18 february 2019
A recent National Fraud Intelligence Bureau (NFIB) threat update noted a ten-year spike in recovery room frauds, linked to timeshare property scams. This led me to reflect on the deviousness and adaptability of the modern fraudster and frauds I have investigated in the UK and Australia.
It is well known in the anti-fraud community that perpetrators will sell 'sucker lists' to other like-minded criminal outfits and take victims details with them to their next 'phoenix' operation. Time and again victims of fraud fall prey to further frauds by the unscrupulous based on follow on scams promising to recover their investment.
Recovery room scams
Case study 1. A 'Land banking' scam where plots of land were sold pending purported changes to planning permission promising fabulous returns when the land is sold to a major housing developer. Adverse media attention caused the company’s demise and the key personal moved to a 'phoenix firm' resuming operations taking their 'sucker lists' with them. The new spin was that the project was on the verge of a highly lucrative sale and they just needed to sell the last few remaining plots with a special discount to existing investors for the deal to go through. I think you can predict what happened next, several purchased further properties and the phoenix company in turn ceased trading leaving the investor owning small plots of virtually worthless agricultural land.
Case study 2. The next stage of the fraud involved victims being approached with offers to recover their investments. Fraudsters represented themselves as an agent for a large China based property investor. The catch was the investor would have to secure an insurance policy in advance. Another variation was a fraudster posing as a private investigator who guaranteed to recover the funds for an advanced fee. Action Fraud has also reported scammers claiming to be working in conjunction with the FCA or the NFIB, posing as police, regulators and even insolvency practitioners in the past.
Case study 3. In one particularly brazen example a fraudster rang a prospective investor interested in a Rare Earth Metal investment scam posing as the investigating police officer. The audacious crook attempted to convince them the matter had now been resolved and it was safe to complete the investment.
Case study 4. A cloned website of a reputable FCA Regulated firm where the fraudsters assumed the names of genuine staff. The fraud only came to light much later when an angry investor contacted their 'broker' on the phone number from the company website and was put through to a genuine broker who had no idea what the furious investor was talking about.
Action Frauds tips to protect yourself from recovery frauds
There are many reputable private and public-sector organisations that may be able to assist a victim of fraud, however some fundamental precautions apply. Be aware fraudsters often pose as someone they are not so always check the credentials of the individual and organisation they claim to represent.
- Check the website, address and phone number, don’t just rely on the phone number or email provided.
- Be aware of recovery fraud and take extra care if you have been the victim of a fraud before.
- Question or even consider ignoring calls, emails or letters claiming to be able to recover losses. If follow up approaches move to requesting an upfront payment in whatever guise the alarm bells should be ringing loudly indeed.
- If you have been a victim of fraud or approached by a suspected recovery fraud contact Action Fraud immediately.
My advice is genuine police, regulators, bank representatives & insolvency practitioners have no problem with you checking their credentials. In fact, they welcome it.
For more information, please get in touch with Scott Loughton or Mark Wilson.