North London-based Carlton Church, Standard Fidelity, Cathay Dupont and International Finance & Consulting, all of the same address, were wound up on 13 August 2019, following an investigation by the Insolvency Service.
The High Court heard that the businesses claimed to trade as IT consultants, software developers, promoters of humanitarian projects in Asia and providers of business outsourcing services in order to secure funds from overseas investors.
But, it upheld there was “no evidence that the companies had been engaged in any form of legitimate business activity”.
Investigations into the four firms have been conducted in various locations and jurisdictions.
Warnings had been issued by the Financial Conduct Authority (FCA), Australian Securities and Investments Commission (Asic), Japanese Financial Services Authority (JSFA), New Zealand Markets Authority (NZMA) and Luxembourg’s Commission de Surveillance de Secture Financier (CSSF).
For example, in 2016, the New Zealand regulator warned that Carlton Church was cold-calling locals offering the chance to purchase US-listed equities when it was not regulated to provide financial services in the country.
Details of the scam
Investigators said the companies, including similarly named firms registered abroad, fraudulently sold shares in pharmaceutical companies to the overseas investors.
Altogether, the businesses secured $572,739 from eight investors based in Russia, Australia, Dubai, Oman and South Africa.
The Insolvency Service said that proceeds raised through the “fraudulent shares” were laundered through an organised crime ring in the Philippines.
Investors sought to take back their investments after shares purchased never materialised, however, they were told further funds were needed before any payment would be made.
But, despite investors handing over additional money, they did not receive any of their investments back.
Boiler room history
The court also heard that there was evidence that all four companies shared a common director, David Martyn, as well as a company secretary, Geoffrey Dixon.
And while Barry Rosen was listed as the actual owner of the companies, investigators determined that he was a “patsy” for another person – David Gilinsky, the Insolvency Service said.
Investigators told the court that Rosen’s conduct was “questionable”, as he had been arrested by the Philippines National Police in August 2018, in relation to alleged online fraud and wider investigations into organised crime syndicates operating in Manila.
The crime syndicates carried out boiler room frauds, which used high pressure sales techniques and cold calling in order to encourage people to invest in share schemes, and specifically targeted expats by misrepresenting themselves as stockbrokers.
David Hill, chief investigator for the Insolvency Service, said: “Throughout our investigations it was plain to see that the companies lacked any sort of transparency and when we tried to engage with the directors, there was a total failure to co-operate.
“Our evidence shows that the four companies were part of a wider scheme to target genuine investors and we are pleased with the court’s decision to shut down these companies, seriously curtailing their opportunities to harm anyone else.”
The Official Receiver, who is a civil servant working on behalf of the Insolvency Service, has been appointed as liquidator.
A spokesperson for the Insolvency Service told International Adviser that it was “too early to say” whether investors would get their money back.
“Now the company is in liquidation, the Official Receiver will attempt to find out where the monies are. This has been made difficult so far due to a lack of transparency.
“Part of issuing the press release is an attempt to alerting members to get in-touch with the Official Receiver and register as creditors in the liquidation.”