The operation, based in Spain, targeted investors in the UK between 2009 and 2010 and took in over £1.3 million.
The defendants used high-pressure telesales techniques, typical of boiler-room frauds, to promote worthless share bonds in non-trading companies pretending they were, in this case, shares in Chinese commodities firms.
The defendants
James Muir Baird from Braintree, Essex is sentenced to five years and six months’ imprisonment. He pleaded guilty on 23 August 2011 to conspiracy to defraud for his role in running the sales operation.
Paul O’Leary from Braintree, Essex is sentenced to one year imprisonment. He pleaded guilty on 29 September 2011 to money laundering charges in relation to the role he played in managing funds.
Omar Shorif Choudhury from Great Yeldham, Essex is sentenced to two years and six months’ imprisonment.
He pleaded guilty on 5 October 2011 to making misleading statements and practices, contrary to s397 of the Financial Services and Markets Act 2000, in relation to the sales and administrative support role he played.
Commenting on the outcome, SFO Director Richard Alderman said:
“Boiler rooms are a blight on the investment sector. They often create victims out of aspiring individuals and dash hopes of a secure retirement.
"I am pleased that the SFO has played its part in bringing the offenders to justice. I hope that confiscation will help to restore some of the damage so callously done.”
Background
The fraud centred on the sale of shares and corporate bonds by Baird’s boiler room in Spain.
Potential investors in the United Kingdom were called by his associates, who pretended that they were promoting shares in large Chinese commodity firms in the process of establishing European-based subsidiaries.
However, these supposed subsidiaries were, in fact, non-trading shell companies controlled by Baird and his associates and had no link to the Chinese firms.
Money paid to the boiler-room operation was not used to fund commercial activities but, instead, supported the lavish lifestyle of Baird and the boiler-room employees.
The fraud thrived on a web of deception. Whilst employees of the boiler room claimed that they were based in Canary Wharf in London, the address they gave to investors was fictitious.
Instead, Baird’s international sales operation operated out of an office in Barcelona, Spain. To conceal this deception, the organisation directed mail to a mailbox address in Haringey, London, and had calls to London telephone numbers diverted to Barcelona.
To avoid the attention of law enforcement bodies the boiler room regularly had a change of name. Initially it was called IGM Securities. In 2010 it adopted the names WA Advisory and MS Securities.
Baird and his associates used these techniques to project a professional image and were able to deceive even experienced investors.
As a result they were able, between September 2009 and June 2010, to persuade victims to invest over £1,312,550 into the companies whose shares were being pushed.
Payments were made to accounts held in the names of these companies in various countries including Cyprus, the Seychelles, and the United Kingdom. However, these bank accounts were controlled by Baird’s associates and the money went to the boiler rooms.
During the course of the fraud Baird stole the identity of an FSA registered financial advisor and an FSA registered company and set up a bank account.
By posing as an FSA registered company, Baird was able to purchase the contact details of people who had made investment enquiries on an investment website. This gave the boiler room the cold call list it needed to deploy high-pressure sales techniques.
Investigation and Proceedings
IGM Securities first came to the attention of Leicestershire Constabulary in late 2009 after an investor made a complaint. The case was then referred to the Serious Fraud Office.
The SFO had an ongoing interest in Baird in relation to his involvement with other overseas sales operations and despite being arrested in December 2008 and on bail; he continued to direct the IGM Securities boiler room.
When it became apparent that Baird’s involvement in the boiler-room industry was ongoing, further investigations were carried out with the assistance of the police forces of Norfolk and Suffolk which resulted in the active boiler-room operation being shut down.
Omar Choudhury was arrested in July 2010 and both he and Baird were charged in December 2010. Another associate of Baird, Paul O’Leary, was charged in June 2011.
The trial of all three defendants was scheduled to begin at Chelmsford Crown Court on 5 October 2011. However all three defendants pleaded guilty and the prosecution case was opened yesterday and concluded today. Confiscation proceedings will follow on a date yet to be fixed.
