• fraudstersdiary

Boiler Rooms

On my wrist is a nice watch. It’s a Rolex Milgauss, with a black face and a stainless steel bracelet. I would describe it as classy but not flashy and it cost me about £6,000. Very few people comment on it as it’s a bit subtle compared to many of their more ‘blingy’ models. About 18 months ago I was having a coffee with a ‘colleague’ discussing emerging opportunities in relation to crypto-currencies when he saw my watch and asked if it was real or a good copy. I laughed and told him that many had suffered so I could buy that watch, so he should show me more respect.

He then asked if I would be interested in joining him and a another guy named ‘Chris’ in a scam to persuade punters to invest in collectable high-quality watches. He told me that trusted contacts in the trade would buy the watches from reputable auction houses to guarantee their provenance and authenticity. The watches would be held in a secure vault in Central London until their value increased to a point at which they would be resold, the profits realised and then shared with investors.

He reached into his man bag and pulled out a glossy tri-fold brochure that contained photographs of watches including Rolex, Piaget and Patek Philippe. These were accompanied by the sales blurb and steeply ascending lines on a graph, comparing their increasing value when plotted against the FTSE 100, over the past 10 years. Each punter would have to make a investment of between £10,000 and £100,00, and in return would receive a certificate that detailed the exact watch(es) in which they had invested. The eventual sale would be at the discretion of the company directors and as this was a medium to long-term investment, the minimum period of investment was five years.

While I already knew the answer I felt obliged to play along and ask him, “So where is the scam?” His reply: “There are no watches - it’s complete bollocks.” I’m aware that most investors are normally very compliant, especially when they are trusting the expertise of an industry expert; who are they to argue that the collectable watch market has peaked? However, what if a more belligerent family member decided to step in and demand to see the watch in the vault? He said that if that happened, the investment contract included a clause that the company could, at any time, return the original investment, less any (considerable) administrative fees. This effectively turned the scam into a Ponzi Scheme, as the money from new investors would simply be used to pay those that wanted their money back.

Being a lover of watches myself made no difference whatsoever to me as they didn’t really exist. However, this scam was something different. I could see why people, who were frustrated by the low interest rates available through banks and building societies might be tempted, so I agreed to meet Chris and talk through the details.

The offices were rented and shabby with a sticky carpet and a toilet that was an obvious health hazard. While I do not pretend to be anything other than a (recently) reformed fraudster, this guy made even my skin crawl. He wore the most ornate and trashy Rolex I had ever seen, clearly a prop for meeting potential investors, and aftershave that was last used as a defoliate during the Vietnam War. The office had three desks, each staffed by a guy under 25 and who sounded as if they had watched The Wolf of Wall Street as a training video.

As much as this was clearly a boiler-room operation by dint of the pressure being applied to prospective investors, Chris was also taking supervision and coaching seriously. They listened in to the calls themselves and provided immediate ‘feedback’ to the sales team. This included throwing a stapler at the head of one guy who had apparently missed a open-goal to close an investment. They all worked to the same script, each of them personalising it slightly as they chatted to their prey. I picked up a spare script and noticed that the words ‘uncertified diamonds’ had been scrawled out and ‘collectable watches’ added in its place. I pointed to it and looked quizzically at my contact. ‘What does it matter?’ he replied “They didn’t exist any more than the watches do - apparently we’re selling unicorn teeth next month”

I politely refused the offer of a coffee owing to the state of the mugs and sat down to talk business in a small side office. With the door closed, Chris described the sales team as ‘too thick to understand the risks they were taking,’ and as he was only paying them on results, and in cash, there was nothing to tie him into what was going on. I then asked where he was getting his sales leads from; he said that he was sick of paying a fortune for lists of people who fitted the necessary demographic, only for them to politely hang up. Instead, he had recently tried something different.

In Chris's deep and dark past he spent two seasons in various resorts in Spain working for a couple of timeshare businesses. His job was to visit the high-end hotels and set up a stand in the lobby or just outside the dining room offering to sell 2 week timeshare packages to holidaymakers following a free presentation during which the food and (especially) the drink was completely free of charge. He took their contact details (name- address - telephone number - email address - amount available to invest) and ensured that they turned up for the free presentation. He was usually accompanied at the presentation by an older guy immaculately dressed who adopted a Nigel Havers type accent. 'Nigel' would 'reluctantly' be identified as a satisfied customer who had made a fortune letting his timeshare apartment and was only there to buy another 4 packages of 2 weeks each. Amazing how someone in a nice linen suit and a posh accent can convince people. If he had been a scouser in a t-shirt and jeans people would have not have given him a second look. The scam worked well but in comparison to the main guys, Chris earned a pittance. However, what he learned was worth a fortune.

One day he sat back watching Nigel 'work the room' of punters and marvelled at the ease at which he repeatedly escorted potential buyers back to the sales team ready to be signed up. He realised that virtually everyone willing to give up an afternoon of their annual fortnight foreign holiday must have something in common. Discounting the few who were only there for the food and drink (not many) he realised that the people there fell into 3 broad groups.

1) Gullible - these are the people who you meet and are happy to believe the tallest of tales. Their naivety makes them easy pickings. If they weren't buying non-existent collectable watches, they would be buying clapped out cars that had done more miles than the Starship Enterprise

2) The get rich quick brigade - these people believe that there are still untapped opportunities out there to make a fortune with minimum effort and,

3) Greedy - these are those that might hear the sound of alarm bells ringing, but choose to ignore them because the risks were outweighed by outside chance to easy make money.

An ideal punter would fall into more than one of these categories. I pointed out that we could all name people who we knew socially who would easily fit into at least one of those groups, however, he obviously needed long lists of potential punters rather than just a few. He agreed and pointed out that his targets had already identified themselves as potential victims so to a very large extent they had self-selected. He explained;

Chris had maintained his contacts with a few of those still topping up their tans and bank accounts on the back of timeshare scams and knew the value of those contact lists. In no time at all he had 4 guys and 2 women taking photos of those contact lists of punters and sending them to him on his mobile. Each full page of contacts earned them a crisp £50 note. Chris believed that each name on that list represented someone who fell into at least one of the three groups described above. His results suggested there was some justification for that belief.

His second rich seam of punters came from a publishing house specialising in those books promising to share the secrets of how to obtain untold wealth without leaving the comfort of your armchair and not working more than 2 hours a week. What most of their customers don't realise is that in purchasing a book, they also agree to their personal details being shared with other 'trusted commercial partners'. In other words - anyone willing to buy their mailing lists.

The third list comes direct from other fraudsters who have already successfully conned particular victims but believe that someone else could still benefit from conning them further with a different scam. These are commonly known as 'Sucker Lists'

This is a business and often an incredibly successful one. It has overheads that include staff and premises and operating expenses such as the purchase of mailing lists and payments to his ex-timeshare colleagues. Whilst Chris's operation is based in a Business Park in Hertfordshire, he has run others in various parts of Europe and he is aware that due to the Internet, it is just as easy to set up in the Far East with the added benefit of reduced labour costs and law enforcement agencies happy to turn a blind eye in exchange for a manila envelope stuffed with cash.

For those of us old enough to remember high interest rates on savings at 10% - and mortgages at 15%, boiler rooms in those days had to offer something much more attractive to tempt punters. If anything, austerity has actually worked in the fraudster's favour. Whilst savings rates currently languish at 1-2%, anyone offering you a 20% return on investment would immediately look suspicious, however, the same cannot be said for someone guaranteeing you a 'safe' 5-7% annual return.

In describing the three types of punter (gullible-get rich quick-greedy) I realise that I'm going to upset some victims who would vehemently deny having any of these attributes. I am not victim-blaming as this can (and does regularly) happen to perfectly sane, sensible and educated people. Chris et al are tapping into their victim's vulnerabilities. Perhaps they want an earlier retirement, possibly saving for a deposit for the grandchildren's first property. The more they want to achieve these goals the easier prey they are to the bad guys.

Chris and his fellow boiler room colleagues are clever. They regularly change location, use technology to mask their true identities and employ people who have few (if any) scruples' . They target vulnerable victims who have already proven their willingness to be duped and/or defrauded.

If I had any advice to someone receiving a call from Chris or his team, it would simply be to hang up immediately without engaging in any conversation whatsoever. Do not speak to them at all. There is no need to be polite - just put the phone down and walk away. You have been warned.

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