Seven men who were involved in a boiler room scam that cheated investors of millions of dollars over a two year span were sentenced to a total of forty years in jail.

The Spanish-based operation targeted thousands of investors in the UK by applying high pressure telemarketing techniques to push shares in a bio-diesel company, Worldwide Bio Refineries (WBR).

The modus operandi was similar to other scams that tries to sell fake shares through telemarketing like Nexus Ventures.

WBR itself was a shell company that was set up to look like a legitimate business. However, it did had a plant in Singapore producing diesel intended to be marketed in the UK.

One of the men who was convicted, Dennis Potter, lived in Singapore during the time the scam was ongoing in 2005 and 2006.

Nothing was mentioned in the SFO report about whether the money was ultimately recovered, but seeing how the money was systematically transferred to offshore accounts, I am not optimistic.

With an average of 5-6 years in jail (even less after parole), the fraudsters might not need to work for the rest of their lives after being released if they had managed to stash away their money safely before their arrest.

In an appeal ruling, the court has affirmed the method of determining how much investors can recover of their money lost in the Madoff ponzi scheme.

Fictitious profits would not be counted as monies to be returned to investors. Only the original capital should be counted in determining how much money is owed to investors.

Earlier investors who had redeemed their investments with profits would need to return their profits.

If this kind of approach is taken for the various scams that had occurred in Singapore, those early investors would have needed to return their profits.  This will put a strong deterrent on people who invest into schemes knowing that they are Ponzi like in nature. But I think this is something that will never happen here.

You can bet that if the returns are enticing enough, even hedge fund managers can be tricked.

A person by the name of John “Scott” Clark raised some $47 million for his firm, Impact Cash from 2006 till now. John offered his investors returns of up to 80% per year.

Impact Cash firm is supposedly a payday lender. A payday lender gives short term loans of less than a month at astronomical interest rates (10 to 20%). Payday loans are quite common in USA to help people tide over their cashflow problems till their next paycheck. Due to the high interest rates, it also means that many of these people who rely on payday loans are forever stuck in the poverty cycle.

Last September, a few hedge fund managed invested $15 million with John. The returns that were promised to them was 55% a year. That was just months before Impact Cash finally collapsed.

Looks like some hedge fund managers really don’t learn…

Ponzi Scheme Hits Mystery Hedge Funds