Boiler Room Profile (Spring 2009)

Summary of main findings of the profile:

Increase in intimidation and verbal threats

There has been an increase in reports of threatening and abusive calls from boiler room staff. The boiler room operative, claiming to be a genuine broker, claims victims have made a binding ‘Verbal Contract’ over the telephone and that they have recorded that ‘contract’. Victims are then threatened with anything from intimidation to legal action.

Elderly victims lose life savings

A significant number of victims are elderly and vulnerable and have lost their life savings. There has been an increase in boiler rooms advising victims to re-mortgage their homes. Victims are also persuaded to cash in life insurance policies or investments and use credit cards to buy the value-less shares on offer.

Changes in victim profile

There has been an increase in female victims and younger males indicating that the brokers will approach just about anyone. The only gender/age group that has yet to be reported as being approached is the under 50’s females.

But boiler rooms still prefer to target men

Boiler Rooms scripts suggest that the criminals find men are easier to deal with as ‘women ask too many questions’.  This could explain the smaller number of female victims though research implies men are more likely to feel shame and not report crimes than women. Those that have fallen victim to boiler rooms are predominantly male and aged 50+. They tend to be experienced investors with a long history of investing. The victims are spread throughout the UK and come from a variety of backgrounds.

Staging 'shareholders' meetings'

A new technique to gain credibility & seek and promote ongoing investment from the victim is to stage a shareholders meeting. These are held in large reputable hotels in major cities such as London an Edinburgh.

Increased use of British bank accounts

Previously, investors were instructed by the Boiler Rooms to send money to accounts based overseas. However, we are receiving more and more reports of British bank accounts being used to validate the appearance of the transactions.

Increased success in tackling boiler rooms – millions saved

Early identification, freezing accounts and intervention have proven to be very successful and over £900,000 has been recovered for investors by the City of London Police in the last five months.

Increase in successful intervention by UK banks

The Operation Archway team meet regularly with banks to share intelligence, this has helped investors receive back thousands of pounds of otherwise lost savings.

The banks are increasingly intervening to protect their investors’ money. One major UK high street bank estimates that in the past 2 years it has intervened to save investors more than four million pounds which would otherwise have gone to a boiler room.

Close working with the FSA

Using the Operation Archway database and the FSA’s own extensive victim details has provided an effective profile of the victim. This profile has been provided to the banks assisting them to focus on the type of account holder that is most frequently targeted by the boiler rooms. This collaborative activity has proved to be highly effective in returning investors otherwise lost funds.

Successfully warning the job hunters

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’.

Officers recognized boiler rooms were targeting students and attended The Universities Careers Advisors Group conference to offer advice.  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.

The Archway team is liaising with major recruitment companies to update them on boiler room operations and recruitment style.