Boiler Room Scammers BETTER than typical stockbrokers !! Fraud Squad update

Posted by Chris on September 1st, 2011

Following the first in the series of Fraud Squad last Friday which focused on Boiler Room Scams many people are making comments like ” Well they would not have caught me out with that scam “.

Actually the thing that might have alerted experienced stock and share investors to the scam was that firms like Anderson Munro, Milton Hayward and Westernfield Holdings gave out too much information !!

Let me explain:

In the early 2000’s I invested a lot of money in stocks and shares, particularly in high tech stocks. ( I also invested a lot of money in high tech companies directly and through I.P.O. share purchases). My reasoning was that there would  be a resurgence in the Nasdaq after the crash of 2000 to 2002. In this I was correct, see:

which is a 36 year graph of the Nasdaq ( High Tech ) stockmarket.

Anyone with a ruler can see the growth trend in the Nasdaq over the last 36 years with the main recent  deviances being the boom
( upwards ) and the 2008 recession ( downwards ). Anyone who invested in the Nasdaq itself in around 2003 has had a good ride ( with a few bumps ) over the last 8 years or so.

I had 2 main share/stockbrokers at the time one in the U.S. and one in the U.K. The U.S. one being ( wait for it ! ) Lehman Bros. and the U.K. one being Merchant Securities ( ). As I am sure most of you will know Lehman Bros. was a main casualty of the 2008 crash ( ) but I am pleased to tell you that I had sold all the shares that I bought through Lehman’s before they did !!

I also had a couple of brokers that I used to a lesser extent in the U.S. and the U.K.

Was the initial approach of Anderson Munro and the other Boiler Room Stockbrokers unusual ??

No. Merchant Securities and one of the U.S. brokers that I used contacted me in exactly the same way that Anderson Munro did. They obviously all had a list of people ( a database ) that they had obtained somewhere. They bought a list from somewhere or they stole a list from a previous broker where one of them had worked. Actually some of the approaches that I had ( especially from New York based brokers ) were more aggressive than “Victoria Mayer’s approach” ( the apparent name of the person who contacted me ).

Was their ” pitch” on the initial phone calls unusual ??

No. Not only was the pitch typical but it was actually fairly refined, well researched  and focused. Typically brokers will give you some general pitch about how they are experienced, have ” unique ” access to ” hot ” stocks and a proven track record of success ( without any details ). Anderson Munro claimed that they were operating in two ” hot ” sectors, firstly the ” Far Eastern stock market ” ( which they had specialist knowledge of as a Tokyo and Hong Kong based broker ) and secondly the ” Clean/Green Energy/Technology ” market. Within this they were promoting shares in a particular company ( ) that renowned investor Warren Buffett had invested in ( ).

What about checks on the Boiler Room Scammers versus checks on real brokers ?

I went to Lehman Bros. because they were a ” renowned New York broker ” . This seems somewhat laughable given the events of  2008 but at the time Lehmans were right up there with J.P. Morgan and Merrill  Lynch as ” THE ” firms to be with ( not just for general stock purchases but also for I.P.O. stocks ). I did not check with the F.S.A. ( for U.K. ) or Finra ( for U.S. ) that any of these firms were “legitimate” and “registered”. Because I had not checked for the other firms ( who I traded with for years ) I did not check for Anderson Munro either. The one thing I would always do with new brokers is to make the first trade small. ( This is one thing that saved me from massive losses with Anderson Munro because one of the main mistakes that they made with me was trying to get me to  move from BYD shares, which Victoria had spent ages convincing me to buy, to other shares which did not have the same  ” support “.  They also tried to get aggressive with me when I would not move – which led to me telling them to ” get lost “).

Were their procedures unusual ?

Yes. If anything their procedures were stricter than a ” normal ” broker in that they wanted I.D. and various forms filling in ( they did not concentrate solely on ” getting the money in ” ). Many legitimate brokers that have contacted me have moved very quickly from initial pitch to ” getting the first investment/puchase done “.

They also involved a ” back of house ” function ( in my case a guy called Max Clarke ) to get the admin. work done. ( Typically you would not even speak to back of house people for some time at proper brokers – the broker dealing with you probably preferring to keep control of a new customer ).

Would you normally see the share certificates of the firms that you bought shares in ??

No. Most brokers that I dealt with held my shares in a “nominee account “. I would get a copy of a ” Buy order ” when I bought shares ( as I did with Anderson Munro )  and this would detail the name of the company whose shares I bought e.g. BYD, the price at which I bought those shares, the number of shares and the total value of those shares.  Then you would get ” statements ” showing your holdings, share price at that date and the total value of those shares. You would also be informed of dividends that were awarded for those shares.  When you sold your shares with a normal broker you would get a ” Sell order “.

Anderson Munro and Milton Hayward actually went to considerable lengths to have ( fake ) share certificates printed and issued although I did not get any. Had I done so this might have appeared unusual to me. Less ” experienced ” investors were probably comforted to have copies of these fake certificates.

Stock certificate

So, the unusual thing about these Boiler Room Scammers is that in a couple of respects they were better than normal brokers !!!

So, How do you choose a Stockbroker ??

After getting scammed by Anderson Munro I continued to get calls from other U.S. and U.K. brokers. I advised them that it was probably not the best time to be calling me and explained why. This prompted them to explain to me how to check that brokers were legitimate using the FSA in the U.K. and Finra in the U.S.

Some people would say that you obviously would not use any broker that calls you up and says that they have a great opportunity – if it sounds too good to be true then it probably is too good to be true etc etc ( see interview with Motley Fool Director in comments below ) .

ALL stockbrokers claim to be ” the ones that have the best research and therefore are most likely to find YOU a stock that will increase in value rapidly “.

Actually most stockbrokers are pretty useless at picking stocks ( in the same way that most fund managers are pretty useless at managing funds )  and they all rely on the same information which means that lots of people actually know about the ” potential ” of that stock which means that it is already priced in which means that it will not actually rise as much as they say – probably.

So, whilst I am not saying ” go with the brokers that call you ” what I am saying is that it is actually very, very hard to find one that is going to give you really good advice.

Boiler Room Scammers get jailed.

Posted by Chris on August 5th, 2011

Boiler room gang behind bars after international investigation

George Abrue


Originally from Nigeria, Abrue met and married the 18-year-old Robson in Newcastle and from here he started to form his criminal network.

Detectives  discovered how he began his criminal career inventing false companies for other boiler rooms before deciding the big money was to be made by selling the shares for himself.

To legitimise the operation, UK phone numbers and Company details were acquired and bank accounts created using Abrue’s neighbours’ addresses.

His gang set-up Spanish boiler rooms from where fraudulent brokers used aggressive sales tactics to sell shares in what they claimed were emerging mineral and bio fuel companies about to float on the stock market.

Abrue was recruiting former colleagues from the telesales industry to work for him.

The men were trained in Malaga and then moved to offices in Majorca, where they operated pressurising people into buying shares in non-existent companies such as Bio Fuel Solutions Corporation and New Power Technology.

Professional websites and brochures were also produced in Sweden to convince people, many of whom were elderly and vulnerable, to part with their savings.

The reality was victims were buying into fictitious companies, with their money being laundered through Swedish and Italian bank accounts to fund a champagne lifestyle for Abrue and his associates.

Parties for up to 300 people were thrown in top Barcelona hotels and a Ferrari, Bentley and Maserati were bought and garaged in Spain.

Victims were sent ‘bogus’ share certificates, produced in a Sunderland back-street office run by Henderson, to provide evidence of their investments and to encourage them to make further payouts.

Abrue was identified as the head of the organised crime gang, using different aliases to move between Spain, Sweden and the UK.


This boiler room fraud first appeared on the City of London Police’s radar in August 2009, when its National Fraud Intelligence Bureau (NFIB) was contacted by a stream of people claiming to have lost money after being cold-called.The NFIB used this intelligence to build a picture of how the boiler room was operating; linking the individual losses to a much larger criminal network operating out of Spain.

City of London Police, which is the National Lead Force for fraud, launched an investigation.

In December 2009 the City of London Police led a national operation that saw 11 people arrested in Northumbria and three others in Manchester, Derbyshire and London. On the same day, Abrue was detained in Sweden and several months later extradited back to the UK to be charged.

Paul Slack’s case first came to police attention in March 2009 when a man from Ilkeston contacted Derbyshire police as he suspected he had been the victim of a ‘boiler room’ fraud by people claiming to be from a company called Milton Hayward based in Japan. He had lost thousands of pounds to the fraudsters.

The gangs set up companies, bank accounts and websites and send out press releases to deceive people into believing that they are purchasing legitimate shares and commodities from genuine companies.

Victims spanned 43 countries

Detectives found the Milton Hayward case particularly difficult to investigate because although the company was allegedly based in Japan, the companies involved had been registered in the West Indies and victims money had been transferred to accounts in Cyprus and Hong Kong.

As the investigation progressed and more victims were traced, officers identified another crime group in Spain, Sweden and the North East of England. The evidence and intelligence that had been gathered by Derbyshire officers was passed to the City of London Police, who agreed to take over the investigation with assistance from Derbyshire Constabulary.

National and international enquiries under Operation Handa continued. Over the next two years, 210 victims in 43 countries including Europe, North America, Australasia and the Far East, were traced. By liaising with authorities in China and Cyprus, police identified several gang members and a large number of other suspect companies being linked to the group.Milton Hayward logo

These companies included First Call Commodities, Milton Hayward, Total Asset Management, Keshington Group LTD, Regal and Archer, East West Options, Jam Capital, Mays Group, Bradley Hill Holdings, World Asian Trading Group, Chatex Ltd, Goldman Asset Management, Quantum Holdings and Borsa Financial.

Inquiries revealed that Slack, a British man living in Thailand, was linked to the companies and bank accounts. He was arrested by Derbyshire officers at Heathrow Airport in December 2010, having returned to the UK from a holiday in Australia.

‘Boiler room’ gang suspects arrested in Spain

Spanish police still of alleged scam phone roomRaids took place across the city of Palma de Mallorca

Fifteen Britons suspected of running one of Europe’s biggest “boiler room” scams have been arrested in Spain.

Armed police carried out a raid in Mallorca as part of an investigation into a gang believed to have been cold-calling thousands of UK residents.

The arrested men, from Nottinghamshire, Essex, Luton and London, appeared briefly in a Spanish court yesterday but are yet to face trial.

Boiler room fraudsters use pressure sales tactics to sell worthless shares.

City of London Police, who worked with the Spanish authorities, said younger members of the alleged scam are thought to have been lured into the operation by crime bosses who targeted them in English-speaking bars.

‘Fake companies’Dyno Medical, Inca Pacific Gold and Mining and Viking Gold Resources have been named as fake companies linked to the gang.

The 15 include Liam Rymell, 23; Dominic Jones, 24; Shafiq Dad, 41; Omar Rana, 27; and Rashid Shafayat, 30, all from Nottingham.

Also arrested were John Bartlett, 22; Tyrone Robinson, 23, and Lee Fisher, 24 – all from Mansfield – and Essex residents Danny Dilliway, 25, Chris Savva, 30, Mohamed Ghazalli, 26, and Neil Simpson, 27.

Farhan Khan, 24, from Hayes, west London; Anthony Baugh, 25, from Luton; and Fahim Khan, 36, from south London but residing in Spain, are the other British suspects.

Two German nationals also appeared in court.

Boiler room scams are estimated to cost the UK about £200m a year.

June 22nd 2011

A City of London Police investigation into one of the UK’s biggest boiler room frauds has ended with the conviction of nine people.The case can now be reported, after the final two suspects, Abrue’s wife and mother-in-law, were convicted in Newcastle Crown Court today. City of London Police investigated the crime in its role as national lead force for fraud.

Sarah Robson, 28, and Jocelyn Cowper, 57, from Tyne-and-Wear, were found guilty of assisting the mastermind behind the multi-million pound con. They will be sentenced on 12 July 2011.

George Abrue, 30, the mastermind behind the fraud, was jailed for five-years having admitted to orchestrating a £10 million investment con that targeted UK citizens.

Six other members of Abrue’s gang were also jailed at Harrow Crown Court in May, with his main partners, Scott Henderson, 31, and Anton Deach, 25, receiving five-year and four-year prison sentences respectively.

Detective Chief Inspector Dave Clark, from the City of London Police, said:

“George Abrue was a bright and articulate man, but he was also an unscrupulous and callous coward.  He showed no sentiment in his crime, and clearly thought nothing of the impact his fraud had on its victims.

“Some of those victims have been suicidal, and the psychological effect on them and their families has been tragic; all so Abrue and his friends could live the lifestyle of a Premier League footballer spending astronomical sums of money.
“Our focus now is to recover every asset we can in an effort to claw back some of the victims’ money, work which will continue for the next two years.

Operation Soundwave saw the City of London Police working with Spanish law enforcement and, for the first time on a major investigation, the NFIB.

DCI Clark added:

“This case shows how the NFIB can prove to be a huge breakthrough for law enforcement. The linking together of this case by the Bureau turned a three-year investigation into six-months work.

“Transfer that to the number of possible victims who could have lost money during a longer investigation, and the potential value of the NFIB is clear.”

15th July 2011

A conman who defrauding investors in 43 countries out of more than £4.5m has been jailed for two-and-a-half years.Paul Slack

Paul Slack was jailed at Derby Crown Court today (Friday, July 15) after pleading guilty to conspiracy to defraud and conspiracy to conceal criminal property. His conviction follows a two-year international investigation by officers from Derbyshire Constabulary’s Economic Crime Unit.

At Derby Crown Court, Slack admitted conspiring with others to obtain funds from various investors by falsely representing legitimate and fraudulent companies between June 2007 and December 2010.

Slack (32), formerly of Kingwinsford in the West Midlands, also admitted conspiring to conceal criminal property.


Click on links beneath photo for full size. (Photos open in new window)

George Abrue Car-3
George Abrue First car used by George Abrue
Car-2 Car-4 gangs location in Spain

‘Boiler Room’ frauds are generally committed by organised criminal gangs which con people into buying shares in legitimate companies or buying commodities such as gold. The victims are often elderly, vulnerable and inexperienced in investments.

They are typically cold called by the gang and subjected to high pressure sales tactics. Victims usually lose their savings, pensions, and property to the criminals.

Detectives hunt Slack’s gang

Detective Sergeant Darron Hunt of Derbyshire police’s Economic Crime Unit said: “Each year, there will be many victims in Derbyshire who lose hundreds of thousands of pounds to these criminal gangs. Some never report their losses to the police as they feel embarrassed at being duped by these criminals but they shouldn’t feel ashamed.

“These are professional criminals at the top of their game, operating outside UK jurisdiction, thinking that they will never be caught. This is a falsely held belief. With the assistance of the public, our Economic Crime Unit is not only prepared to take on these gangs but are also proven to be successful in prosecuting them from wherever they choose to operate.”

Detective Constable Winnard, the officer in the case, said: “These sort of crimes are difficult to investigate due to their complexity and cross-border nature. The gangs hope that by moving through different countries the police will not investigate their activities but in this case, they were wrong.”

DC Winnard said that this type of crime not only has a devastating effect on victims, who often lose everything they own, it has an impact on the economy as well. He added: “In this case, around £4.5 million that could have been invested in legitimate companies went straight into the pockets of criminals instead of into businesses that needed investment.

“We are aware that Slack had personal control of almost £1 million of victims money. This conviction sends a message to those involved in this type of crime that wherever you are in the world, you are not beyond the reach of the UK authorities.

“I would personally like to thank both the Cypriot and Hong Kong Authorities for their assistance in bringing Paul Slack to justice.”

“However, our investigation is not over. We are still actively seeking Slack’s accomplices in this significant fraud case.”

Fraudsters jailed in similar operation

The joint operation between Derbyshire Constabulary and the City of London led to several successful convictions earlier this summer at Harrow Crown Court. This crime group is believed to have obtained around £3.9 million from victims in the UK. Sentences for this crime group included:

  • George Abrue (30) – five years imprisonment
  • Scott Henderson (31) – Four years imprisonment
  • Anton Deach (25) – five years imprisonment
  • Babatunde Aluko (28) – three years and nine months imprisonment
  • Sam Hamed (24) – three years and nine months imprisonment
  • Dean Hamilton (25) – three years imprisonment
  • Mark Brannan (27) – 18 months imprisonment on each count (1 x conspiracy to defraud, 1 x money laundering) to run concurrently
  • Sarah Robson – (25) 21 months ( 1x conspiracy to defraud and 1x conspiracy to money launder)
  • Jocelyn Cowper (53) – one year (1x conspiracy to defraud and 1x conspiracy to money launder)

The full list of sentences for the case was as follows:

George Abrue – 5 years imprisonment on each count (1 x Conspiracy to defraud, 1 x money laundering) to run concurrently

Anton Deach – 5 years imprisonment on 1 count of Conspiracy to defraud

Scott Henderson – 4 years imprisonment on each count (1 x Conspiracy to defraud, 1 x money laundering) to run concurrently

Babatunde Aluko – 3 years and 9 months imprisonment on each count (1 x Conspiracy to defraud, 1 x money laundering) to run concurrently

Sam Hamed – 3 years and 9 months imprisonment on each count (1 x Conspiracy to defraud, 1 x money laundering) to run concurrently

Dean Hamilton – 3 years imprisonment on each count (1 x Conspiracy to defraud, 1 money   laundering) to run concurrently

Mark Brannan – 18 months imprisonment on each count (1 x Conspiracy to defraud, 1 x money laundering) to run concurrently

Sarah Robson – found guilty of one count of conspiracy to defraud and one count of conspiracy to money launder; due to be sentenced 12 July

Jocelyn Cowper – found guilty of one count of conspiracy to defraud and one count of conspiracy to money launder; due to be sentenced 12 July

Boiler Rooms Scams

Posted by Chris on June 7th, 2011

Regular readers of the M&A Rainmaker Blog will be aware that we have highlighted the dangers of Boiler Room Scams before; for example in this blog here

I.P.O.’s ( Initial Public Offerings ) are taking off in the U.S. this year and this is likely to increase the possibility of you getting a call from a Boiler Room or Chop Shop.

Boiler Room Poster

I was watching the film ” Boiler Room ” recently ( as part of my research ) and I noted a couple of things:

– The ” brokers ”  studied ” Wall Street ” to the point where they could recite lines from the actors without looking at the screen !!

Wall Street: Money Never Sleeps Poster

You can bet that recent Boiler Room scammers have also studied ” Boiler Room “. Sean Liptrot and Dominic Ryan John probably paid particular attention.

– J.T. Marlin was based ” somewhere on the Long Island Expressway ” i.e. not on Wall Street but in New York, U.S.A. Whilst some Boiler Rooms may still operate from either the U.S. or the U.K. Alfort International Ltd and Newton Moore Limited are based in the British Virgin Islands.

Anderson Munro was ostensibly based in Hong Kong. If you are running a Boiler Room scam you don’t really want to be based in the U.K. or the U.S. because you are within the jurisdiction of those countries and – as in Boiler Room – the F.B.I. can monitor you and raid you. It’s much better to be based ( or to appear to be based ) in a foreign country because typically you are outside the jurisdiction of those countries and anyone who complains about you or tries to get their money back will be told that.

– the main victims were Harry Reynard ( a Gourmet foods company Purchasing Manager ) and a Docter – both unsophisticated investors. In reality the victims will range from unsophisticated to sophisticated  investors. The reaction of Harry’s wife is typical though !

– Technology, Telecommunications and the Internet has come on a long way since 1999/2000. We have spoken about how Anderson Munro achieved it’s Internet Profile. One of the ways that you try and check on brokers these days is via the Internet.

– The telephone sales techniques are clever – you have to admit it – they are clever !!

I am still studying Boiler Room so may have more comments later …..

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