British regulators report that they have secured some redress for victims of boiler room scam.
The UK Financial Services Authority (FSA) has secured a court order against a company, Sinaloa Gold plc, that it says was created as a vehicle to issue shares, which it did through several boiler room brokerages. The order also applies to a US resident and one of the company’s directors, Glen Lawrence Hoover.
A high court in London ordered both Sinaloa and Hoover to pay almost £1.1 million ($1.74 million) to the FSA for distribution to the victims, and not dispose of any assets held worldwide until the payment has been made. However, only about £127,000, which was frozen when the FSA became aware of the scam back in 2010, is currently available to be repatriated and returned to investors.
The FSA says that between August and December 2010 investors were offered shares in Sinaloa, a UK company, by at least 12 boiler rooms who cold called them. Investors were told that the company was raising funds to develop a gold mine in the Sinaloa region of Mexico. However, the FSA found no evidence that Sinaloa held any interest in the mine and that up 90% of the money raised from consumers was paid to the boiler rooms and to persons associated with Hoover.
The names of the boiler rooms selling Sinaloa shares included PH Capital Invest, Tudor Asset Management, First Geneva Wealth Management, Invest Direct Group, J.P. Brown & Partners, Steiner Haus Capital and UTC International Services. Sinaloa was briefly quoted on the Frankfurt Stock Exchange, but the shares were delisted in 2011.
“The case against Sinaloa and Hoover demonstrates that we are prepared not only to take action against companies involved in the promotion and sale of their shares by boiler room fraudsters but where possible, we will also take action against the people behind these scams – whether in the UK or overseas,” said Tracey McDermott, acting director of enforcement and financial crime at the FSA.