Three weeks ago, three British men were sentenced to a total of 43 years in prison in America. Their crime was a classic boiler-room scam, which they used to con British investors out of £80m.They then funnelled the money through US bank accounts and spent it on having a good time think boats, planes, luxury houses and endless cars. £80m is proper money, but the really horrible thing is that they didn't find it that hard to get hold of.
The boiler-room scam involves employing rooms full of people (paid commission only) to cold call would-be investors and use high-pressure sales tactics to get them to buy either non-existent or worthless shares over the phone. The shares never materialise and the money never comes back.
You may think you'd never fall for this kind of thing. But retired professionals with money to spare are the ones who most often do in this scam a good few lost hundreds of thousands of pounds.
Start your trial of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Some victims are now having to work instead of retire and in the saddest case of all, and which makes you think 43 years isn't enough, Mark Goswami killed himself after being defrauded out of £200,000.
Latest Videos FromMoneyWeek
So how can you protect yourself from this kind of criminal?
Reputable firms don't cold call. So anyone calling you to chat about the stock market or your investments must be considered suspect.
If you do find yourself wondering about a firm, check the Financial Conduct Authority (FCA) website to see if it is listed as authorised or as one to avoid. Make sure you go directly to the site yourself (links you are sent could be fake) and remember, some criminal gangs will adopt real firms' names to scam you. If in doubt (and if you have got this far, you really should be), look up the number of that firm yourself and call them to check.
Do not be taken in by glossy brochures (this lot had plenty of them) or smart names and addresses (easily made up).
Never give out any personal details to cold callers (financial details in particular). Hang up on anyone offering to buy any shares you already hold at a price above the market price (this is just to draw you in), or who tells you that you have to make any decision quickly.
Always be suspicious of callers from outside Britain boiler rooms are often based in Spain and Dubai. To report a firm, call the FCA helpline on 0800-111 6768.
Keep on top of your own finances using firms you know and trust. That way, when the cold-call comes, you won't be tempted to suspend disbelief and accept any promises that are clearly too good to be true.
