On 9 September 2021, a Judge at Southwark Crown Court sentenced a former stockbroker to a term of five years and 10 months imprisonment for money laundering. He was also made the subject of a director disqualification order for a period of 10 years.
As reported by the FCA, as part of what was described as a trans-national organised crime group, Richard Faithfull laundered £2.5 million being the proceeds of at least seven professionally run overseas investment/boiler room frauds.
A "boiler room fraud" is used to describe a particular type of fraud using high pressure sales tactics by cold calling, telemarketing and telesales to persuade people to buy products or invest in schemes with exaggerated promises of high returns when in fact they are worthless or do not exist.
Potential investors are targeted from "lead lists" that are often obtained from telemarketing companies and will detail people who have existing shareholdings and investments. Boiler room frauds will often target those who have an interest in the stock market but are inexperienced investors, deliberately focusing on older or vulnerable people.
Boiler room frauds are extensive and sophisticated operations. Potential investors will be provided with glossy marketing brochures and share certificates. A website will direct potential investors to claims about the investment products and testimonials from satisfied investors. There will often be a virtual or serviced office space at a prestigious city address.
The FCA has a Financial Services Register listing all financial firms and individuals who are authorised to operate and carry out regulated activities in the UK. As part of the due diligence process when considering investments, the FCA register must be checked.
A custodial sentence and director disqualification is not the end of the story for Mr Faithfull. The FCA is now pursuing confiscation proceedings under the Proceeds of Crime Act 2002 (POCA) to realise assets which represent the benefit from his criminal conduct. POCA proceedings are often more complex than the trial proceedings. An unpaid confiscation order will not only attract interest but potentially a further custodial sentence.
'money coming in [to accounts controlled by Faithfull] was not being invested, it was simply being slaughtered'.