REAL LIFE STORY OF A SMART PERSON WHO LOST £200,000
AND WHY IT COULD HAPPEN TO ANY OF US
Lots of things in life are about timing, being in the right place at the right time, or conversely the wrong place. That’s what happened to John, not his real name, who just having sold the family house and about to move abroad for a year had a much bigger bank balance than ever before. Month after month of seeing tiny amounts of interest kept making him feel that he wasn’t doing enough with his money.
On one such a day he saw less than a £20 of interest for a month on more than £100,000 he received an email talking about how to invest the smart way, specifically in new technology like Tesla and Space X, the Elon Musk space project, Tesla share were in the press daily at the time hitting new highs. John clicked on the link for the website and was taken through to a very smart looking website for a company called Liberty Global Partners, unfortunately their site has now been taken down but believe me it looked impressive.
John gave them a call. The guy he spoke to Martin was a nice, knowledgeable and personable guy. He talked about the opportunities that were out there both the public and private transactions. John loved it and quite quickly signed up to buy some Tesla shares, not a huge amount approximately £4,000. Below is a copy of a trade invoice they sent John, not for the first trade but a later one. Doesn’t it look official? As a 20-year veteran of stock broking I must say its pretty convincing.
AND WHY IT COULD HAPPEN TO ANY OF US
Again, perversely as it would ultimately prove for John his timing sucked. Everyday the Tesla share price went up, it was working. Martin the salesman kept calling and emailing John to tell him how smart he was. Well after a couple of weeks John wanted more, Martin suggested he buy some more Tesla shares and John did, another £20,000.
Over the next month Tesla kept doing well, Martin kept calling and John felt good. Martin had started talking about the private opportunities that were out there for smart investors, which frankly this is what John now considered himself to be. And again, picking Space X which was often in the news was very alluring. Martin talked about the fact they were putting a small group of smart investors together to invest in Space X which normally was not investible for the public. John loved it. Each investor had to put in a $100,000 but would be able to sell them at 9 times that price after a short period. Literally it was going to go up like a rocket! John went for it.
See the letter to the left, John stood to make $860,000!!! Official looking stamp and everything!
John then received a call, the whole thing was going to fall through, one of the other investors had pulled out and unless they had the whole amount, the whole thing was off. Tesla had had another good day. So when Martin asked if he would step in and invest more John said yes.
Sadly, that wasn’t the end of it, a few weeks later John received another call from martin saying that he stood to lose the whole investment unless he put in another $50,000.
Unfortunately, John did this.
Ok, so what was really going on. John reacted to a cold call, (first mistake). Unfortunately, he didn’t check if Liberty Global Partners were an authorised investment firm (second mistake). The website on deep scrutiny is flashy but lacks content (third). John never actually bought any real Tesla shares, they just took his money.
The name and logo of the company are similar to a legitimate firm Liberty Insurance: This is a ploy scammers frequently use as it gives a veneer of respectability.
The scam started with relatively small amounts of money, although that was £4,000, and a very credible story, i.e. Tesla. Once hooked the more outrageous situation could be introduced and a large sum taken. This is how most fraudsters operate.
When John sat back and considered the situation and the mounting number of requests for more money, he became uneasy and asked for help. Unfortunately, Reassura had to tell John it was a fraud and what to do next.
ActionFraud were contacted, after 20 minutes on hold, they answered, took details and were never heard from again. The Police were not interested in John’s massive loss.
The Financial Conduct Authority were more communicative but informed John that as the fraudsters were not authorised there would be no compensation. Strangely enough they still have not put Liberty Global Partners on their fraudsters list.
John was shattered by all this and the fact that the authorities had no interest made it even worse.
So, what can we learn from this:
- Avoid cold calls- phone/email/social media and certainly never invest with one
- If you want to invest go and speak to a professional regulated advisor, an IFA, click here to check
- Really research whoever you chose to invest with, they must be regulated, find reviews, and as above get professional advice
- Websites can look great but quite frankly they can offer the veneer of respectability without any substance, so don’t be taken in by a flashy website
- Official looking paperwork is easy to produce, see above, its worthless
- If it sounds too good to be true, it’s a scam.
As was said at the beginning of this article it’s all about timing. People are most vulnerable to romance scams when they are feeling lonely.
To investment scams when they feel they are not getting their money to work for them. To holiday booking scams when there is little available, and they find a bargain.
To PC support scams when their PC has actually been a bit temperamental recently. We could go on and on. To stay safe, we all have to stay vigilant and even if we are 1% unsure, get some advice, that’s why Reassura are here.