Sat, Jul 26, 2003 - Page 9 News List

It's full steam ahead for `boiler room' con artists

The premise of financial scams is human greed and although gullible customers get fleeced of small fortunes, many boiler rooms are not nearly as greedy as the investors they con

By John Aglionby  /  THE GUARDIAN , LONDON

ILLUSTRATION: MOUNTAIN PEOPLE

The three watches on the man's wrist were all set to different time zones. One gave the time in New Zealand, the second in South Africa and the third in New York. On the table in front of him were three mobile phones, one for each group of customers in each of the three countries, who all thought they were calling him locally. He was actually in Taiwan.

The man with the watches, a Briton known as "Mr Big," showed a second man sitting opposite him a fax he had just received, the contents of which left little to the imagination. "It basically said: `I'm going to come over there and I'm going to kill you. I'm going to kill all your family unless I get my money back. I've spent this much money with you.' It was really horrible," says the second man, who gives his name as Barry Stephens.

"Let me show you something," Mr Big continued. He picked up one of the phones, dialled the number on the fax and checked his watches.

"Mr So-and-so, I've just got your fax this morning," Stephens quoted Mr Big as saying. Once the torrent of invective at the other end of the line had subsided, Mr Big reportedly continued: "Look, sir, we're a brokerage company. We can't guarantee you're going to make money.

"Stocks go up and down. You're a man of the world, you know that. But what I can tell you is that I have another opportunity here... "

According to Stephens, "The conversation ended with the man agreeing to send another US$20,000 after he had just sent him a fax saying he was going to kill him."

The incident he describes is a snapshot of the world of boiler rooms, where members of the public send complete strangers who claim to be stockbrokers vast sums on the promise of making massive and rapid returns.

More than 75 percent of investors end up losing all their money. Despite gaining worldwide publicity in 2000 with the release of the Hollywood blockbuster Boiler Room, starring Giovanni Ribisi, Vin Diesel and Ben Affleck, thousands of people continue to get conned every year.

Stephens, who claims he was "intimately involved" in Mr Big's brokerage for several years, approached The Guardian after hearing that a suspected boiler room was shut down in Cambodia last week. He claims he wants to expose for the first time the full details of how boiler rooms have fleeced tens of thousands of people all over the world in the past decade, to help prevent others from a similar fate.

Out of fear for his safety -- one man who allegedly double-crossed a former boiler-room partner was gunned down in his BMW in Bangkok last year -- Stephens has asked that his real name not be used.

The premise on which all boiler rooms operate is human greed, he says.

"People think they're going to turn US$10,000 into US$100,000 by doing nothing. They don't think, it's too good to be true. They don't stop to think, if it's so great why are you telling me about it? Why am I so special?" he said.

Stephens says the operation he witnessed succeeded through an elaborate web of deception, fraud and highly refined, high-pressure telephone sales tactics in which most people didn't realize they had been snared until it was too late.

The "sting" would begin with a harmless call from a sweet-sounding, usually female, voice known as a "qualifier." She (or he) would ask if the company's database records were still accurate and offer a free subscription to a company newsletter, says Stephens.

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