The Insolvency Service described this crime as "the ultimate scam".
Search engines can produce surprising results. For reasons that will soon become obvious, I needed to check past stories on the rare earth minerals scam which I first covered in July 2012. I found two on that subject on a legitimate UK investment website. One, from January, was all about how China is creating rare earth investment opportunities across the globe, while the second, posted just a week or two ago, cautioned against investing in the same companies because the Chinese economy has slowed.
Both articles were accompanied by some really difficult to follow points – I have no idea how factual they were or what they left out – but many of the comments in the first piece came from shareholders in the companies promoted.
I am unequivocal. Investing in rare earth minerals is the same as shredding bank notes in the street. It has no credibility, whatever “investors” put up on websites. I have warned and warned about this for years. In late 2012, the then-watchdog Financial Services Authority posted an alert – sadly victims did not read it.
Closed down in the public interest
Now one of the very many companies flogging these minerals to the unsuspecting and trusting has been shut down in the public interest by the Insolvency Service. The linked Westpier Consultants Limited and Global Metal Exchange Limited sold rare earth metals at hugely inflated prices to the public while grossly exaggerating the rate of return on investment, the High Court was told.
[SPOTLIGHT]These two linked companies sold the metals for Denver Trading Limited and Denver Trading AG (“the Denver companies” are currently in provisional liquidation in the public interest). They inflated prices by between 300% and 500%, yet promised a return on investment of around 200% in two years. So victims paid £10,000 for metals worth £2,000 but were told they would get £30,000.
The court heard that: “In reality customers had almost no prospect of making any investment returns, given the huge mark ups they paid for their purchases. One investor who tried to sell the stock he had bought through Westpier Consultants Limited was told that the selling price was just 10% of his original investment.”
The ultimate scam
David Hill, a Chief Investigator at the Insolvency Service, said: “These two companies were carrying out the ultimate scam. Not only did they sell the rare earth metals at an inflated price, they also lured investors in by promising high yields once the stock was sold which was just hot air.
“The court has taken a dim view of this behaviour and wound up the companies, a result would-be scammers should take seriously.”
According to Hill, both companies took up to 50% of the selling price as fees, most of which was used to pay commissions to sales staff. After they had both taken their cut, there was little left. The companies also lied to customers about the size of their commission while customers had no access to their virtually worthless stock as it was held in the name of one or other of the Denver companies.
And if that wasn't enough Westpier also promoted an unauthorised collective investment scheme, by selling off part ownership of mining rights in gold mines in Ecuador – that's the 'gold in the ground' scam where investors are told they have bought rights to the metal at a discount to the current price. But as the gold has still to be mined, they have to wait two years. In all likelihood, there is no gold.
Thanks to current lax company laws, the companies could get away with giving a “business centre” in Berkhamsted, Hertfordshire as the address of the one and only director Stephen Langton. His real home is in Ware, Hertfordshire.