Couple Lose £300,000 Pension Pot to Boiler Room Investment Fraud

Scammer Jonathan Arafiena had been running a ‘boiler room’ scam. The name for this type of fraud originates from when these types of scams used to occur in basements or ‘boiler rooms’ with teams of scammers all reaching out to victims. In boiler room fraud, scammers pressurise victims to invest in false promises through telesales or distance selling.

Jonathan Arafiena is now serving a five-year sentence after pleading guilty to one count of money laundering and conspiracy to defraud. Over two and a half years, he was estimated to have taken £12 million from hundreds of people.

The couple has since tried to recover some of their lost money. £160,000 was initially paid into an account held by Moorwand, a payment service provider, and was withdrawn by the scammers. Mr and Mrs Hamblin took further legal action against Moorwand, alleging the provider didn’t have the proper checks in place. Unfortunately, a judge ruled that there was no breach of duty, and the case was dismissed, meaning the couple now have legal costs to pay on top of their lost money.

Investing can be a powerful tool for building a secure financial future, but it’s crucial to remain vigilant. Investment fraud occurs when criminals use social engineering techniques to exploit trust and scam people into investing in fake schemes that often don’t exist.

Even if you see yourself as an experienced investor, you must familiarise yourself with the warning signs of an investment scam.

Investment and pension fraud red flags include:

• Promises of low risk and high, fast returns.
• Scammers may contact you through unsolicited calls, emails, or texts, someone knocking on your door, or unexpected messages on messaging apps or social media. Always be wary of unsolicited, out-of-the-blue calls, emails, texts, and social media adverts.
  The investment is time-limited or must be completed by a specific date to receive the best rates or discounts. Scammers use this to pressure victims into agreeing and sending money without having time to carry out sufficient background checks. Don’t be pressured into investing. Legitimate, regulated companies will not pressure you to do anything.
• Scammers tell you not to inform anyone about the investment, as the offer is just for you. This prevents friends, colleagues, or family members from questioning the investment and detecting the fraudsters.
• The company is not registered with the Financial Conduct Authority (FCA).

The FCA regulates financial services firms in the UK and publishes a list of registered providers and a warning list of unauthorised businesses to avoid. If you invest in a non FCA regulated company, you may not be covered by the Financial Ombudsman Service (FOS) if you lose your money. FOS is a free government service that investigates complaints and helps resolve disputes between regulated financial companies and customers.

Also, be aware that scammers could be ‘cloning’ the details of a legitimate provider – it is quite easy to create professional and genuine-looking fake websites or social media accounts. Always do your research and get professional independent advice before you decide to invest.

As scams become more sophisticated, you can still fall for scammers even if you are a seasoned investor. Fraudsters usually persuade victims to make payments from their bank, and this is known as Authorised Push Payment (APP) fraud. With APP fraud, scammers will transfer money immediately, usually to an overseas account, making it nearly impossible to recover.

If you have been scammed, immediately stop all communication with the scammers and report the fraud to your bank, police, and Action Fraud, the UK’s national reporting centre for fraud and cybercrime.

Your bank will initially investigate the case, and you may be entitled to a refund. However, if the money has been moved, this might not be possible. If your bank hasn’t taken the proper steps to protect you from fraud, they may be liable for the loss.

If you have lost money through a push payment scam and your bank is unwilling to refund you, you can take this further with the Financial Ombudsman Service (FOS).

Sarah Spruce, Legal Director and Head of the investment scams and APP fraud team at TLW Solicitors, said:

“As the Hamblin case shows, investment scams are becoming increasingly sophisticated, and even taking all the precautions they did, including meeting the alleged adviser, they still fell prey to the scammers.

“Unfortunately, this is not an isolated story and our scam team have helped many clients who have lost huge amounts of money to scammers in a similar way.

“If you or a loved one has fallen victim to investment fraud, please remember, that you’re not alone. TLW Solicitors is here to provide specialist help and support. Don’t hesitate to reach out for a friendly, no-obligation discussion to explore your options and see if you can make a ‘no win, no fee’ refund claim.”