Tuesday, 29 March 2011

Boiler Room Scams

If the profit sounds too good to be true and someone unknown to you phones you out of the blue then it is most likely a scam. You should be particularly cautious when the "company" making such an offer is not regulated by any government body.

A friend of mine who has a great deal of experience in investing and also investigating "Boiler Room" scams showed me me an example of a case (here and here) that matches those criteria. It is a UK Company registered  in July 2010 called Nemesis Commodities Ltd who called him at home with an unsolicited call. In that call and several subsequent calls they made unsupported claims about a wonderful trading opportunities with natural colour diamonds.

The general idea is Nemesis buy certificated natural colour diamonds from investors, sell them to you based on the value of the certificate. Then Nemesis enter the diamonds as parts of batches into auctions at Sotheby's where other rich  investors buy them at a high price and so you make a profit. They told my friend Sotheby's generously give a reduced them a reduced commission fee. Oh dear oh dear me.

They even sent him literature describing diamonds as being weighed in "carrots".

My friend's view was that anyone how gave Nemesis Commodities money would learn they'd chosen their company name well!

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