Jail for share scamsters won't stop the boiler room fraud
One family made millions by flogging worthless shares. Don't become a victim
Saturday 27 August 2011
family businesses can be admirable concerns – but not the one run by fraudster Tomas Wilmot with his sons Kevin and Christopher (pictured left). The trio tricked around 1,700 elderly people out of their savings through a boiler room scheme. If you think that sounds like small beer, bear in mind that the crooks netted some £27.5m from their scam, £14m of which has not been recovered.
The Wilmots were sentenced to prison at South Crown Court on Monday. The court case followed a long-running investigation – known as Operation Slick – by the Financial Services Authority, City of London Police and Eurojust. By the time the case reached court, investigators had produced 21,000 documents in evidence and 350 witness statements.
Tomas Wilmot had, in fact, come under some scrutiny back in the 1980s when he ran a share-peddling outfit called Harvard Securities from seedy offices near Waterloo station in London. He was investigated by the then Department for Trade and Industry and the firm, which flogged shares over the phone, went bust in 1988 after failing to receive regulatory authorisation.
The collapse left thousands of investors out of pocket unable to sell the almost worthless shares they had been flogged by Harvard traders. Sound familiar? Who knows how many other unsuspecting punters Wilmot cheated out of savings before he was finally jailed on Monday. The trio were sent down for 19 years in total, with Tomas getting nine years and his sons five each. Their crime was to flog millions of low value, worthless and sometimes non-existent shares to victims in the UK.
How did they trick people? As with all other boiler room scams, the promise is always of information that will cause the shares to soar. The Wilmots' salespeople claimed that the worthless shares they were hawking about were set to rise in value on the back of a takeover or a new mega contract, for instance. In all cases, they gave the impression that once the news was out, there would be a massive clamour for the shares.
Victims were told: "This is the next Microsoft"; or "This company is about to list on AIM..."; or that the firm has "obtained several government contracts...".
In truth, of course, there never was a listing, government contract or anything else that might create interest in the shares. In many cases there was actually no listing, so that anyone persuaded to buy would have nothing to sell. Tracey McDermott, the FSA's acting director of enforcement, said the Wilmots "sought to cloak their activities within an aura of respectability to deceive investors, many of whom were vulnerable or elderly. They are, however, nothing more than cold-hearted criminals who profited from stealing other people's money."
The family enjoyed flaunting their crooked gains, splashing out on homes in the UK, Gran Canaria, Brazil and Slovakia, as well as a private box at Ascot Racecourse.
How can you spot a boiler room scam? The simple rule is never buy shares offered to you by a cold caller on the telephone. If you are contacted out of the blue by somebody trying to sell you shares, you should hang up. If you think they may be legitimate check the FSA Register to see if the person selling shares is authorised to do so. Then call the company back using the details on the FSA Register to verify its identity.
Report any company that cold calls you to buy or sell shares to the FSA. It maintains a list of known unauthorised businesses on its website. The list is updated regularly with details of businesses that are believed to be involved in boiler room activities and could be dangerous to investors.
Most share fraudsters use legitimate-sounding overseas-based companies with fake UK addresses and phone lines routed abroad. The Wilmots' list of boiler rooms included Griffin Securities Spain, Premier Venture Capital, Ridgewell Capital Markets and Bolton Price International.
Detective Superintendent Bob Wishart of the City of London Police warned: "The evolving nature of fraud sees British criminals increasingly trying to hide their operations in foreign countries and siphon off their profits using a myriad of global bank accounts." The money trail left by the Wilmots stretched across Malta, Spain and Austria, for instance.
If you think you may have been contacted by a boiler room call the FSA's consumer helpline for further guidance on 0845 606 1234.
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