12.00pm UPDATE
BANGKOK - Thai police say they have cracked a major global stock dealing scam, detaining 81 people, including 3 New Zealanders, accused of cheating investors of more than $360 million.
Police raided two offices in central Bangkok yesterday, the culmination of two years of investigation into complaints by securities
regulators in Australia, New Zealand and Hong Kong.
Thailand's Securities and Exchange Commission (SEC) said in a statement that Thai and Australian Federal police as well as the FBI searched the office buildings and detained the suspects, seizing 35 boxes of documents, 20 computers and large amounts of cash.
The firms are suspected by the regulators of being unlicensed securities companies involved in fraudulent activities against foreign investors, especially in Australia, the statement said.
The Bangkok newspaper The Nation said firms implicated in the scam included the Brinton Group and Benson Dupont Capital Management in the Sathorn and Silom areas.
After being conned to give up their money, investors were then asked to send money offshore and had difficulties recovering their investment, a commission official said.
The newspaper said the suspects were arrested as they were about to send out share trading prospectuses to overseas investors. Before yesterday, the authorities had difficulty gathering evidence as the illegal trading was conducted online.
The scams, played by similar gangs in other parts of the world, are dubbed "boiler room'' operations, because of the high pressure sales tactics employed. The term was popularised by an American film highlighting similar frauds.
Police said most of the customers were medium to high income earners. They were lured to invest in stocks, not knowing that they were not the legal owners.
The illegal brokers would then try to convince the investors not to sell the shares in order not to release the money.
Eventually the company would go bust and spring up immediately under another name.
Deputy national police chief Sant Sarutanonda told a news conference the police had not formally charged the suspects, 17 Thais and 54 foreigners with New Zealand, Australian, US and Irish passports.
The New Zealanders detained are understood to be either telemarketers contacting people to get them to invest in the scam or qualifiers - people who seal the deal.
"These people don't have a work permit and we need to interrograte them first before we can formally charge them," Sant told reporters.
Sant said the syndicate was one of the world's largest underground stock dealing scams and had stolen around $A300 million ($NZ362 million) from their victims.
Norman Miller, of the New Zealand Securities Commission, said the commission had been receiving complaints over the last two years from many New Zealanders who had been ripped off in the scam.
"The last six months we've done some sums and we're aware of at least $5m that's been siphoned out of the country and that's probably just the tip of the iceberg," he said.
"It's extremely difficult when you're dealing with people in foreign countries... to take action against them.
"We have to leave it very much for the local authorities in those jurisdictions to act and it seems they have acted in this case which is pleasing."
He said his advice to potential investors was: "Just don't do business over the telephone with a stranger on another land.
"You just hang up."
The Thailand Securities and Exchange Commission statement said the two firms, affiliated with each other, had frequently changed their names and places of business and had transferred large amounts of funds out of Thailand raising concern of their involvement in international money laundering.
The maximum penalty for fraud in Thailand is seven years in prison.
Trading securities without permission carries a maximum penalty of five years' jail and a 500,000 baht ($26,5000) fine, police said.
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If you have been affected by an overseas stock scam we would like to hear from you.
E-mail: tony_wall@nzherald.co.nz
12.00pm UPDATE
BANGKOK - Thai police say they have cracked a major global stock dealing scam, detaining 81 people, including 3 New Zealanders, accused of cheating investors of more than $360 million.
Police raided two offices in central Bangkok yesterday, the culmination of two years of investigation into complaints by securities
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