Investment Fraud: Real Life Story

 

Investment Scam: a Real life story of a smart person who lost £200,000 and why it could happen to any of us

 
Lots of things in life happen that revolve around timing, in the right place at the right time, or conversely the wrong place. That’s what happened to John, not his real name, who just had sold the family house and about to move abroad for a year had a much bigger bank balance than ever before. Month after month of seeing tiny amounts of interest kept making him feel that he wasn’t doing enough with his money.

On one such a day he saw less than a £20 of interest for a month on more than £100,000 he received an email talking about how to invest the smart way, specifically in new technology like Tesla and Space X, the Elon Musk space project, Tesla had plenty of media attention and for the right reason. The tech company’s share price hit new highs. John clicked on the link for the website; it took him through to a professional looking website for a company called Liberty Global Partners. Unfortunately, their site, now take down, looked very impressive.

Don’t be fooled by the courteous cold call

John gave them a call. The friendly guy he spoke to Martin came across a knowledgeable and personable guy. He talked about the opportunities that were out there both the public and private transactions. John loved it and quite quickly signed up to buy some Tesla shares, approximately £4,000. The copy below of a trade invoice they sent John, not for the first trade but a later one. Doesn’t it look official? As a 20-year veteran of stockbroking, I must say its pretty convincing.

 

Warning Signs of Investment Fraud

 
Again, perversely as it would ultimately prove for John, his timing sucked. Every day the Tesla share price went up, it was working. Martin, the salesman, kept calling and emailing John to tell him how smart he was. Well after a couple of weeks John wanted more, Martin suggested he buy some more Tesla shares and John did, another £20,000.

Over the next month Tesla kept doing well, Martin kept calling, and John felt good. Martin had started talking about the private opportunities that were out there for smart investors, which frankly this is what John now considered himself to be. And again, picking Space X which was often in the news was very alluring. Martin talked about the fact they were putting a small group of smart investors together to invest in Space X which generally was not investible for the public. John loved it. Each investor had to put in a $100,000 but would be able to sell them at nine times that price after a short period. It went up like a rocket! John went for it.

See the letter below; John stood to make $860,000!!!

 

Legitimate Source Website?

 
Official looking stamp and everything!

John then received a call, the whole thing was going to fall through, one of the other investors had pulled out, and unless they had the entire amount, the whole thing was off. Tesla had had another good day. So when Martin asked if he would step in and invest more John said yes.

Sadly, that wasn’t the end of it, a few weeks later John received another call from Martin saying that he stood to lose the whole investment unless he put in another $50,000. Unfortunately, John did this.

Ok, to break the story down. John reacted to a cold call, (first mistake). Unfortunately, he didn’t check if Liberty Global Partners were an authorised investment firm (second mistake). The website on in-depth scrutiny is flashy but lacks content (third). John never actually bought any real Tesla shares, they just took his money. The name and logo of the company look similar to a legitimate firm Liberty Insurance:

The conclusion to the real-life story of Investment Fraud and identify theft

A ploy scammers frequently use as it gives a veneer of respectability.

The scam started with relatively small amounts of money, although that was £4,000, and a very credible story, i.e. Tesla. Once hooked the more outrageous situation could introduce a large sum taken. It’s how most fraudsters operate.

When John sat back and considered the situation and the mounting number of requests for more money, he became uneasy and asked for help. Unfortunately, Reassura had to tell John it was a fraud and what to do next.

John contacted ActionFraud, and they took his details over within 20 minutes. John never heard from again. The Police were not interested in John’s massive loss.

The Financial Conduct Authority did communicate and informed John that as the fraudsters were not authorised there would be no compensation. Strangely enough, there’s no inclusion of Liberty Global Partners on their fraudsters list:

Tips and advice

The fact that the authorities had no interest made it even worse for a shattered John.

So, what can we learn from this:

  • Avoid cold calls- phone/email/social media and certainly never invest with one
  • If you want to invest go and speak to a professional regulated advisor, an IFA, click here to check
  • The research you chose to invest with, they must be regulated. Find reviews, and as above get professional advice
  • Websites can look great but quite frankly they can offer the veneer of respectability without any substance, so don’t be taken in by a flashy website
  • Official looking paperwork is easy to produce, see above, it’s worthless
  • If it sounds too good to be true, it’s a scam.

 

As was said at the beginning of this article it’s all about timing. People are most vulnerable to romance scams when they are feeling lonely. To investment scams when they think they are not getting their money to work for them. To holiday booking scams when little is available, and they find a bargain to PC support scams when their PC becomes temperamental. We could go on and on. To stay safe, we all have to remain vigilant and even if we are 1% unsure, get some advice, that’s why Reassura is here.

Reassura continues to help raise awareness of scams and fraud along with the impact they have on their victims. Reassura’s team of specialist anti-fraud advisors are here to help members make better decisions and avoid falling victim to scams and fraud

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