Use your wits and beware those boiler room baddies
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.