Thousands of people throughout the UK are believed to have been defrauded by a phone-based fraud operation selling fake gold certificates. Victims of the scheme were taken in over the phone with promises of rapid, above-market returns from their investments in gold deposits.
The fraudsters operate using the same tactics as underground ‘boiler room’ share fraud operations. Victims are typically targeted by phone by aggressive sales staff with promises of rapid returns and ‘risk-free’ investments. Many of the firms buy existing companies to act as clients in order to increase their false reputation.
After the scam group contacted a BBC reporter, the operation was passed onto the police for investigation. The fraudulent company is known as Demmore Ltd., and is reportedly based in London’s Hatton Garden jewellery district. The company claims to lease gold to large corporate clients, including Wholefoods and Boots.
Both of the companies listed as clients by Demmore have no association with the fraudulent firm. Other victims have reported that the fraud operation has bought existing companies with years of trading history in order to appear legitimate and increase the success rate of their sales programmes.
Victims have lost upwards of £40,000 in fake investments promoted by the fraud operation. Unlike typical boiler room operations, which sell shares in companies that are often controlled by the sales business itself, the fraudsters in question are reportedly taking deposits from investors without any gold being purchased.
Other scams have popped up in recent years, each using the same tactics to sell a variety of different commodities. City of London Police have reported that some fraudsters offer investments in wine and carbon credits, both of which have the perception of low or limited risk in prospects’ minds.
Although the police have been successful in freezing several bank accounts owned by the group, it is currently unclear whether victims of the scheme will receive any of the money they have lost.
