Management Boiler Room Scam Investment Fraud Promoting Safeguard
Prospect is Listed as Well
I was recently contacted by Wentworth Drake in Costa Rica offering
me shares in a Nasdaq listed company called Multicast Interactive.
I declined after some heavy sales pressure and wondered how they
came to contact me.
I have now been approached by another overseas company called Livingstone
Asset Management offering me shares in a company called
Safeguard Technologies / Safeguard Technology /
Needless to say, incredible profits have been forecast while both
have said they want to introduce me to their companies with a big
profit deal so that I will continue a long working relationship
with them. Does this sound like a familiar scam or could it really
be a good investment?
Chris Buxton 08/06/02
One big scam with a large appetite. They claim to be calling from
Geneva when they are actually calling from Budapest, Hungary.
They appear to be targeting small and large businesses and
speak of a share opportunity in anti-terrorist, security technologies,
equipment such as eye scanners etc, biometrics. They also refer
to a Dr Reddy, an Indian who made some sort of medical discovery
( noted in Forbes magazine ), and of shares being sold (pre initial
public offer) to clients for US$10.04 and then cashed in for US$24
per share. They also say they have averaged a 45% profit over
the last seven years for their clients.
Article on Livingstone Asset Management
They don't provide any phone numbers for their four official European
offices and are not listed in the Budapest phone book for their
call centers there.
Annual Reports pages deny access without a username and password.
14 Rue du Rhône
1204 Geneva, Switzerland
12-14 rond point des Champs-Elysées
75008 Paris, France
Piazza del Popolo 18
00187 Rome, Italy
114 35 Sweden
Notify the Hungarian
Financial Supervisory Authority (PSZAF) if you have anything
to help shut them down.
I have been a client with Livingstone Asset Management for a number
of years now. I am writing to you in order to assure you that these
chaps are real - they are who they say they are. I was shocked
to see them highlighted on your website.
I invested into their recommendation called Dr. Reddy Labs in
2000. Made my money when it went public last year. Also invested
into their current one Safeguard.
As far as their cold calling goes, I initially received a call
from one of their guys who asked me if I'd mind being called back
- if I was interested. I got the call 2 weeks later and asked for
written info which I got. They flew me in to Geneva and showed
me around the premises before I invested.
The man whom I've been dealing with is Aaron Morgan. His phone
number there is 41227477879.
Gerald Johnson 08/19/02
Note: Imagine them flying first time prospects to Switzerland! This
is an example of a deceptive lull letter likely from one of the
Invest in a Little Research
First of all, may I say how much I really appreciate your website. It
is my first point of reference whenever I am suspicious that something
sounds too good to be true.
Recently I've been receiving a lot of "Boiler Room" calls. I'm
based in Ireland and the calls purport to originate from Geneva. All
of them promise huge returns in return for relatively small amounts
of initial investment. They always ask for each of our company
directors by name, obviously finding our details from publicly
The two companies I've received calls from have been "Cambridge
Global" - not affiliated with the SAGIT fund, although probably
the name was chosen to coincide; and "Livingstone Asset Management".
I checked out the LAM pages, from your link, and did a bit of
digging about on the Management Team.
The CEO is named as one "Jonathan Paul Livingstone IV",
who is described as follows:
"A pioneer in harnessing innovative technology to identify
market needs and solutions for these opportunities, Mr. Livingstone
is chairman and CEO of the Livingstone Global Corporation ........
Mr. Livingstone founded Casablanca Technologies, Inc., a software
business which created an early version of what has now become
known as an "online chat room." Fourteen months later,
he sold CTI in a stock-based transaction which ultimately netted
LGC more than $46 million ........ Mr. Livingstone is a frequent
speaker on international affairs affecting both the business and
financial communities, and his industry acumen has been recognized
with numerous accolades and editorial awards."
Strange then that, according to Google, he has left no electronic
footprints. No mention of any sale of Casablanca Technologies
(a company name registered in Geneva), no mention of his speaking
engagements, no mention of his accolades and awards and, somewhat
ominously, no mention of the Livingstone Global Corporation.
This runs true through the whole management team. No mention
of them on Google or Altavista and, more significantly, no mention
of any of the high profile companies they are supposed to have
founded, sold or run. (Examples include: NetSci Online Inc, AOLI
Inc, Crosby Investment Management, Ridgeford Medical Institute
and HGG Music Group)
This, along with the other evidence presented on your site, leads
me to believe that these companies are merely fronting an elaborate
and well-financed scam.
Matt Rudge 10/16/02
Godwynns, You Lose
Thank you for an excellent site. My brother was almost conned
into investing money, but thanks to information on your site I
was able to stop him in time.
He was contacted by phone, initiallyin February, by someone
claiming to be from Godwynn International selling shares in Safeguard
I did Google web searches and turned up your site when I looked
for info on Safeguard Technology and Livingstone Asset management,
which was listed on the Safeguard Technology website as providing
venture funding .
I didn't throw up anything on Godwynn International when
I did web searches on it.Is this a new player in their scam?
Thank you again.
Lesley Bagnall, UK 04/03
Danny Sterk is now believed to be in Bucharest, Romania and operating
Amherst International which pushes Slenderlife.
No doubt Mr. Sterk, who famously refered to his victims as "morons",
will be making contributions to the Romanian Police Benevolent Fund as
well as bolstering demand within the local narcotics industry.
How the boiler room got a head of steam
another excellent piece of investigative journalism by Tony Levene.
Saturday August 16, 2003 The Guardian
English-speaking Hungarians were recruited to rip off millions
of dollars a month by selling worthless shares to gullible investors.
One recruit tells her tale to Tony Levene
Finding well paid work in Budapest is tough for Borbola Kalman, aged
24. "I've got good English plus people skills. But I don't have
the formal qualifications Hungarian employers demand."
But Borbola (not her real name as she fears violent retribution
from former bosses), her compatriots, and non-Hungarians living
in Budapest, found they needed few qualifications for a job with
Livingstone Asset Management, a boiler room operation which ripped
off around $2m a month from gullible investors by selling virtually
None had an investment background and many quit when they realised what
they were doing. Others never re-appeared following police raids.
Borbola says: "When I went back to Budapest in February, after a
spell in England, I was desperate for cash. A Croatian friend had been
working - illegally - for Livingstone Asset Management. I had a drink
with her co-workers and they said I could earn 60,000 Hungarian forints
a month in cash - that's about £160, but good money in Budapest.
They said Livingstone was always desperate for staff."
Borbola met Judit, 24, a Livingstone recruiter at the firm's office,
Vaci Ut, 18, in a smart area of town. "It was on the second
floor - all the other floors had notices to say who was there.
Our floor did not," she says. Others were recruited through
English language adverts in Pesti Est, a Budapest Time Out magazine,
offering "a great opportunity".
Borbola was "trained" for a week, largely by watching
a more experienced colleague.
"I started on the day shift. My job title was 'junior account executive'
but I had to change my name to something Anglo-Saxon. I became Belinda. I had
to phone people up from a list we created from
phone books, company registers and anything else.
"I had the script about how investing in Safeguard Technology
would transform their finances. I had to claim I was in Geneva
- we were given details of our pretend office. But no one asked
- we would have put the phone down if anyone became pushy."
She had to ask potential victims what they did. "If they
said lawyer, accountant, journalist, banker or real estate agent
we would terminate the call at once. Dentists, doctors, engineers
and farmers were the best bets. My job was to work out how much
we could take victims for. I classed them A, B or C depending on
There were 100 Livingstone workers split in two shifts over two
buildings in Budapest. Some quit after a few hours but those who
stayed soon realised it was a real life equivalent of "Boiler
Room", the film starring Ben Affleck about a high pressure
sales outfit pushing phoney shares.
"We all used to watch the film - on pirated videos of course
- over and over to pick up tips. It was good but not nearly as
tacky as our place," Borbola says.
"In early March we were raided by the police and immigration.
Half the staff were Hungarian, half were foreign students but UK
citizens were banned as we mainly targeted the UK. The raid was
scary - all the non-Hungarians were put into a room and the police
were told they were being given a seminar on investing in Hungary.
No one believed this but a wad of ten dollar bills worked wonders
and we were left alone."
Borbola/Belinda, who was forced to sign a confidentiality agreement
with Livingstone, earned 1% of share purchases from her "qualified" leads.
But the senior brokers, often American, took 10%. And most of the
rest was shared out by the top staff including Judit.
After the raid, Livingstone Asset Management turned into Godwynn
International - now in "Berlin", and has since turned
into Cambridge Global.
"The name change happened over a weekend. It was described
as a merger but nothing altered. We continued selling Safeguard.
We kept on saying how it was a great opportunity, and how it would
transform their family's future. It was scripted. You said you
had worked on Wall Street for years."
Borbola was taught how to deal with "objections". She
says: "If they didn't put the phone down and it's amazing
how few did, you'd get a senior person to talk to them."
· If a potential victim claimed to have no money, the script
said: "Only children have no money. You mean you don't have
money to lose. But Safeguard is risk-free."
· To those who claimed "I already have a broker",
the script said: "Do you always consult your broker on every
decision. Your broker firm would advise you against Safeguard as
there is no money in it for them."
· Dealing with those who said "I only invest in property" involved
telling them that whatever they made, Safeguard would be better.
· Countering those who objected to the share pusher's offshore
status was easy. The script said: "It's not overseas. It's
in the US which is well regulated."
Borbola would also try to get losers to put up more cash - known
"I had one big client. He invested $20,000 and was worried.
We persuaded him to put in a further $70,000 to make $90,000 so
I ended up with $900 - a fortune."
Borbola says: "We never gave real names or a phone number.
We just took their money. After two months, I had enough. I admit
I did not have much sympathy for the losers. They were rich and
greedy while I needed whatever I could earn."
What to watch for with high-pressure sales methods
Boiler rooms are high pressure selling operations designed to
separate greedy and gullible investors from their savings. They
are successful - to the tune of millions of pounds a month from
UK victims alone.
Livingstone Asset Management/Godwynn International, which has since turned
into Cambridge Global, is one example. But all use the same methods.
· Find victims. Often via cold calling or offering a "free report" on
· Make initial contact. You will be asked about investments
and if you would like to do better.
· You will be offered shares in a small company which will
either not exist or be virtually worthless. Boiler rooms buy shares
at one cent and then sell them at $1. They promise you pre-float
advantages and that you will "double your money at least over
12 to 18 months". You won't. The boiler room will have disappeared.
The shares are unquoted and unsellable.
· Boiler rooms have websites which are long on rhetoric
and short on facts.
· Boiler room operatives never let you contact them - even
if you have a phone number, it will only take messages. They always
phone you. They are rarely based where they say.
- If you complain, you could be persuaded to buy even more rubbish
shares. Those unhappy with Safeguard can end up with shares in
equally valueless Slender Life International.
Livingstone, Godwynn, Cambridge and Safeguard are the object of
regulatory warnings in a number of countries including the UK,
Italy, Australia and Ireland. One former Safeguard director is
Jeffrey Lazarus who was fined $10,000 in 1999 for US stock sales