Crimes of Persuasion:

Schemes, scams, frauds.



Boiler room scams are still operating in Thailand

Rich? Gullible? It's the boiler room calling...

By Andrew Drummond - Thailand Expat Forum 08-03

A British army officer's son is on trial in Taiwan accused of a £520 million share-trading scam. Despite his arrest, Asia remains a haven for 'boiler rooms' - staffed by ambitious young Britons taught how to sell bogus shares to targeted victims in the West. Our correspondent reports from Bangkok

IN A LARGE, open-plan office in the business district of Bangkok, 20 or so young men are working the phones. Some are wheedling, some persuading, others are boasting. All are selling, and all are selling the same thing — shares in companies that have hardly traded, or may not even exist.

Welcome to the boiler room, Britain’s latest export to the Far East. You will find boiler rooms — illegal share-dealing operations — all over South-East Asia. From these offices, which appear and disappear regularly, young “business travellers” — the great majority of them Britons — are busy selling bogus shares to the wealthy and gullible in the West.

Their method is simple, but frighteningly effective: they pick out names from business and company directories, then cold-call them offering advice on how to make millions by buying shares in the companies they recommend.

A great number of the recommended companies don’t exist. Some do, but aren’t trading. But by the time the victims have learnt the truth, they will have lost thousands, sometimes millions, of pounds, and the advisers who milked them will have disappeared.

And there is little the authorities can — or will — do about them.

In one of the few cases to reach the courts, the son of a former British Army officer has just gone on trial in Taiwan accused of fraudulently building up a £520 million fortune in the boiler rooms of South-East Asia.

Sheridan Cox, who the authorities claim set up operations in Thailand, Taiwan, Indonesia and the Philippines, allegedly told colleagues that it was his ambition to become the world’s first boiler-room billionaire.

He has already been convicted in his absence in a Belgian court of a £30 million fraud and is also charged with the attempted murder of a colleague whom he blamed for police raids on his broking rooms in Phuket, Jakarta and Taipei. He denies all charges.

In a separate case, last week 14 Britons were among 20 people deported from Cambodia by the Ministry of the Interior. Cambodian Government officials accused them of operating a share-trading racket, but their lawyers say they are guilty only of making international calls illegally.

Cox’s arrest and the Cambodian deportations will have little effect on the boiler-room industry. A number of companies have already been closed down and their employees deported from Bangkok, only to be replaced by slicker and even bigger operations.

New recruits, mostly in their 20s, have answered advertisements in regional giveaway newspapers in Britain, Australia and America, offering the chance to make a fortune in the sun.

Cox, who has been described as one of the top fraudsters in the world today, apparently depended not on newspaper advertisements but a recruiting agency to find educated, personable young Britons to act as his brokers.

Bangkok is the boiler-room capital of the world (the term reflects the high pressure put on salesmen and their clients, and was first used in the cult movie of the same name starring Ben Affleck, which dealt with illegal share-trading firms in the US).

Of 54 boiler rooms recently named in a watch list by the Australian Securities Exchange Commission, 24 are in the Thai capital. Although the scam is simple, most boiler-room operations are run as efficiently as genuine share-trading companies.

They rent office space in the business district, often complete with brass nameplate on the door, and each employee is given a specific role to ensure that the victims are, first, reeled in and then kept on the hook.

Brokers are divided into qualifiers — who draw up a list of potential investors by questioning them on the phone; openers — who get the customer interested; and closers — who make the final deal. The less experienced recruits are the qualifiers, working from scripts; the openers and closers are more experienced, with the gift of the gab necessary to persuade clients that they are authentic traders.

A typical script used in Bangkok from a boiler room called Foreign Trading International, which was raided 18 months ago, ran as follows: “We have seen an incredible opportunity of returns on the euro. For instance, did you know that a US$10,000 investment in the euro placed in the market in December returned over US$30,000 in January! Yes. That’s the type of return you’d like to see, isn’t it?”

James O’Connor, 37, a mechanical engineer from Bolton, was recruited to Foreign Trading International and sent to Bangkok after being interviewed by a fellow Briton at the Piccadilly Hotel in Manchester. He had answered an advertisement in the North West Trader, a Manchester-based freesheet. O’Connor says: “In Bangkok we were put up in a hotel and told that the Prime Minister, the chief of police and a member of the Thai Royal Family were in the company.

Our group was divided into who was selling currency and who was selling commodities. We had a script to follow making amazing offers on, in our case, a petroleum company. We would start work at 5am calling people in Australia. The evening shift would call people in the UK. We couldn’t leave the office at all during the day until close of business; the doors were locked electronically.

“We were told to tell customers that with a minimum investment of $3,000 they could make $18,000 in a month. The guy who recruited me was shouting to the salesmen at the top of his voice, 'Get 'em (the punters) to the f***ing bank!' It was all rubbish, we knew it was. I knew it was a sham by the nature of the people I had to work with. None of them was a commodity dealer. Also, I was told to say stocks increased without any evidence. They said, 'Tell them that and they will buy more'.

“We had to phone the customers the next day to tell them how much their shares had gained and persuade them to send more cash. On the second day I was there a guy called Mark closed a deal and was immediately given a wad of dollars and the prize of a champagne dinner for two and a massage and Jacuzzi with two prostitutes."

O’Connor finally left with Geoffrey Higson, from Nelson, Lancashire. The two got out just in time. Foreign Trading International was closed down after their boss, a New Zealander called Ian Travis who described himself as an ex-mercenary, was shot dead as he was climbing into his BMW to go to work.

Global Option Trading - Platinum Asia

Travis had seen the easy pickings made from boiler-room operations and had apparently decided to go it alone, taking half the staff with him. FTI’s boss, Michael Muller, a US citizen, has been indicted for conspiracy to murder together with his “security adviser”, Jalit Sanitchon. It’s alleged they hired a gunman to kill Travis for just over £3,000.

Meanwhile, in July 2001, Thai police, Australian federal police and an FBI legal adviser raided the offices of Benson Dupont Capital Management and the Brinton Group in Silom Road in the business district of Bangkok. The companies were accused of defrauding Australian citizens out of A$200 million under a range of different names and with different products.

In their offices police found scripts that the salesmen followed. These showed that the callers were expected to call from Tokyo to give their deals more business credibility. Tokyo fact sheets were also found, indicating that callers would chat to clients about the city as if they really lived there.

Several executives were charged with running a securities business without a licence, but directors insisted that their products were genuine. One of the companies’ products was golf.com, in which the golfer Gary Player was a minority shareholder.

Player licensed the right to use his name and likeness in connection with the company’s equipment. He cancelled the agreement after royalty fees were not paid and he became unhappy about the companies and their business, but they continued to use his name.

The companies’ chief executive, smooth- talking Irishman Jon Kealy, insists that all his products were genuine and the only reason shares collapsed was because of the publicity following the raid. “A lot of people made good money in genuine deals,” he insists. “There are bad companies out there but we are not one of them.” No members of Kealy’s organisation have been convicted of fraud. But the Australian Securities Exchange Commission still has his companies listed among those to be avoided.

Sheridan Cox’s alleged sting operations were more elaborate than any of the boiler-room scams previously uncovered.

According to investigators, Cox, whose victims number over 5,000, bought dormant American and Canadian shell companies quoted on little-known stock markets. Using his own money and that of a number of front companies set up by friends, he would buy and sell shares in large volumes and advertise in legitimate business magazines such as The Economist for other high net worth investors.

If his victims checked the share prices, it seemed that legitimate trading was taking place; but none of the invested money stayed in the companies. Cox’s clients realised they had been the victims of a huge scam only when he stopped “investing”, the share prices plummeted and the companies collapsed.

The proliferation of boiler rooms in Asia is a result not just of low overheads but — more importantly — the inability of local police and investigators to deal with the problem. Cox faces a 20-year sentence if he is found guilty, but his trial is the exception rather than the rule.

Legally, this is a difficult crime to prosecute. Although the calls are being made in South-East Asia, the victims are thousands of miles away in Britain and Australia.

“In one way it's the perfect set-up," says a British Customs official in Thailand. “The fraud would not be difficult to prove in a court in the USA or Britain but here it is viewed as 'foreigners cheating foreigners' and often senior Thai officials have been bribed to smooth over the operations.

Moreover, once charges are brought a case like this can take 10 years to get through the legal system. The worst that can happen is that the operations are shut down and their employees are deported for breaking work permit and visa regulations.”

What is more, as Nataya Nyamanusorn of the Thai Securities and Exchange Commission points out: “Sometimes we arrive at an address and find that it is only a post office or a device switching telephone calls.”

The authorities are resigned to the fact that they will probably never defeat the boiler-room boys. Many boiler rooms that are closed simply start up again within weeks under a different name.

And there is no shortage of greedy and gullible people in the world willing to believe that someone they have never met can make their fortune for them.

COLD CALLS, HOT TIPS

THIS is a script used by boiler-room traders cold-calling prospective victims:

“I know you're a busy person so I won't take up much of your time and I wanted to offer you some information on my company. The information you'll receive is on the great opportunities available in the options market. Specifically right now we see an incredible opportunity for returns on the euro. Did you know that a $10,000 investment in the euro placed in the market in December returned more than $30,000 in January! That's the type of the return you would like to see, isn't it? Of course, anyone would. Obviously the only way to see those types of returns is to be aware of the opportunity ahead of time. Correct?

(Wait for response. If the client says immediately “Where are you calling from?”)

“Well, our American parent company has been in business for more than 20 years and this office has been open in Bangkok for just over a year. Our trading advisers and account executives are skilled at identifying these returns. After you receive the information and you see an opportunity that you feel would show you a good return, are you liquid for $10,000 dollars to invest?"

IF YES: “Are they liquid to you or would you have to sell something?”

IF NO: “How close to that could you comfortably come?”

“OK, great. I will make sure one of our advisers gets you all the information you need to make an intelligent decision. By the way, what keeps you busy for a living out there? How long have you been doing that? Have you ever traded in options before?"

IF YES: “Great, then I know you will like what you hear.”

IF NO: “Great, then I know you will wonder why nobody has brought this to your attention in the past.”

(If the prospective client says: “I have a broker or a financial adviser who deals with all of that for me.”)

“Did your financial adviser advise you to invest $10,000 in December which returned $30,000 in January?"

(Wait for answer)

“That's the type of return you'd like to make, isn't it? Anyway, thanks for your time, we're really busy so I will try go get one of my senior trading advisers to contact you as soon as possible. Have a good day.

Source: Andrew Drummond


SCAMWATCH - Mendes Prior mastermind arrested

By Money Marketing - mymoney.iafrica.com
Posted Wed, 10 Oct 2001

The alleged mastermind behind Mendes Prior — an unapproved foreign-based investment company which ripped off millions of rands from South Africans — has been arrested.

Since November 1999, when the activities of Mendes Prior were first exposed to the Financial Services Board (FSB), the FSB has issued several warnings that Mendes Prior Europe, Mendes Prior Orient and Mendes Prior Offshore were not permitted to solicit business in SA.

FSB spokesperson Russel Michaels, said after the South African public was warned about Mendes Prior, the company surfaced elsewhere. “They reared their head in Botswana and Zimbabwe and we asked Interpol to help trace Mendes Prior. We also informed all the members of the International Organisation of Securities Commissions (IOSCO) about the company.”

Michaels added that more than 600 South Africans were ensnared in Mendes Prior’s web.
“According to records, 630 South Africans had invested huge sums of money and about 100 have complained to the FSB. Once again we appeal to the public the first check with the FSB whether so-called investment managers are approved before investing their money offshore. Some of the investors had invested between a few thousand and R2-million. The total amount of money which South Africans entrusted to Mendes Prior is about R232-million."

According to overseas media reports, Sheridan Leslie Cox, a British citizen was arrested in Taiwan for allegedly using false travel documents. Cox allegedly has a dozen identities. One of the names he used for Mendes Prior was Paul Gallenburg. Columnists L Billings reports that Cox is a wanted fugitive in connection with various securities frauds spanning three continents. Cox has been convicted in his absence on a major fraud scandal in Belgium.

According to Taiwanese sources investors have been defrauded of over R2-billion, which is believed to be held in various bank accounts worldwide. Mendes Prior was a “boiler room” scam, lately operating from the Philippines. Its offices were raided just a few weeks ago and fourteen people were arrested. Cox was also allegedly responsible for other “boiler rooms” in Amsterdam during 1993-1994 and Manila between 1995-1998.

SCAMWATCH


Taipei, March 13 (CNA) The Public Prosecutors' Office will charge Sheridan Cox, a man wanted for by the International Criminal Police Organization (INTERPOL), for stock fraud, the Criminal Investigation Bureau (CIB) under the National Police Administration said Wednesday.

Cox formed investment consulting companies in Europe and Asia as stock brokerages, the CIB said, but was found to be passing counterfeit stocks and was listed by INTERPOL as one of its most wanted criminals.

According to information from the INTERPOL, Cox, of Great Britain, has cheated at least 1,300 people out of some US$30 million.

Receiving tips from INTERPOL, the CIB arrested Cox in downtown Taipei in January 2001 at the Mandarina Crown Hotel as he was preparing to leave the country with his girlfriend, who authorities said was an accomplice.

Authorities in Taiwan were unable to immediately charge Cox with fraud, so he has been held in detention on charges of entering the country on a phony passport. The CIB said that Cox had entered Taiwan several times with counterfeit passports. Before being nabbed, Cox had opened offices in Taipei and Kaohsiung. (By David Hsu)

CICC - taipei.org


AP , TAIPEI TIMES
Mar 14, 2002

Authorities plan to indict a British man for his alleged involvement in a telemarketing scam that duped thousands of would-be investors worldwide, an investigator said yesterday.

Sheridan Cox, 49, headed a firm called Mendez Prior Europe that sold phony stocks and real-estate investments to people in more than 70 countries, said Jason Sun, a Lieutenant-Colonel at the National Criminal Investigation Bureau.

Mendez Prior Europe bilked over 10,000 investors out of about NT$10.5 billion (US$300 million), Sun said. The victims included people in the Philippines, Malaysia, Sweden, South Africa, Singapore and New Zealand. Sun said that Cox, arrested last year in Taipei, will be charged with professional fraud in the week.

Cox's operations were run from Taiwan by fax, e-mail and telephone, said Sun, who works in the investigation bureau's Interpol Division.

The accused also had offices, or boiler rooms, in other places in Asia and Europe, Sun said.


Taipei Times 03/23/02 - Prosecutors have indicted a British man on charges of fraud and money laundering for his alleged involvement in a multimillion dollar telemarketing scam that duped thousands of investors worldwide.

Sheridan Cox, 49, faces up to 10 years in prison and a fine of NT$3 million (US$85,714) if found guilty, a statement released yesterday by the Taipei District Prosecutors office said. He was indicted on Thursday.

Cox, who is in detention, headed a firm called Mendez Prior Europe that sold phony stocks and real-estate investments to people in 78 countries.


SCAMWATCH - Taiwan regulators seek Mendes Prior victims

Iona Minton
Posted Mon, 11 Nov 2002

The saga of the alleged mastermind behind Mendes Prior — an unapproved foreign-based investment management company who ripped off millions of rands from South Africans — continues with the Taiwanese authorities who now want South African investors who lost their money to contact them.

Alleged Mendes Prior mastermind, Sheridan Leslie Cox, a British citizen, was arrested in Taiwan last year for allegedly using false travel documents. Cox allegedly has a dozen identities.

Since November 1999, when the activities of Mendes Prior was first exposed by the Financial Services Board (FSB), the FSB had issued several warnings that Mendes Prior Europe, Mendes Prior Orient and Mendes Prior Offshore were not permitted to solicit business in SA.

FSB spokesperson Russel Michaels said after the South African public was warned about Mendes Prior, the company surfaced elsewhere. "They reared their head in Botswana and Zimbabwe and we asked Interpol to help trace Mendes Prior. We also informed all the members of the International Organisation of Securities Commissions (IOSCO) about the company."

More than 600 South Africans were ensnared in Mendes Prior's web. "According to records, 630 South Africans had invested huge sums of money and about 100 have complained to the FSB. Sums invested varied between a few thousand rand to R2-million.

"The total amount of money which South Africans entrusted to Mendes Prior is R232 806-million ($27 847  657)," said Michaels.

According to Taiwanese sources, investors have been defrauded of over R2-billion, which is believed to be held in various bank accounts worldwide. Mendes Prior was a "boiler room" scam, operating from the Philippines. “Once again this is a wakeup call to all South Africans who want to invest offshore. Make sure the company you are dealing with has been approved by the FSB.

The Taipei district public prosecutors' office are now seeking the public's help in the criminal fraud case pending against Leslie Colin Sheridan Cox. “If you feel that you may have been a victim of criminal fraud perpetrated by this defendant or if you have any information concerning incidents of fraud perpetrated by this defendant you are urged to contact the Taipei District Public Prosecutors Office.

“According to preliminary investigations, we estimate that there may be in excess of 10000 victims worldwide who have been defrauded by this defendant. "The public's assistance is vital in ensuring that this case is fully investigated and that the perpetrators are brought to justice", the Taipei prosecutors' office said in a statement.

Please contact the Taipei District Public Prosecutors Office:
Telephone: 886-2-2314-6111 ext. 7028 - Prosecutor Josie Hsu
Fax: 886-2-2314-6247.


05/24/02 - Hsu has also given the FSB the details of three local attorneys who represent the world-wide Mendes Prior victims.

Like the FSB, Hsu has also cautioned the public not to use the service of a particular alleged forensic fraud investigator who now demands $1 000 upfront. “To my knowledge, it is another fraudulent company which purpose is to cheat those victims again, please be aware of it!,” warns Hsu.

“The Taipei district public prosecutors office has announced a public notice to tell world-wide victims how to claim their rights against defendant Cox."

There may soon be some good news for the 632 investors who lost millions of rands through the unapproved investment management company, Mendes Prior.

Financial Services Board (FSB) spokesperson Russel Michaels says all those who invested and lost money with Mendes Prior Europe must contact inspector Charles Bezuidenhout at the Commercial Crime Unit of the South African Police Service in Pretoria.

“Investors must give the inspector their personal particulars, details of funds transferred to Mendes Prior and deposit slips.

“The Taiwanese prosecuting authority is busy with a plea-bargain with the alleged Mendes Prior master brain, Sheridan Cox. "

“Cox, a British citizen was arrested in Taiwan in connection with the activities of Mendes Prior. In terms of this arrangement Cox might agree to refund investors in order to reduce his sentence."

Inspector Bezuidenhout may be contacted at telephone and fax number 012 401 3362, or on his cell 083 954 9507.


Mar 22, 2002

New Zealanders are believed to be among the victims of an international fraud scam thought to be worth at least three quarters of a billion dollars.

Sheridan Cox, the British head of stock trading firm Mendez Prior Europe, has appeared in a Taipei court charged with fraud and money laundering.

Investigations have found that Mendez Prior Europe sold bogus stocks and real estate in 78 countries - including New Zealand.

New Zealand Securities Commission senior operations executive Norman Miller says the company was active in the country about five or six years ago.

Miller says victims were cold-called and persuaded to invest in shares - usually in North American companies.

He says once the money was sent offshore, the company then became difficult to contact.

Miller says it is unclear whether people stung by the scam will get their money back.


SCAMS - Mendes Prior victims face another scam

Posted Tue, 03 Jun 2003

Victims of the 1999 Mendes Prior investment scam are now being targeted in another scam, which is posing as a victims’ group seeking to help recover their cash.

Business Day reports local investors who were conned out of R232-million by the scam have been approached by Massena & Partners, based in the Netherlands, to help recover their money. The company has asked for an upfront retainer of between $1000 and $300,000 to fund these efforts.

Massena included the names of three South Africans on its board in order to legitimise its operations, according to the daily. However, two of them said their names were used without their knowledge, and one of them, Gavin Geddes, said he is considering taking legal action. Geddes admitted to losing a large sum of money to Mendes Prior.

The MPGG Investor Victim Group, based in South Africa, said a large number of people had already handed funds to Massena, but none of them had received any money.

The Mendes Prior scam fleeced over R2-billion from 10,000 global investors before its mastermind, Sheridan Cox, was arrested in Taiwan two years ago. As part of a plea agreement, Cox agreed to help trace the missing funds, Business Day reported.


Boiler room conman seen in Britain

5 August 2003

A fraudster accused of tricking more than STG500 million ($A1.24 billion) out of thousands of mainly Australian and New Zealanders in a sophisticated stockmarket con has slipped into Britain.

Former broker Sheridan Cox, 52, is facing a possible 20-year jail sentence if convicted of fraud charges in Taiwan.

But the son of a British army officer entered the UK using an Irish passport he earned legally after promising to invest heavily in Ireland, private investigators say.

The private detectives have been trying to find the fugitive on behalf of his 11,000 known victims.

"He's been tracked traveling to Britain using his Irish passport," said one of the investigators, speaking on condition of anonymity.

"He can basically do what he likes with that passport. And the beauty of it is that the passport is genuine, so no-one can stop him."

One of Cox's former brokers, Neil Missenden, 28, said the multimillionaire had been seen in England.

"He was seen having dinner with another former broker of his in Cambridge," said Missenden, who worked for Cox in Taiwan training other brokers in how to sell shares over the telephone.

Cox's scam involved setting up so-called 'boiler rooms', high pressure tele-sales centres where small armies of mainly British brokers sell shares in non-existent or worthless companies to customers around the world.

Cox used his investors' money to manipulate the shares of companies on the American and Canadian stock exchanges so prospective victims could watch the stock prices moving up and down on their financial TV screens.

Investors in the apparently healthy companies were left high and dry when Cox took their money and the companies collapsed.

Warrants for his arrest have been posted in Belgium, where he netted at least STG30 million ($A74.3 million) before his scam was exposed, and Spain.

He was jailed for a year in Switzerland for false instrument fraud, using forged documents to get money.

Authorities in Australia, South Africa and New Zealand, where most of his victims are from, are also reportedly keen to interview him.

Dan Maskell from the Specialist Crime Directorate at Scotland Yard said British police would need a request from Spain or Belgium before they could investigate as Cox was not wanted in the UK.

AAP - theage.com.au


Police can't charge US 'scammers'

Published on Jan 19, 2002

The Economic Crime Investigation Division cannot press charges against executives of Global Option Trading Co, a company suspected of operating an illegal foreign-exchange business, because no damaged parties have filed complaints with police. No complaints of fraud have been filed against the company by Thai or foreign investors, Colonel Chanachai Limprasert, chief of the economic crime unit, said yesterday.

Even if police moved against the company, Chanachai said, prosecutors would not because there are no complaints from damaged parties. "Foreign investors only complained to their embassies in Thailand.

They do not want to file complaints with police because of the time and cost of flying here," he said.

Police on Thursday raided the company's offices in the Ori Flame Building on Asoke Road. Two Americans, including company president Garry McMullan, were detained and about 50 Thai staff questioned.


CRIME - Two CAUGHT for murder of NZ trader Operating illegal currency business

by Wassayos Ngamkam Bangkok Post 3. March 2002.

A fatal shooting of a New Zealander whose currency trading business was found to be illegal.

Ian John Travis, 46, was shot dead on Friday night as he was pulling out of the driveway of his Sukhumvit Soi 24 home in his BMW.Police said the assailants were two men aged 35-40 who fled the scene in a Honda Accord were caught and confessed that this was a hit from a partner who boarded a flight for the USA with his Thai wife.

Pol Maj-Gen Jongrak said Mr Travis had conducted forex business in the country for more than 15 years and was the owner of Platinum Asia Co, which he opened a month before his death.

The firm acts as broker for clients in Australia, New Zealand, and Europe. He had been general manager of Global Option Trading but broke away to set up Platinum Asia after a conflict with a business partner.

Police believe the killing was motivated by a business dispute.

Gunmen were hired who confessed. Ketchakat Nilpradab, of Thong Lo police, said Platinum Asia employed 100 staff and an initial search by police and the Finance Ministry confirmed the business broke securities laws. Pol Lt-Col Ketchakat said Platinum Asia was ordered closed.

Police are now looking into the business partnership between Mr Travis and his American former business associate from Global Option, who skipped the country 10 days ago with his Thai girlfriend.

Investigators suspected the associate  linked to the killing. This is a reminder that these people are set upon ripping off innocent people then use these tactics on each other. Source: http://www.bangkokpost.com{ A case of greed by conmen who turned on each other - the mastermind was his American partner].


Overseas Boilerrooms
Mendes Prior



Crimes of Persuasion: Schemes, scams, frauds.