Use your wits and be­ware those boiler room bad­dies

Auckland City Harbour News - - NEWS -

In Bri­tain, an Aus­tralian boiler room op­er­a­tor called Jef­frey Rev­ell-Reade was banged up for the bet­ter part of 16 years in June for op­er­at­ing a ‘‘boiler room’’ scam which sold worth­less shares to Bri­tons who lost £70 mil­lion.

Why do I bring you this tid­bit of fi­nan­cial grub­bi­ness from the UK?

Be­cause boiler rooms, which are named for their high-pres­sure sales tac­tics, are call­ing peo­ple in their homes and busi­nesses in New Zealand now.

Boiler rooms cold-call peo­ple and at­tempt to sell them shares.

In the case of Rev­ell-Reade, in­vestors were sold shares in shell com­pa­nies, real com­pa­nies set up to do noth­ing but look like real com­pa­nies so the boiler room staff could sell them.

The ge­nius was buy­ers were told they couldn’t sell for a year, so they could be spoon-fed non­sense for 12 months be­fore the game was up.

Com­pa­nies ‘‘trad­ing’’ in dis­tant lands are in­tan­gi­ble things, so it is easy to fake them.

It’s not easy to get away with fak­ing com­pa­nies for very long but then boiler rooms op­er­ate from over­seas.

They are only in­ter­ested in get­ting peo­ple to send them money.

If the heat gets turned up on them, they dis­ap­pear from their rented of­fices and set up else­where.

They only need a win­dow of months.

Lo­cal reg­u­la­tors don’t pur­sue them be­cause they are too hard to catch, and a long way away.

They also have more than enough lo­cal fi­nan­cial grub­bi­ness to be deal­ing within their own bor­ders.

See­ing boiler room bad­dies end up be­hind bars is rare, which is why the UK case is so note­wor­thy.

De­spite their so­phis­ti­ca­tion, boiler rooms are lit­tle dif­fer­ent from other ‘‘send your money over­seas’’ type schemes.

The con­tact could be ini­ti­ated by email by a fake nun/UN of­fi­cials/aid worker/Nige­rian princess/sec­re­tary of the for­mer Shah of Iran , by a phone call from ‘‘The IT Depart­ment’’, or the in­ter­na­tional time­share spruiker, or by you click­ing on that tab on that web­page telling you you are the lucky win­ner of that on­line lot­tery you never en­tered.

But it’s all about set­ting up a plau­si­ble story to get you to send money over­seas. De­fend­ing your­self is the easy part. You hang up the phone. Delete the email. Ig­nore the tab. You do not deal with peo­ple New Zealand law can’t prac­ti­cally reach.

You do not buy any fi­nan­cial ser­vice, share or bond from peo­ple who are not reg­is­tered here on the Fi­nan­cial Ser­vices Provider reg­is­ter, which is free to check on­line.

You cer­tainly do not buy any­thing as in­tan­gi­ble as a share from some­one you have never met from over­seas, who cold-calls you.

You do not be­lieve any of­fer to let you profit by ‘‘in­side in­for­ma­tion’’. In­side in­for­ma­tion does ex­ist, but the idea of a stranger shar­ing it with you is nuts.

You do not go against your in­stincts, or your ethics, such as at­tempt­ing to aid some­one who claims to be UN worker get aid money out of the coun­try in re­turn for a size­able share of it.

In short, you de­fault back to the ad­mit­tedly sad re­al­ity that be­nign fi­nan­cial ge­niuses and once-in-al­ife­time sure things don’t come to you via peo­ple on the phone in dis­tant lands, or in­ter­net strangers.

And, if in any doubt, call a fi­nan­cially savvy friend, or a real, New Zealand-based fi­nan­cial ad­viser, and ask their opin­ion.

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