Attack of the dodgy investment clones

by Tony Levene on 02 July 2011  |  4 comments
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All of this firm's details seem genuine enough. But they aren't who they say they are...

Why do those dodgy investment phone calls nearly always come in the early evening?

It's partly because targets are more likely to be in. Also potential victims tend to be more relaxed after 6.30pm – maybe they have a glass of wine.

So when someone giving the name Sean Clark called bang on time on a poor quality phone line (with the usual buzz of the boiler room in the background), I was prepared for an attempted raid on my bank balance.

Clark spoke excellent English – but with an accent and difficulty pronouncing some words. He explained he worked for Ace European Group in London.

I asked where in London – he replied “Holborn, it's near a big building.” London readers should remember this stated location. Those less clear on London geography should find a street map.

He explained that I had previously replied to “one of our marketing agents who had contacted you in April or May to see if you were interested in investment opportunities.” Of course, that was a lie.

Clark said he worked for Ace European Group which he described as “specialising in financial reports” - whatever that means. Ace European Group is a very big financial company. But it is in insurance, not investment. Besides beginning with the same two letters, these are very different financial areas.

After the usual softening up questions such as “how are your ISAs performing?” and “Would you like higher interest?”, he launched into a sales pitch for a “fixed rate bond paying 7 to 10%”.

At this stage, he again mentioned he was in London and gave the address 100, Leadenhall Street. Now Londoners will know – and those elsewhere can consult their maps – that 100, Leadenhall Street is around two miles east of Holborn. No one really working in Leadenhall Street would or could say they were in Holborn.

The Leadenhall St address is indeed that of insurance giant Ace European Group which occupies the building, although it has sub-let a few rooms to others.

The website Clark gives – aceeumarkets.com – also carries a Zurich address. And, surprise, surprise, the Zurich address quoted belongs to the real Ace European. This is nothing more than a cloning exercise. This dodgy website was set up on May 9, 2011, unusually in Sao Paulo, Brazil.

So what does Clark try to persuade me to buy?

It's a fixed rate bond issued by Valco Petroleum. Interest rates vary from 7% to 10.5%, depending on how much and how long. Interest is paid quarterly. According to Ace, investors can ask for their money back at any time without penalty, an unusual arrangement for a fixed rate, fixed time offering.

Valco, a small company based in Spokane, Washington state, but with a “corporate headquarters” in Houston (and not to be confused with many other firms of a similar name), appears to take an interest in oil production areas that are a long way from viability. It also carries, on website valcopetroleum.com, an unusual mission statement: “We have long recognised the value and importance of business morality. It is held as sacred in our policies.”

But who runs Valco Petroleum? The management team page says “this page is being updated, please try again later.” So there is no information.

And what are its finances? Where is the balance sheet? Would you invest in a firm with no financial paperwork? But there is nothing available.

Why does it wish to raise £150m? There is no mention of any bond on the VP site. And why would a small oil company in Spokane raise money in sterling rather than dollars and in London rather than locally? There is no explanation.

However, to put my mind at rest, Clark tells me that my investment would be protected by the security of SIPC insurance. What's that? It's the Securities Investor Protection Corporation, a US version of the UK Financial Services Compensation Scheme (www.sipc.org). It pays out if brokers go bust.

The problem is that this only applies to US brokers who are in the scheme. Ace, of course, is not. The SIPC website says it does not cover individuals who are sold worthless stocks and other securities.

Now as everything about this looks and feels phoney, anyone who pays over a cheque for Valco Petroleum bonds might just as well take their cash out of the bank and set fire to it.

As for the real Ace in Leadenhall Street, it was amazed to learn, when I called, that its London and Zurich addresses had been hi-jacked. It tells me that its legal and compliance teams are trying to find the cloning culprits.

Meanwhile Sean Clark has called again to see how I liked the idea. He still maintained he was both in Holborn and Leadenhall Street, a physically impossible feat. I asked him where I could find a balance sheet and accounts for Valco. He did not respond, leaving me to eavesdrop on Sean Clark clones trying to rip people off.

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