Share scam victims get £1 million backIt follows crackdown on 'boiler room' fraud

07 March 2008

A pile of notes and coins.

Consumers who lost more than £1 million in a share scam have got most of their cash back following a transatlantic crackdown on the fraudsters.

The Financial Services Authority (FSA) says 153 people have received more than £1 million they lost in the 'boiler room' scam.

The returned cash is about 90% of the money that was lost.

The  fraudsters had illegally sold shares in two gold mining companies - the Rocky Mountain Gold Mining Corporation and the Rocky Mountain Gold Mining Inc.

Boiler rooms

But the FSA worked with Canadian authorities to freeze funds before the scammers could make off with the money.

Boiler room scams involve the illegal sale of shares in the UK that are overpriced, restricted for onward sale and have little or no resale value.

Boiler rooms are so called due to the high-pressure sales techniques used to sell shares in risky companies.The fraudsters are mainly based outside the UK and often vanish, leaving the investor out-of-pocket. 

The head of the FSA’s enforcement division, Jonathan Phelan, said: ‘This is a rare bit of good news for investors who have been persuaded to hand over money to boiler rooms as usually the money disappears without a trace.

‘Investors are reminded to just hang up the phone when contacted by boiler rooms as in most cases these investments do not have a happy ending.’

Refunds

Any investors who think they've bought shares in either Rocky Mountain Gold Mining Corporation or Rocky Mountain Gold Mining Inc and sent money directly to Ontario, Canada may be entitled to a refund.

The FSA has tried to contact all relevant investors but some people targeted by the boiler rooms may not be aware that they could be entitled to a refund. They can contact the FSA on 0845 606 1234.

Take a look at our guide to getting your money back after a scam.