lose money.”

Do these warnings come from UK investment watchdogs? No. I have copied them from the customer agreement Aaron and Robert expected me to sign. The customer agreement I have not signed.

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