Sophisticated scammers catching experienced investors

New Zealanders are losing hundreds of thousands of dollars in bogus overseas investment deals – but sometimes victims don’t even want to admit they’ve been caught out.

Bronwyn Groot, manager of fraud education at the Commission for Financial Capability, said she regularly dealt with people who had been duped by investment scams. ‘‘It’s an absolutely huge problem. No one knows how big because they are not getting reported.’’

Victims were usually contacted about an investment opportunity promising high returns and little risk.

Groot was previously security and fraud co-ordinator with the BNZ and said that in her roles with the bank, she investigated at least two or three big cases a fortnight.

‘‘I even had one guy who wouldn’t listen to me when he lost $250,000, but by the time he reported it to police he had lost over a million.’’

Groot said the victims were often wealthy, experienced investors who were used to navigating deals.

She had dealt with people who were chief executives and had been duped. ‘‘They may stay in it a lot longer because they don’t want to admit they’ve been caught out.’’

Last year she dealt with one case that involved five New Zealand victims who lost a combined US$381,000 (NZ$514,000).

The same month, another case involved five different overseas companies that were all connected and racked up US$350,000 in theft from Kiwi victims between them. ‘‘One of the [victim] CEOs I spoke to, he didn’t want his family to know, didn’t want his son to know and definitely didn’t want his staff to know.’’

She said anyone who was offered an investment opportunity should research it thoroughly. Investment providers should be registered in the country they claimed to be from.

‘‘You can go to that country’s regulatory body and check whether they are registered.’’

They should also take the documentation they were offered to an independent expert. Scammers had put significant resources into making their paperwork sophisticated and building up their associated websites.

It should also be a red flag if the company asked for money to be sent to a different account.

Fraud was a growing problem, Groot said. The sooner people could intervene to stop someone caught by a scam, the better.

‘‘You get people who are repeat victims. If you get in touch with a victim one month in, there’s a good chance of stopping them and they probably haven’t lost any money. But after six months it’s a lot harder because the losses are definitely up there. Any longer than 12 months and it’s hard work.’’

She dealt with one case where a man had been involved in a scam for five years before he got out.

If she did not keep communicating with him, there was a high chance the scammers would get in touch again and he would fall back in. ‘‘They want to recover their money so badly and the scammers come up with all sorts of ways.’’

Some would say they were acting for law firms investigating the scam. Others would say they were taking anti-money laundering action and people had been arrested. Eventually, victims would end up handing over money again. ‘‘It’s just the same scam with a different name.’’

The fraudsters could move faster than the regulators trying to keep up.