Pension and investment scams and scandals are a blight on financial services and saving for retirement. The energetic and inspired campaign by Darren Cooke of Red Circle successfully raised awareness of the problems of cold calling. But the snap general election scuppered serious traction on this and the most the government has achieved so far is to make a vague promise to talk about talking about it. But still it is not illegal, and still the scammers are scamming away merrily.
Chair of The Transparency Task Force
The Scams and Scandals team was formed as a result of inspiration by the Transparency Task Force’s Andy Agathangelou. It has attracted a group of like-minded professionals who believe passionately that a concerted effort should go into coordinating a zero-tolerance approach to scams and scandals. All members of the team are committed to producing a White Paper which can focus the minds of government ministers, regulators and law enforcement agencies on the whole problem – not just the cold calling bit.
Irrespective of which version of which political party we are talking about, the ultimate object of a successful and fulfilled life is to be happy, healthy and solvent. And this includes getting a decent education, leading a responsible and law-abiding life, and saving for a comfortable retirement. Millions of British citizens manage to achieve this goal, but sadly many thousands of them lose part of all of their retirement savings to the armies of scammers.
XXXX XXXX, one of the many pension scammers ruining thousands of victims’ lives
All these scams and scammers have caused thousands of victims to lose hundreds of millions of pounds’ worth of retirement savings. And caused untold misery – in many cases exacerbated by HMRC punishing the victims rather than the perpetrators.
The Scams and Scandals Team has a clear five-point goal:
Ban UK cold calling and fraudulent calling
We must not let this disappear off the agenda and must keep up pressure on MPs and Ministers – as well as the regulators. But this must also be extended to overseas as we already know that the UK-based cold calling outfits have made arrangements to move their operations or merely facilitate re-routing of phone numbers. However, the twilight industry of “introducing” must also be examined as this is a serious source of scam facilitation.
Support Lesley Titcomb “Scammers are Criminals”
Ms Titcomb has publicly declared scammers to be criminals
We must work with the regulators, government and law enforcement agencies to enhance existing and introduce new regulation and legislation to prevent new scams, close down known existing scams and bring those involved in conceiving, operating and promoting both to account.
Revitalise Scorpion Campaign
Fundamental to preventing scams is communication to the public of the dangers of cold calls and pension/investment scams which would include the Scorpion Campaign – but so much more as well. A key part of this exercise is the use of social media and the plan to produce a documentary and Youtube channel giving real-life examples of past and current scams. Explaining the mechanics of a scam is one thing – but showing an actual example of a victim and the scammer is bound to have even greater impact.
Write off HMRC debt where scams are proven
HMRC celebrating the tax they collect from victims of pension liberation fraud
We need the help of the government here and could do with an actuary to help us work out what the cost to the State is of taxing victims of scams. If we can demonstrate that by ruining a scam victim (who has already probably lost part or all of his pension) with the tax charge, the long-term cost of supporting the victim and his family will far outstrip the tax collected. This is especially well demonstrated in the Ark case where the victims have got to both repay the “loans” and pay the 55% tax even if the loans are repaid.
Ensure AML regs include pension scamming
TOBY WHITTAKER’S TOXIC EMPIRE WILL FINALLY BE HUFFED AND PUFFED AWAY
I would widen this to include investment scams. This is because at the heart of every pension scam there is a fraudulent investment (and/or loan). The actual pension itself is harmless as it is essentially just a box with a label on it and only becomes toxic and dangerous once you put the scorpions, snakes and cockroaches inside it. You could equally put fluffy kittens in it. It is the mis-use of the pension “box” which is the scam.
Regulators have got to do some effective regulating
Regulators and scammers; cops and robbers; cowboys and indians. Each has their role: cowboys fire their six shooters and dodge the injuns’ arrows valiantly; cops drive their police cars at breakneck speed to corner the robbers in a dark alley; regulators waggle their flaccid willies and watch the scammers walk all over them.
In the week my great friend had his appendix out (somewhat hurriedly as it happens) I thought I would write a slight variation on the Three Sausages poem:
Regulation, regulation, regulation, Three scammers went to the station, One got crushed, one got killed, And one got a huge operation.
The sizzling scammers need to be put behind bars – and the keys need to be thrown away.
Now, I am not suggesting I want the scammers crushed or killed – nor even that they suffer the same pain and discomfort that my mate has gone through in hospital this past week. But I do want them stopped from harming more victims and destroying more life savings. And, of course, put behind bars where the only thing they can scam is the soap on a rope.
WHAT DO REGULATORS NEED TO DO AS A MATTER OF URGENCY?
All regulators in all jurisdictions where has been a history of scamming and mis-selling need to work closely with governments, tax authorities, financial crime units, ombudsmen and the press. There has to be a “zero tolerance” attitude to scams and scammers – and all those responsible have to be brought to justice. And publicly so. It is clear that most regulators – including the FCA – are limp, lazy and useless and this has to change. Here are some examples of regulators’ failures in each jurisdiction:
Allowing unregulated firms to provide financial, pension and investment advice freely and without sanction in the UK. Sometimes these firms have an insurance license – sometimes none at all
Not sanctioning regulated firms for clear breaches and/or fraud – such as Gerard Associates which was introducing Ark victims to Stephen Ward of Premier Pension Solutions as far back as 2010, and was then providing “advice” to Ward’s London Quantum victims
Ignoring firms such as Fast Pensions who have defied 37 Pensions Ombudsmen’s determinations
Failing to coordinate criminal prosecutions against the scammers behind numerous scams who ruined thousands of lives and cost hundreds of millions of pounds’ worth of life savings
Failing to use existing legislation provided by FSMA 2000 to prosecute advisors (regulated and/or unregulated) overtly contravening the ban on communicating invitations to retail clients to invest in Unregulated Collective Investment Schemes
Announcing ineffective crack-down plans by newly-appointed government minsters who have failed to grasp the enormity of the pension scamming industry and the desperate plight of thousands of pension scam victims
Failing to police and sanction negligent pension trustees such as STM Fidecs for accepting members introduced by an unlicensed adviser: XXXX XXXX of Global Partners Ltd/The Pension Reporter – who was also the fund manager for the UCIS that all the victims had their pensions invested in and which is now being wound up
Refusing to communicate with members on the progress of the winding up of the Trafalgar Multi Asset Fund which had been run by XXXX XXXX
Omitting to take action against STM Fidecs for its role in the Cornerstone Friendly Society investment scam
Taking no action against Trustees, Integrated Capabilities Malta Ltd (ICML) for accepting retail members from an unlicensed firm in the Czech Republic and knowingly permitting investments in Nunn McCreesh’s UCIS: Blackmore Global, as well as Malta-licensed fund Symphony – a sub-fund of the Nascent Platform that is licensed only for professional investors
Not sanctioning Customs House Global, that runs the Nascent Platform, for inadequate due diligence and accepting unscrupulous sub-fund managers (such as XXXX XXXX, investment manager of failed TMAF and later, the recently wound up Symphony Fund) that exploit the platform for the sole purpose of pension scamming
Allowing an unlicensed firm – Square Mile Financial Services – to operate freely in the EU, providing pension and investment advice with only an insurance mediation license
Ignoring insurance companies which accept investments in UCIS funds and professional-investor-only instruments for retail investors
Failing to recognise those registered Closed-Ended Investment Companies whose true nature is as a Collective Investment irrespective of their form, such as Blackmore Global (registered number 010221V), that intentionally circumvent the stricter regulations imposed on collective investments, specifically to hide their financial accounts and the sub-funds which invariably include unsigned loan notes and high-risk hare-brained projects
Failing to act against a pension liberation scam – Evergreen Retirement Benefits Scheme – run by Simon Swallow who was working with Stephen Ward of Premier Pension Solutions and operating Marazion “loans”
Ignoring Concept Trustees (Guernsey) who offered retail investors the EEA Life Settlements UCIS and then accepted investment instructions from unlicensed, un-insured Stephen Ward of Premier Pension Solutions
As always, Pension Life would like to remind you that if you are planning to transfer any pension funds, make sure that you are transferring into a legitimate scheme. To find out how to avoid being scammed, please see our blog:
A fund like Blackmore Global really ought to be audited as soon as possible – to make sure it isn’t simply a “black hole” into which victims’ hard-earned pensions have sunk. Numerous worried pension savers are stuck in the Blackmore Global Fund and finding it difficult – if not impossible – to get out. They are seemingly “locked in” for ten years.
I WOULD LIKE TO EXPRESS MY SINCERE THANKS TO THOSE – INCLUDING IFAs, PENSION TRUSTEE FIRMS AND BLACKMORE GLOBAL VICTIMS – WHO HAVE CONTACTED ME AND SUGGESTED IMPROVEMENTS, CORRECTIONS AND ADDITIONS.
Allegedly, Grant Thornton is working on an audit – and has been doing so since September 2016. They could probably have audited Microsoft in that time – and squeezed in Amazon on the side during the lunch breaks. Just how difficult can it be to audit a fund which only has a handful of assets in it?
Originally, the directors of Blackmore Global were Brian Weal, Patrick McCreesh, and Phillip Nunn.
Brian Weal – sanctioned by the FSC in 2014 – was also a director of Swan Holdings – the only investment that the Advalorem Value Asset Fund made. Brian Weal was also a director of Advalorem. Advalorem lost most of its money because the investments in Swan Holdings were overvalued. The valuations were supplied by Stuart Black who also provided valuations for a Hedge Fund called Heather Capital which lost $300 million because of overvaluations. Swan Holdings had invested a chunk of cash in Etaireia Investments. Stuart Black was a director of Etaireia Investments. Brian Weal owns a controlling number of shares in Etaireia Investments. So, make up your own mind as to whether having Weal as a director of Blackmore Global is a good thing or a bad thing – or a “black hole” thing.
As for Nunn and McCreesh, I will let Leonard Fenton of the Insolvency Service do the talking:
Documents and information received from members of CAPITA OAK indicated they were initially contacted by Craig Mason or Patrick McCreesh of Nunn McCreesh of Its Your Pension Ltd and offered pension review services prior to them being referred to JACKSON FRANCIS or Sycamore for the transfer of their pension to CAPITA OAK.
On 3.3.15 I received an undated letter in which it was stated that Its Your Pension had not traded and was a dormant company and that Nunn McCreesh had traded as an insurance brokerage between 2009 and 2012 when they entered into a verbal arrangement with TRANSEURO where in return for providing pension leads to JACKSON FRANCIS they received a commission from TRANSEURO.
Nunn McCreesh provided JACKSON FRANCIS with 100-200 leads per month which were provided by email and/or telephone for which they received £899,829.86 from TRANSEURO during the period 26.3.12 to 14.5.14.
So, again, draw your own conclusions about those connected with Blackmore Global. Nunn and McCreesh generated up to 200 leads a month to pension scammers in relation to a series of pension/investment scams which are now under investigation by the Serious Fraud Office. This entailed £120 million worth of pensions being invested in Store First store pods which are now the subject of a winding up petition – and arguably worthless.
When I first started investigating the Blackmore Global fund in 2016, I started with the brochure which makes all sorts of grand claims: “medium to long-term investment vehicle with a diversified investment portfolio under one structure. The Company allocates investment between four distinct protected cells, giving a true diversification of assets between property, sustainable, private equity and lifestyle”. Yeah, right. But what are the underlying assets? Where is the audit?
The Fact Sheet goes on to claim the fund’s NAV is £17.65 million and was launched on 1st May 2014. So why no audit? It also claims that the Investment Manager is a firm in Barcelona called Meriden Capital Partners. I thought it a bit strange that a fund based in the Isle of Man would appoint an investment manager in Spain – especially one without a website. So I called Meriden Capital Partners and asked them to confirm that they were the investment manager. They claimed they had never heard of Blackmore Global. Then one of the partners called me back and told me that some man who didn’t give his name had come to their office and asked them whether they would be interested in being the investment manager for Blackmore Global.
The partner at Meriden Capital explained that they had declined because they were not licensed to provide investment management advice to a fund – only to private individuals.
But then I discovered that that hadn’t been entirely true either. Meriden Capital had actually completed an application form to apply to become the investment manager to the fund on 4th April 2014. So either Meriden Capital was lying or Blackmore Global was lying – or both.
The Blackmore Global NAV Factsheet also states that there is a ten-year lock-in to the fund. So why would anyone invest a pension in such a fund? A pension saver has a statutory right to a transfer and might want to take his PCLS – 25% tax free withdrawal at age 55 – or retire, or even die. What on earth is the point in using Blackmore Global for a pension at all? Ever.
As Grant Thorton is clearly having a little trouble with the audit of a five-cell investment fund, I will lay a wee trail of bread crumbs for them to look at. Clearly they can’t even find the underlying assets – let alone value them:
Spinaris 90 – UK sports spread betting (invisible – and what happened to Aria Invest?)
Most of the victims of the Blackmore Global fund were initially cold-called by a firm called Aspinal Chase. And all the victims were advised by unregulated investment advisers Square Mile Financial Services (an insurance license does not cover regulated investment advice). But more worryingly, all of them were put into a QROPS in Malta or the Isle of Man. So why were UK residents transferred to an offshore pension at all, and why were most or all of their pension funds invested in a UCIS which is illegal to be promoted to UK residents?
The list of questions goes on and on. And here, we get back to whether the unscrambling of these pension and investment scams is more about who you know rather than what you know. One victim had his pension invested 75% in Blackmore Global and 25% in Symphony. Symphony was a fund invested in derivatives and highly leveraged. It was also a sub fund of the Nascent Fund run by Richard Reinert. Under the Nascent “umbrella” (a structure for wannabe fund managers) was also the Trafalgar Multi Asset fund which was run by XXXX XXXX who was one of the main distributors behind Capita Oak, Henley and Westminster – all of which are being investigated by the Serious Fraud Office.
Now we have gone round in a complete circle. A catalogue of lies, deception, fraud, mis-selling, negligence and incompetence.
I don’t envy Grant Thornton (if indeed they are the auditors) because they have got to unscramble this unholy mess. And I strongly suspect that, behind the scenes, there are certain parties who are busting a gut to ensure the audit is never published. Two of these may well be John Ferguson and David Vilka of Square Mile in the Czech Republic who seem to have a strong vested interest in promoting this black hole of a fund.
Meanwhile, the longer the victims are held back from transferring out of this toxic swamp of a fund, the more serious the complaints against the various parties involved will be. These will include the cold-calling scammers; introducers; advisers; pension trustees and insurance companies such as Investors Trust who allowed this investment and the pensions transfers from unlicensed advisers.
Finally, on the subject of Investors Trust, they showed not a shred of interest in the fact that they had facilitated financial crime in allowing UK residents to have their pensions invested in this UCIS, but when I published a photo of John Ferguson and David Vilka posing as a couple of gaudily-dressed spivs in Las Vegas, Investors Trust objected on the grounds the photograph was their property.
Gambling is a very strictly controlled industry – and rightly so. Every individual jurisdiction has its own gambling or casino licenses which are usually very expensive and onerous to obtain and keep. Where large amounts of cash change hands every minute, it is obviously important to impose strict conditions and ensure that regulations are complied with.
The city of Las Vegas sprang up in the middle of a desert in 1905 in the hottest part of the world and has since flourished into a sparkling and magnificent centre for world-class gambling.
In the words of Rudyard Kipling: “If you can make one heap of all your winnings, and risk it on one turn of pitch-and-toss, and lose, and start again at your beginnings, and never breathe a word about your loss…..you’ll be a man my son!”
Kipling’s advice is clearly aimed at someone young; someone who has years ahead of him to get lucky; recoup his losses; start again; do a phoenix; learn from his mistakes and do better next time. But with pensions, a life-time of savings can be wiped out so easily on “one turn of pitch-and-toss” by entrusting an unlicensed adviser.
Here in Spain, the investment regulator – the CNMV – refers to unlicensed pensions and investments advisers as “chiringuitos” (which translates as “bar flies”). The CNMV helpfully publishes a well-written warning booklet to alert the public to the nefarious tactics of these scoundrels – copied below for the information of the gentle reader. However, in Britain we tend to be rather more direct and call them scammers. And Lesley Titcomb of the Pensions Regulator has come right out and said it: “scammers are criminals”.
So, make sure you only use an advisory firm which is licensed to provide pension and investment advice. And avoid the chiringuitos, scammers and criminals. I have no idea who the jolly pair of gamblers are in the photo on this blog, but I am sure no informed person would entrust them with a pension and I reckon Kipling would have had a thing or two to say about them.
Away from the fun fun fun of Vegas, these two amiable-looking scallywags could probably scrub up and look like respectable independent financial advisers with a business-like suit and a leather portfolio full of impressive documentation about funds with imaginative names such as “Symphony” and “Blackmore Global”. But if they did so without a license, they would be criminals.
SPANISH REGULATOR’S (CNMV) GUIDE (translated)
FINANCIAL CHIRINGUITOS (“IFA” FLY BOYS/SCAMMERS)
“CHIRINGUITOS” means entities offering and providing pensions/investment and advisory services without being authorized to do so. They are dangerous because in most cases the apparent provision of such services is just a cover for fooling victims into believing they are making a highly profitable investment. It is important to understand that high yields offered are often too good to be true: the bait to con ill-informed (naïve) investors to hand over their savings or pensions. When exposed, the “CHIRINGUITOS” simply disappear or change their names. They are simply swindlers.
Companies authorized to provide investment services (brokers, portfolio managers, IFAs, banks etc.) are subject to the rules governing the securities markets and strict controls by the supervisory bodies (CNMV and BanK of Spain). Only CNMV-registered companies are authorized to provide pension/investment services, after demonstrating compliance with specific legal requirements and standards.
CHIRINGUITOS are not attached to the Investment Guarantee Fund, so that investors are not protected in the event of insolvency of the entity (authorized entities contribute to these protection funds through compulsory subscriptions).
There is no particular type of victim because often scams are very elaborate. Victims can be small businesses, individuals or professionals who fall for credible-sounding false promises of quick wealth and easy gains.
In short, to trust a CHIRINGUITO is a sure way to lose capital, with no investor protection under the laws. How CHIRINGUITOS work
The channels used by scammers and boiler rooms to contact potential victims are no different from those that can be used legally by legitimate entities i.e. telephone, letters, e-mail, web pages etc. The difference lies in the way the scammers use these channels, the type of messages they convey and the general approach to achieving their goals.
The CHIRINGUITOS use databases (often obtained fraudulently) of people who, for example, have purchased a particular financial product, publication – or on occasion answered a survey about their tastes, interests and financial situation. Phone calls
Cold calling is one of the CHIRINGUITOS’ favourite contact methods. It allows them to directly exercise psychological pressure techniques. Cold calling is by definition unexpected but is legal, and in fact authorized entities often use it as part of their promotional campaigns. However, in the case of authorized entities, it is normal practice to call existing customers, so people know their data has been obtained legitimately. If the answer to what is being offered is “no” this is accepted politely. By contrast, the CHIRINGUITOS do not usually settle for a NO.
Mail
High-quality leaflets which are sophisticated, inviting and promising. These often request the recipients to contact them by filling out a form, calling by phone or by visiting their website. Internet, e-mail
The great success of the Internet as a direct marketing tool allows advertisers to access a wide mass of recipients more cheaply than traditional media (phone, mail). This fact, coupled with the possibility of anonymity, has led to abuse of the medium, such as spam or indiscriminate emailing of unsolicited products bordering on illegality. Recipient lists are often obtained unlawfully, in breach of data protection rules. Also, the address of origin of the messages are usually false, and also the subject headings are deliberately misleading. Spanish law decrees that commercial communications should be identified as such and prohibits sending emails unless they have previously been requested or expressly authorized by the recipient. No serious company would ever spam the public, as that would be invading consumer privacy.
When it comes to financial products and services, we must be very cautious about offers and information received, even if they have been requested or consented to. Financial fraud on the Internet can be carried out by more sophisticated means. Spam is just one of the possible mechanisms, because the Internet offers various tools to disseminate potentially fraudulent or questionable deals: boards, newsgroups, chats, or even sophisticated web pages.
Phishing
Another danger is “phishing”: emails that appear to come from legitimate financial institutions, which request personal passwords. These messages often lead to a website that imitates an authentic entity (although it may have spelling mistakes), which fools people into entering their personal data or passwords.
Pharming
Even more sophisticated is “pharming”: people who visit fraudulently-cloned websites can have their personal, confidential data collected by criminals. Never surrender personal or confidential business information to unknown persons. If a request for personal data appears legitimate, use an established phone number to double check. Also, don’t access websites via links, but type in the full URL and, if possible, install antiphishing and antipharming tools. Adverts
CHIRINGUITOS also advertise in newspapers, magazines or other media (such as television teletext) to offer opportunities which are much more attractive than traditional investments and promising to provide attractive opportunities (which, of course, are not so in reality).
Personal referrals
It is common for people to make their investment decisions based on recommendations from acquaintances or relatives whom they trust. Knowing this, sometimes the CHIRINGUITOS pay great benefits to the first customers, using their own money or from other investors; this is what is called a Ponzi scheme. In fact, those investors who unwittingly act as bait are only going to get limited performance at first and successive investments begin to generate losses. Then, the company will not respond to requests for repayment of capital and finally disappear with all the money invested.
Personalized investment recommendations should always be made by a professional entity authorized to do so, because what is good for one investor may not be for another, depending on their different personal and financial circumstances. Persuasion techniques
The list of boiler-room persuasion techniques cannot be exhaustive, since the arguments and methods are increasingly sophisticated. Therefore it is important to stay alert to any financial offer that is not from a known, registered party. Accurate predictions
A simple but very effective technique – using a large number of calls to impress potential victims with their knowledge of financial markets – half of which confidently predict the rise of a certain investment value and the other half predicting decrease of the same value. In the following days this exercise is repeated several time. Those targets who were given a series of successful predictions are contacted again. Now convinced of the infallibility of a company that has hit all its forecasts for several consecutive days, these people are willing to surrender their savings to the CHIRINGUITOS. Appearance of respectability and success
CHIRINGUITOS know it is essential to look respectable and seem like financial market experts. So they dress smartly and elegantly and rent luxury offices. Sometimes it is difficult to get an appointment to meet them because they want to give the impression of being busy and in high demand. Incomprehensible explanations and use of technical jargon
CHIRINGUITOS promoting fraudulent investments talk with confidence and mastery of technicalities that make them look like experts on the subject. In fact, the aim is that the potential victim does not understand anything and chooses to trust those who seem to be experts who know what they are talking about. Offering large profits with little risk
CHIRINGUITOS promise much higher returns than can be obtained from a conventional investment with minimal risk. A basic principle that all investors should bear in mind is that profitability and risk go together inseparably. The possibility of obtaining high yields always involves taking high risks. Be wary of any offer that ensures high returns without risk. Insistence on an immediate decision
Urgency is a major factor, not only because they want to get their hands on your money asap and with the least possible effort, but because they know that if the investor has time to think properly about the offer, or seeks professional and reliable advice, he will probably reject the offer. So, CHIRINGUITOS use tricks aimed at achieving an immediate decision to try to convince the victim that they are offering a unique opportunity that will expire soon. Investors should be aware that this is not true: there is always time to assess the characteristics of a financial offer and to make sure it is suitable. Psychological pressure
The conversation, either by phone or by any other means, usually begins in a cordial fashion, but if the targeted victim shows some potential resistance the scammer can become more aggressive. This constitutes a fundamental difference between the CHIRINGUITOS and the authorized entities, who always respect a prospect’s right to not be interested.
Although psychological pressure can take many forms, here are some common tricks:
Not taking no for an answer
Being repeatedly insistent
Becoming increasingly aggressive
Questioning the intelligence or ability of the investor to make a decision
Conveying the idea they are doing the victim a big favor by offering exceptional gains
Making it clear it would be absurd to question the promises made
Using warnings such as: “you’ll regret it if you don’t go ahead” or “you’ll never get rich if you ignore my advice”
When to be suspicious of a financial offer
Most of the techniques used by CHIRINGUITOS would not be used by authorized firms, since they are subject to strict rules of conduct. Authorized firms are required to keep customers properly informed and to provide information to investors fairly and clearly. In particular, they must provide information about their services and financial instruments, so that the client knows the nature and risks of the investment service that it is going to provide and the characteristics and risks of financial instruments offered.
It is therefore important to understand the difference between people or entities who are authorized to provide investment services and those who only intend to carry out a scam. When an authorized firm sells a product, the customer must request information on their knowledge and experience in this product, in order to assess for himself whether it is suitable for him. This is called a suitability test.
When a broker is going to provide investment advice or manage an investment portfolio, in addition to asking about the client’s investment knowledge and experience, he should request additional information such as the financial situation and investment objectives of the client (risk profile, time-frame etc.) – as proper financial advice is always personalized.
The boiler room scammers’ only aim is to attract money from their victims, so they do not care about their clients’ expertise in investments and financial circumstances – all they need to know is that they are willing to invest. The contact must have been requested by the prospect
Authorised entities have to work with personal data in a legally-compliant manner, and the client must have given them permission to make commercial offers. But if an entity of which we have never heard contacted us to offer an investment, you have to take extra precautions because this is probably a scam. Authorized entities never pressurise customers
Any investment should be approached with sufficient knowledge of the characteristics and risks of the product. It is important to do thorough research before committing. The investor needs time to decide and get answers to all their questions. However, scammers pressure the victim to get an immediate yes, without giving them a chance to reflect. How to protect yourself against a possible CHIRINGUITO
Promises of exceptional returns without risk should make us suspicious immediately. Never trust an unknown entity until they have been able to verify that they are properly authorized to provide investment services. The investor has available the following protection mechanisms which should always be used before handing over capital:
Request information from the supervisory body, in this case the CNMV
Identify any peculiarities about the investment proposal
Demand concrete answers and make sure they are fully understood
Ask for information from the CNMV
The Investor Assistance Office of the CNMV is at your disposal to inform you whether entities are authorised to provide investment services or not. If you have been advised to deal with a company that has been referred/recommended, you should call the CNMV for assurance that it is an entity which is authorized, registered and supervised. Public records are also available through the website of the CNMV (www.cnmv.es). Investors can also visit the website of the International Organization of Securities Commissions IOSCO, (www.iosco.org) where there are warnings and advice available.
The CNMV regularly issues warnings about entities which are suspected of providing investment services without authorization. These warnings may come from the CNMV (when it is aware of the existence of possible CHIRINGUITOS through inquiries or complaints from investors) or which have been supplied by a foreign regulator (bear in mind that CHIRINGUITOS may operate their fraudulent activities in more than one country).
To make it easier for investors to identify entities operating without authorization, the website of the CNMV provides a search engine that can locate them quickly and easily. Entities that have not been placed on the warning list may not yet have been detected by the supervisory bodies. It is important to remember that although most of the victims of fraud contact the CNMV after losing their money, it is always preferable and much less expensive to conduct this consultation in advance, i.e. before handing any funds over.
Identify the characteristics of the proposal
Sometimes, the activities of the CHIRINGUITOS are masked under the guise of consulting services, in which in the client is charged a high commission on their investment (which also often adds to the total loss of the capital). However, all entities making personalized investment advice must be registered on a public registry, so that potential victims can see whether or not a firm or person is authorized to provide this service.
Generally, CHIRINGUITOS require funds to be transferred to a current account (sometimes abroad) on behalf of a non-Spanish company. In general, any offshore entities are not authorised or regulated. The investments tend to be complex financial products in unknown foreign markets.
There are often entities or websites that offer investors the opportunity to invest in foreign exchange derivative products (CFD, futures, rolling spot contracts etc.). The forex market (foreign exchange) is very complex, so any access to this should only be done by authorized entities.
Scammers are often reluctant to provide updated information or respond to questions from the investor, although they promise that they are offering a relationship based on mutual trust. But remember that trust is something that must be earned, the more so when it comes to giving your money to organizations or persons who have failed to establish their legality, professional integrity or solvency.
Insist that any adviser provides clear answers to questions. The investor not only has the right but also the duty to know in advance all relevant aspects of the proposed investment. One of the main differences between authorized financial institutions and CHIRINGUITOS is that the former invite investors to ask questions and then provide all necessary answers and information, while the scammers try to make their targets feel ignorant, and to trust them blindly.
Below are some questions to ask the advisers to see whether they are CHIRINGUITOS. In fact, many of these questions, particularly those relating to the characteristics and risks of the investment should also be made when dealing with authorized entities. The difference is that scammers will be unwilling to provide clear answers:
How did you get my name and contact details?
Why are you making contact with me?
Is your firm registered with the CNMV and the Bank of Spain?
Is your firm supervised by any public authority?
Are you a member of any investment protection/guarantee scheme?
How long have you been with the firm?
What is your professional experience?
Is there any financial entity which can give you or your firm a reference?
Does the investment you are proposing match my objectives and is it suitable for me?
What are the risks of this investment? How much could I lose and under what circumstances?
How would I profit from this investment?
What has to happen for the value of this investment to increase? (i.e. interest rate or stock market rises?)
For how long do I need to keep the investment?
What is the liquidity of the investment i.e. how and under what conditions can I get my capital back if I need it?
What commissions are payable? How are they calculated? Can I have a copy of the fees/rates?
Can I have a copy of the documents/contracts that I have to sign (to read carefully before signing them)?
Is there any official document regarding the investment at the CNMV regulator? Can I see it?
Can you give me a written detailed explanation of the investment to read/digest carefully and a second opinion?
Can we discuss the proposed investment with my lawyer or with a trusted financial expert?
If anything goes wrong with my investment, what avenues of redress or compensation do I have?
Just asking these questions is not enough. CHIRINGUITOS are expert at being persuasive and evading answering questions with plausible excuses. This is why it is essential to check out any person, firm or investment with the CNMV before handing over any funds.
So what makes a pension or investment scam? Unfortunately, the scammers don’t wear “I’m a fox” teeshirts, and the victims don’t know the questions to ask and even if they did, they probably wouldn’t understand the answers. Only by looking at individual case studies can the public learn what to look out for – and hopefully report all the scammers and help the authorities bring current scammers to justice and prevent future scams.
Is there a difference between an obvious scam and just negligent financial advice? They can both have the same bottom-line effect. But should one be jailed and the other simply prevented from working in financial services?
YOU DECIDE!
This is a real-life case study which has resulted in a victim losing £57,512.18 in 18 months. The victim, whom we will call Mr. Driver, went through seven months of hell after realising he had been scammed and fought hard to get some of his money back. The important thing to note is that neither the advisor nor the pension trustee nor the insurance company has lifted a finger to put right Mr. Driver’s losses. Nor have any of them offered to compensate him for the gains/interest his pension should have earned (but didn’t) in the past 18 months.
In May 2015, Mr. Driver (a UK resident close to retirement age) was advised by Square Mile Financial Services (Czech Republic) to transfer his final salary pension fund into a Maltese QROPS called the Optimus Retirement Benefits Scheme No. 1 whose trustees are Integrated Capabilities in Malta. They used an insurance bond from Investors Trust in the Cayman Islands. Mr. Driver’s entire pension fund was invested in two funds – one of which, Blackmore Global, was promoted and distributed by those behind Square Mile Financial Services. The other fund, Symphony, was from the same stable as the suspended £20 million Trafalgar Multi Asset Fund – run by the same distributors as in the Capita Oak, Henley and Westminster scams (all wound up by the Insolvency Service).
Blackmore Global was full of toxic, illiquid, high-risk assets, had no audit and as a UCIS (unregulated collective investment scheme) was illegal to promote to a retail UK investor. The brochure made a fraudulent claim as to who the investment manager was.
Symphony had no up to date audit, and there has been no explanation as to why – on the day Mr. Driver redeemed out of the fund – it mysteriously plummeted in value by 30% (despite the trustees claiming the fund was making a healthy profit).
The advisers at Square Mile – John Ferguson and David Vilka – have refused to engage. They have offered no compensation; provided no audit or evidence as to who the investment manager of Blackmore Global really is; provided no evidence their firm was regulated to provide pension and investment advice to a UK resident. The investment manager of the Optimus QROPS – Lombard Bank in Malta – has been ominously coy (even attempting to deny falsely they were involved).
The trouble is, while Mr. Driver has fought hard to get some of his money back, there are around 1,100 other victims stuck in this fund who may yet have no idea their pensions are invested in – how shall I say this – worthless crap.
The solicitors to the advisers, trustees and fund managers have bleated that they want their names kept out of this. Which I guess is fair enough because law firms will take business from anybody as long as they pay their bills. But the advisers, trustees and insurers must be exposed, brought to justice and shamed (or sued) into taking responsibility for the damage they have caused to innocent victims.
I am worried about the whereabouts of John Ferguson of Lillywhite International and Square Mile Financial Services (Czech Republic). The last I heard he was boarding a long-haul flight on 23rd November 2016 to an unknown destination. His solicitor assured me Mr. Ferguson would get back to me as soon as he landed to deal with a victim’s pension losses.
Mr. Ferguson has invested a number of victims’ pensions in the Blackmore Global and Symphony funds and was asked to provide a copy of the audit for Blackmore Global which his firm has been promoting and which appears to have some questionable assets – described as “esoteric” and “alternative”. He was also asked to provide evidence of his firm’s regulation to provide pension and investment advice.
One victim had threatened to report the matter to Action Fraud when he discovered multiple irregularities with his pension scheme. Mr. Ferguson had dismissed the victim’s complaint saying:
“All fine as Action Fraud are nobody & have no authority. But does that now mean we don’t have to answer his formal complaint?”
The factsheet for the Blackmore Global fund had falsely claimed a firm in Barcelona was the Investment Manager for the fund – robustly denied by the furious firm in question. Mr. Ferguson clearly has questions to answer and the victims’ losses to deal with – so I do hope Ferguson is safe and well. I am comforted by the fact that as recently as 26th November he was Tweeting about football https://twitter.com/thfcfancz so perhaps he just forgot my questions about audit and regulation?
