A sophisticated investment fraud in which 1,200 people across the world have been defrauded of up to £4million has been smashed by Sussex Police, working in collaboration with other law enforcement agencies.
Seven people were sentenced to a total of 32 years imprisonment at Blackfriars Crown Court on December 10 and 11 following their convictions on December 7 after a six-week trial, for conspiracy to defraud and money laundering:
Chad Naidoo, 32, of Compton Street, Eastbourne, was sentenced to 11 years, in his absence; Leo Torr, 23, of Canute Road, Hastings, was sentenced to three years and nine months; George Pallett, 21, of Holmhurst Lane, St Leonards, was sentenced to three years, in his absence; Frankie Cunningham, 24, of Knebworth Road, Bexhill, was sentenced to three years; Lorenzo April, 24, Tideswell Road, Eastbourne, was sentenced to four years; Socrates Mbala, 22, of Western Gateway, London E16, was sentenced to three years; and Gareth Griffith, 28. of Lowen Bire, Truro, was sentenced to seven years.
Martina Kelly, 26, of Holmhurst Lane, St Leonards, was found not guilty.
Pallett didn’t attend the trial at any stage and is believed to be in Spain or Portugal. Naidoo attended the first week of the trial but failed to attend thereafter. He is South African and it is likely that he has travelled there. Police enquiries are ongoing to trace both of them.
On January 30, 2016, police in Eastbourne received information that suspicious activity was taking place at The Courtlands Hotel in Wilmington Gardens, suggesting that a ‘boiler room’ fraud enterprise had been set up at the hotel.
The term ‘boiler room operation’ refers to a scheme using high-pressure sales tactics to sell stocks to clients who are ‘cold called’ or called randomly,
A conference room had been booked at the hotel from January 8 by Chad Naidoo, who had stayed there before, in what turned out to be a new phase of the fraudulent scheme. They typically operate for a few weeks and then move on.
Detective Constable Charlie Ward went to the hotel and in the room he found four makeshift workstations with three laptops, a computer tower and a shredder. Handwritten post it notes with names, emails, and phone details of persons were dotted about the walls as well as a company name – Olympia Global Solutions – and bank account details linked to this company. The curtains were closed.
DC Ward saw that one of the people named on one of the post-it notes was local. He visited her and it became clear that a person or persons from a company called Olympia Global Solutions or Binary Inter Bank had called incessantly seeking to encourage investment in Binary Options.
On February 2 police raided the operation. George Pallett and Leo Torr immediately jumped from a balcony but were caught after foot chases and arrested. Martina Kelly and Frankie Cunningham were arrested in the room. While officers were searching and seizing material, Lorenzo April arrived and was arrested.
NaIdoo, one of the key players, then arrived at the hotel and was arrested following a brief struggle in the lobby and shortly afterwards, Socrates Mbala was arrested, having arrived at the hotel with Naidoo but wandering off when he realised what was happening.
Naidoo’s Bentley Contintental was seized nearby in Eastbourne. The vehicle and two BMWs were seized by police.
Detectives secured multiple bank production orders and liaised with the City of London Police and Action Fraud.
The fraud involved the setting up of a trading platform hosted by a company called Tradesmarter. People were contacted by the fraudsters using Voice Over Internet Protocol provided by a company called RingCentral and were told to deposit monies into two accounts held by a company called Olympia Global Solutions Ltd. But it was clear from assessing the account information that no monies were actually used for investment in options trading and were simply redistributed between those arrested and laundered.
Fourteen mobile phones were examined. These included personal phones and what were deemed cheap throw away ‘burner phones’ used to contact victims from the boiler room when VOIP was not being used.
Using the information acquired detectives compiled a list of victims. An initial email shot was sent to 110 people targeted alerting them to the arrests and the suspicion that BIB was fraudulent.
However examination of the computers seized in the room revealed a Spreadsheet client list of some 1,200 people across the world had been defrauded of up to £4million. A revised email shot was sent to the 268 people in the UK that the spreadsheet indicated had already ‘invested’ some £1 million.
Some people responded to the police emails but some were undeliverable because the emails were no longer valid or were incorrect.
In addition, several other people were contacted who had previously been recruited to work for BIB but soon realised that all was not right.
Many of the victims are elderly or otherwise vulnerable.
DC Ward said: “The evidence, in statements and supporting documents provides clear evidence of fraud. One victim has sustained losses in excess of £550,000, albeit these losses have been transferred from one fraudulent company to another over time, the last being BIB.
“Finding one of these ‘boiler room’ operations in action is rare and the international, national and cross border nature of this organised crime group became evident from the material seized and clear links to other fraudulent enterprises.
“We had clearly nipped in the bud a new phase of their operation which could have netted yet more victims.”
It is believed that this fraud was linked to other organised criminal activity and the City of London Police have been investigating overlapping strands in which commodities fraudulently offered range from fine art, wines, and diamonds.
And police action against six of the offenders has not stopped with their sentencings. All are subject of enquiries into their assets by expert Sussex Police financial investigators, and an application for court confiscation orders under the Proceeds of Crime Act (POCA) will take place next year on a date yet to be set.
For further information about ‘boiler room’ fraud schemes, see the Action Fraud website at https://www.actionfraud.police.uk/a-z-of-fraud/boiler-room-fraud.