Boiler room big boys face justice at last

A major police operation has finally led to a string of arrests of suspected big-time scammers.

It was my wife who first noticed. “It's been a long time since you were phoned by those muppets trying to con you out of £10,000 into their criminal schemes – you know the people you write about on lovemoney.com. In fact, I don't think you've been called since before Christmas,” she informed me.

She should know. She often picks up the phone first and knows the all-too familiar buzz of a boiler room as well as I do. And she was right. I've had the usual Indian call centres but nothing from those high-pressure sales folk flogging me non-existent shares, phoney bonds in big companies and 'can't fail commodities' ranging from rare earth minerals to coloured gemstones.

I'd put this down to post-Christmas hangovers, or that they were spending their money somewhere in the sunshine, or that they were all drugged out of their tiny minds. Or that I had been crossed off the suckers' list as they finally realised that I was not the fool with money they thought I was. I was wrong on all counts.

The sting

My phone was silent on the boiler room front because there had been a massive police operation – mostly in the UK and Spain but also in Serbia – that resulted in 110 arrests. These have been over the past couple of months and have only now been revealed following a decision in the Spanish courts. It all happened before The Wolf of Wall Street went on general release so this was not life emulating art.

Codenamed Operation Rico, a reference both to the US anti-racketeering law and to the Spanish word for 'rich', the police and other authorities had been planning the arrests for two years, admittedly following decades of criticism for inaction. Those running the boiler rooms, so-called because of their high pressure sales tactics and not because of cramped conditions as some suggest, had previously scooped up hundreds of millions of victims' cash without a worry.

Boiler rooms are sophisticated operations, as the UK arrest of Tom Wilmot and two of his sons showed. They were sentenced in August 2011 to a total of 27 years in prison. Wilmot senior's ability to get parole is limited by his refusal to reveal where the cash is stashed. He blames his estranged wife for putting the money out of reach, according to those who have visited him.

Boiler rooms need websites, premises, staff, money laundering facilities, lawyers and accountants. And financing to set up the operations. It's a big business operation.

I have long believed that these rackets were controlled by a small number of 'Mister Big' characters. The speed with which ideas appeared – rare earth minerals and the recent epidemic of wine scams – and the way they all used very similar scripts suggested that there was more than a casual link. Additionally, they all spotted legal weak points at the same time.

Targeting the big boys

Yet the typical boiler room would appear, on paper at least, to be run by someone virtually straight out of college. These people – and those who do the basic phone work – are 'expendables'. A small advert offering “highly remunerative work in financial services in Spain” will bring in many applications. So if these operatives – some as young as 19 – are locked up, taken out or so coked out of their brains as to be useless, they can be replaced within days.

Rico targeted those who really run boiler rooms: accountants, lawyers, money launderers and the financiers. They will have, at least, to explain where the cash came for luxury Aston Martins and Lamborghinis, for solid gold watches and for expensive homes. That's leaving aside the drugs and the prostitutes that co-existed in this world.

In the UK, police have details of around 1,000 victims, many losing six figure sums up to £500,000. But those who come forward are the tip of the iceberg. A far larger number cannot admit their gullibility to themselves, let alone their families or the authorities. Some continue to live in the false hope they will one day receive the riches they were promised.

This racket has scammed billions from the moderately well-off, usually retired people who are both more trusting and easier to reach on the phone.

Meet the new boss, same as the old boss

These arrests have left a vacuum, which the crime world abhors. Already, my phone is ringing with calls from new rip-off organisations – same old story but from a newly-minted company and website. And it won't be long before the 'recovery rooms' open, promising to get cash back if you pay more money upfront.

But the scam is now firmly on the police radar.

City of London Police Commander Steve Head said: "These people have no conscience in terms of what they do to people's lives. This is not at all a victimless crime. We've seen lives that have been utterly devastated.

"We have dismantled an international network of fraudsters. Make no mistake, this will make a difference to the ability of fraudsters to operate at this level.

"This network has been dismantled, hopefully we have sent a message to those who think that it's an easy crime that it doesn't matter where you are, we will come after you."

More on scams:

Appleguild: scammers that came back from the dead

Fighting back against the pension liberation scammers

Don't get caught out by the bamboo investment scam

Graphene: the 'miracle material' investment that will lose you money