Police in London, New York and Switzerland have been investigating the fraud which involved companies in London and Wales taking money from wealthy investors. They were invited to pay a minimum of $10m (pounds 6m) each for access to what was claimed to be a secondary, billion-dollar market in high-denomination notes issued by obscure foreign banks.
The pounds 100m banking fraud in Torquay was based in a former branch of the TSB in the town. A second man is due to appear before Torbay magistrates today on charges relating to the Tor-quay investigation.
The companies in the second fraud, controlled by a financier in south- east England, charged $1m (pounds 600,000) as an up-front fee for every $10m (pounds 6m) invested, with the promise of a 2 per cent cut from every deal on the notes market.
The 2 per cent would not be paid immediately, investors were told, but would roll-over into future trades. To back up their claims of serious financial muscle, the fraudsters produced documents apparently showing funding from Middle Eastern institutions and one of the region's royal families.
Clients paid their money and waited for their accumulated 2 per cent commissions to arrive. When nothing came, they called in the police. Arrests are likely to be made shortly, said one senior officer who helped co-ordinate the investigation, which has been going on for several months and involved the uncovering of bank accounts in Switzerland and Panama.
Some money has been recovered but the advance fee element has long since vanished. Final losses will be far higher than pounds 15m. "We have firm evidence of half a dozen victims who have lost pounds 15m [between them]. There is no reason not to think there are many more," the officer said.
According to one of the world's leading experts in such cases, this was a typical "advanced fee" fraud. John Moscow, assistant district attorney in New York, said the ingredients were always the same: investors paid a fee in advance for the guarantee of a fortune.
Investors with ready cash are normally the targets of the schemes, which are growing in number all the time. "In the US they have become the financial equivalent of what we call `home repair' scams, where people would take deposits to buy materials to repair your house and go off with the money," Mr Moscow said.
"Advanced fee frauds are especially prevalent at the moment," an ex-senior Scotland Yard officer, now a private investigator, said. "They all follow the same pattern. They must be multi- jurisdictional because it makes it difficult for investigating officers to follow the trail and they show enormous diligence in knowing their customers."
Increasingly common is the use of "prime bank notes". Adverts promising access to such notes, which have enormous face values, were usually bogus, Mr Moscow said. "It never ceases to surprise me how arrogant, stupid and gullible some people are," he added.Reuse content