Investment scams

09 July 2012
The Australian Crime Commission Board has established a multi-agency taskforce, including the Northern Territory Police, in response to a rise in the incidence of serious and organised investment fraud targeting retirement savings in Australia.

This crime is real and it is happening here in the Territory. Read about Christopher Fulton (name has been changed to protect the victim's identity) who lost over $40,000 when he fell victim to a sophisticated fraud operation.

In cooperation with a range of state and federal government agencies, Task Force Galilee will help combat the growing threat of cold-call investment fraud being perpetrated by organised crime groups offshore.

This sophisticated form of fraud, sometimes referred to as boiler-room fraud, seeks out Australians in or approaching retirement age, with ready access to investible savings.

In recent years, authorities have identified more than 2,600 victims, with at least $113 million in savings lost (as at June, 2012). Reluctance on the part of many victims to report the fraud has led authorities to suggest the extent of the fraud is much wider.

ACC Chief Executive Officer John Lawler said the investment fraud, is usually initiated by telephone cold-calling of potential victims, and is backed up by highly professional-looking websites and documentation detailing impressive financial returns.

“The criminals use high-pressure tactics and persuasive sales techniques, both over the phone and online, to zero in on victims before coaxing them into transferring money into bogus or worthless investments overseas,” Mr Lawler said.

“Needless to say, once the money is transferred out of Australia, it is never seen again.
While the average reported loss is $42,348, one victim lost about $4 million and many others have lost their entire life savings. It is clear the personal emotional and financial impact on victims is enormous.

“Unfortunately many victims are reluctant to admit having been defrauded so we suspect the extent of the fraud is much greater than current figures suggest,” he said.  

The Task Force believes that organised crime operations based overseas are increasingly being drawn to Australia’s large pool of retirement savings, which presently stands at more than $1.3 trillion, healthy economy and strong currency. It is believed poor returns from traditional investment markets in recent years have made many retirees receptive to ‘investments’ promising higher yields.

Of the reported victims, 880 were registered Australian companies that have transferred funds offshore, and 51 invested through their self-managed superannuation fund.

Task Force Galilee comprises all ACC Board agencies including the Australian Federal Police, the Attorney-General’s Department, Australian Customs and Border Protection Service and all state and territory police, as well as the Australian Competition and Consumer Commission, the Department of Broadband, Communication and the Digital Economy, Department of Immigration and Citizenship, Department of Human Services and the Australian Transaction Reports and Analysis Centre.

Australian Securities and Investments Commission (ASIC) Chairman Greg Medcraft said the fraud is becoming increasingly sophisticated and can be difficult for even experienced investors to identify.
 
“Many of these investment scams are so professional and believable that it is hard to tell them apart from genuine investment opportunities,” Mr Medcraft said.

“They often use the internet to appear legitimate. They put up websites and issue online press releases and some even give victims logins to fake accounts to view fake investment balances.

“The reality is that these scams are getting more sophisticated and people need to be wary.  The first thing to remember is to never transfer any money into an investment, especially overseas, without first checking on ASIC's MoneySmart website whether the company is licensed.

"ASIC's number one priority is ensuring investors and financial consumers are confident and informed. So use our MoneySmart website, ask questions and be sceptical. But the best thing to do is get some independent financial advice before you sign anything," he said.

For information about Task Force Galilee, please contact the Australian Crime Commission. For more information about serious and organised investment fraud, visit ASIC at www.moneysmart.gov.au or call 1300 300 630.

Protect yourself from investment fraud

  • Visit www.moneysmart.gov.au or call 1300 300 630 for further information.
  • Alert family and friends to this fraud, especially anyone who may have savings to invest.
  • Report suspected fraud to the Australian Securities and Investments Commission, by visiting www.moneysmart.gov.au, calling 1300 300 630, or speaking to local police. Any information such as company name, location and contact details will assist with investigations.
  • Hang up on unsolicited telephone calls offering overseas investments.
  • Check any company you are discussing investments with has a valid Australian Financial Services Licence at www.moneysmart.gov.au
  • Always seek independent financial advice before making an investment.

Find out more from the NT Government, Department of Justice Consumer Affairs.