Crimes of Persuasion

Schemes, scams, frauds.

Livingstone Asset Management Boiler Room Scam Investment Fraud Promoting Safeguard Technology

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.

News 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. The Annual Reports pages deny access without a username and password.

Contact addresses:
14 Rue du Rhône
1204 Geneva, Switzerland

12-14 rond point des Champs-Elysées
75008 Paris, France

Palazzo Valadier
Piazza del Popolo 18
00187 Rome, Italy

Stureplan 4c
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 salesmen.

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 available information.

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 Technology International.

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 worthless shares.

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 wealth."

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 as loading.

"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 shares."

· 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 violations.

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