View the article online at http://citywire.co.uk/money/article/a605475
FSA: Sinaloa Gold boiler room scam victims will get money back
Victims of a scam to invest in a Mexican goldmine will see some of their cash returned.
Victims of a boiler room scam will see some of their money again after the Financial Services Authority (FSA) secured a court order against ‘sham’ outfit Sinaloa Gold.
79 UK residents were victims of a scam which offered shares in the company – ostensibly to raise funds for a gold mine in the Sinaloa region of Mexico.
The shares were offered through cold-calling ‘fraudsters’ and without a prospectus – a legal requirement of a share offer.
Sinaloa and one of its directors, US resident Glen Lawrence Hoover, were ordered to pay £1.09 million to the FSA which will be distributed back to the victims.
At the moment, however, only £127,000 is available to be returned after the FSA froze the company’s assets in December 2010.
Judge John Jarvis QC said Hoover was being punished owing to his role as an ‘integral part’ of the dodgy dealings.
‘The evidence therefore indicates to me that Sinaloa was set up purely as a vehicle to issue shares to the public and Hoover was an integral part of that operation,’ he said. ‘Sinaloa was a sham operation. Mr Hoover knew all that was going on and took an active part in the scam that took place.’
The scam took place between August and December 2010 when staff from 12 boiler room outfits rang round members of the public offering the shares. However the FSA said no evidence was found that Sinaloa was involved in the mine, with 90% of monies raised going to Sinaloa associates.
Boiler rooms offering the sham 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.
Tracey McDermott, acting director of enforcement and financial crime at the FSA, said: ‘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.’
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by Gavin Lumsden on Dec 19, 2014 at 17:24