Boiler Room fraud – crimes where bogus stockbrokers cold-call investors and pressure them into buying worthless shares – could be costing the UK economy hundreds of millions of pounds, the City of London Police warned today.
The force, which co-ordinates the Operation Archway City of London Police is responsible for coordinating Operation Archway, the national intelligence reporting system for boiler room fraud, warns that despite the recession thousands of UK investors are still losing significant sums every week to fake shares.
The success of the criminals is especially worrying during the recession as their proceeds are then lost to genuine companies needing investment.
The Archway team has today released details of a new profile of boiler room crime, looking at a number of areas including how the fraudsters now operate, the type of victims they target, how they recruit their ‘salespeople’ and the successful efforts to prevent the crime.
Officers have noticed an increase in female victims and younger males although they say the fraudsters prefer to deal with men as ‘women ask too many questions’.
The force says boiler rooms rely on recruiting often naïve young people to be the frontline of their sales team. These people are tempted by the offer of a ‘high returns sales job in the sun’. Organisers of these scams have been found targeting students. Warnings have since been placed on University recruitment web pages and a number of referrals have been made to the police about existing advertisements and attempts to place new ones.
Det Chief Supt Stephen Head, head of the Economic Crime Department said, “This latest information shows the ruthless approach of the criminals behind boiler rooms. It seems they are prepared to target anyone, however vulnerable, and will take their last penny if they can.
“But today we can also show that the joined up approach of the police, banks, UK and overseas regulators and foreign law enforcement agencies is bearing fruit. Together, we have prevented millions from falling into criminal hands and being lost not only to individuals but also to the UK economy.
“This type of fraud is hitting investors in the pocket and depriving genuine businesses of millions of pounds of much needed cash flow.”
