Category: The Authorities

Freddy David Ponzi Scheme Stopped

Freddy David was sentenced to six years for defrauding 55 victims out of £14.5 million in a Ponzi scheme.

He used the money to fund his gambling habit, as well as paying for holidays abroad and his children’s school fees.

An investigation by the City of London Police’s Fraud Squad found that between 2005 and 2017, David had been running a Ponzi scheme through wealth management company HBFS Financial Services Limited (HBFS), of which he was managing director.

The Financial Conduct Authority (FCA) became suspicious of the HBFS bank accounts and referred it to the City of London Police who worked closely with the FCA to investigate the affairs of HBFS.

This fraud was running in parallel with legitimate HBFS business, with David using the company’s name as a means to defraud victims out of vast sums of money. 55 victims invested a total of £14,545,494.48 with individual investments of between £20,000 and £750,000 per person.

The Scam

David would convince victims, some of whom he knew personally as friends, that their funds were being held in a high interest bank account offering between four and eight percent interest annually and they would be paid interest on a monthly basis.

The investigation found that victims were transferring large sums of money into the HBFS business accounts, under the impression that they were investing in high interest accounts. It was found that large sums of money were being transferred into David’s personal bank accounts for his own use as well as being used to pay other investors their “monthly interest”.

Victims were provided with forged bank documents which supposedly confirmed that the investments had been made and that interest was being accrued each month.

Police Staff Investigator, Katie Watkins, said:

“Freddy David took advantage of individuals who placed significant trust in him. He abused his position and as a consequence this has had a devastating impact on the victims and their families, both financially and psychologically.”

This is an unusual case as normally either the scheme is setup to be a Ponzi or it starts legitimate then circumstances conspire to push it into a Ponzi. However in this case, Freddy David was a respected financier and ran the Ponzi scheme as a side business to bolster his own bank account.

Be careful who you invest money with, even if that person is a friend or works in a legitimate financial services organisation.

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The International Fact Checking Network

There is a major problem across the world with ‘fake news’, especially on the Internet.

The Poynter Institute is a global leader in journalism, claiming to be the world’s leading instructor, innovator, convener and resource for anyone who aspires to engage and inform citizens in 21st Century democracies.

Poynter created The International Fact-Checking Network (IFCN) at Poynter, committed to promoting excellence in fact-checking.

They say that they believe nonpartisan and transparent fact-checking can be a powerful instrument of accountability journalism; conversely, unsourced or biased fact-checking can increase distrust in the media and experts while polluting public understanding.

The Poynter Institute have also created a set of principles for organisations that publish and claim to be non partisan.

  • A COMMITMENT TO NONPARTISANSHIP AND FAIRNESS We fact-check claims using the same standard for every fact check. We follow the same process for every fact check and let the evidence dictate our conclusions. We do not advocate or take policy positions on the issues we fact-check.
  • A COMMITMENT TO TRANSPARENCY OF SOURCES We want our readers to be able to verify our findings themselves. We provide all sources in enough detail that readers can replicate our work, except in cases where a source’s personal security could be compromised. In such cases, we provide as much detail as possible.
  • A COMMITMENT TO TRANSPARENCY OF FUNDING & ORGANIZATION We are transparent about our funding sources. If we accept funding from other organizations, we ensure that funders have no influence over the conclusions we reach in our reports. We detail the professional background of all key figures in our organization and explain our organizational structure and legal status. We clearly indicate a way for readers to communicate with us.
  • A COMMITMENT TO TRANSPARENCY OF METHODOLOGY We explain the methodology we use to select, research, write, edit, publish and correct our fact checks. We encourage readers to send us claims to fact-check and are transparent on why and how we fact-check.
  • A COMMITMENT TO OPEN AND HONEST CORRECTIONS We publish our corrections policy and follow it scrupulously. We correct clearly and transparently in line with our corrections policy, seeking so far as possible to ensure that readers see the corrected version.

The International Fact-Checking Network:

  • Monitors trends, formats and policy-making about fact-checking worldwide, publishing regular articles in the section below and in a weekly newsletter
  • Helps surface common positions among the world’s fact-checkers.
  • Promotes basic standards through the fact-checkers’ code of principles and projects to track the impact of fact-checking.
  • Funds annual fellowships, an innovation grant and a crowdfunding match program.
  • Convenes fact-checkers in a yearly conference (Global Fact) and promotes collaborative efforts in international fact-checking.
  • Provides training in person and online.
  • Advocates for more fact-checking, including through an annual International Fact-Checking Day.

I think we’re a long way from ever getting rid of fake news but at least this fact checking network should help organisations discern real facts from, fake facts.

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Surrey Police Stop Phone Scammer

Brandon Hurst of Hounslow, posed as a bank fraud investigator and scammed two ladies 88 and 70, out of just under £6,000.

He was caught and has been sentenced to 6 months imprisonment, suspended for two years and has to do community service and pay back nearly £6,000.

He phoned his victims and claimed to be calling from bank fraud investigation departments of Barclays or Santander.

He told them there had been fraudulent activity on their accounts and convinced them to return their bank cards to the bank. He got them to provide their PIN number as well.

To convince them he was calling from the bank he used the stay on the line trick. He told them to check the bank’s fraud number and call it but he stayed on the line and the victims were just talking to him again.

He arranged for a courier to collect the cards and the victims believed the cards would be taken back to the bank but they went to Hurst instead where he could then spend on the cards.

If you get any suspicious callers claiming to be from your bank then use a separate phone to call the bank to check and do not do as requested unless you are totally sure the caller is from your bank. Some scammers may already have some of your information such as the account number so do not be fooled by this.

Let’s hope the prison sentence can teach this man to pursue a life that doesn’t prey on vulnerable people.

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Men in Space Suits Scam

Two men dressed in homemade spacesuits claimed they had a deal with NASA and could generate electricity “from thunderbolts” but have been arrested for fraud.

Indian police tweeted a picture of the father and son duo wearing crinkly silver material and floppy topped helmets after a businessman complained he had been duped out of £156,000.

Virender Mohan Brar, and Nitin Mohan Brar, claimed they would be able to sell a device called the “rice puller” to NASA once it was ready.

They were confident and spoke in fluent English, police said, wore branded clothes and expensive watches and travelled in luxury cars with two armed security guards.

It is believed the pair duped at least 30 other people.

Mr Saini was allegedly told by the accused that he was paying for “anti-radiation suits” that scientists would wear during testing.

Deputy commissioner of police Bhisham Sing said the duo “roped in fake actors posing as Defence Research and Development Organisation officials just to convince Saini about the authenticity of the equipment”.

Already on bail accused of selling snakes with “medicinal qualities” for more than $25,000 each, the pair told potential victims they were developing a device that could be used to generate “electricity from thunderbolts”.

They promised it would be sold to NASA and India’s space agency for hundreds of millions of dollars, police said.

Images of the accused fraudsters in radiation suits alongside crime branch investigators were widely shared on Indian social media, where comments compared the duo’s antics to “a low-budget C-grade Bollywood movie”.

Their fake device was apparently based on rare copper “that had been struck by a thunderbolt” so that it could magnetise rice, police explained.

A copper plate covered in a thin magnetic liquid and rice mixed with iron filings were used to show off the machine.

The New Delhi businessman became suspicious when promised experiments were repeatedly called off, mainly because of bad weather.

As scams go this one is quite audacious though remarkably silly.

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FBI Charge 6 Over Nigerian 419 Scam

Six people charged in Houston in $7 million international investment scam.

The charges against the six individuals were for their participation in an elaborate international advance fee and money laundering scheme. The scheme involved the impersonation of Branch Banking & Trust (BB&T) and JPMorgan Chase (Chase) executives, the fabrication of U.S. government documents, the creation of fraudulent investment agreements in the name of BB&T and Chase and the purchase of luxury vehicles to launder the proceeds of the scheme.

The Scam

The scammers impersonated U.S. bank officials and financial consultants over the Internet and by phone and conned the victims into thinking they would receive millions of dollars of investment funding as part of joint ventures with U.S. banks, usually BB&T or Chase.

The scamers used fake Internet domains to make it appear that senders of emails were actually affiliated with BB&T or Chase.

To convince victims the opportunities were authentic, the perpetrators recruited U.S. citizens to pose as bank “representatives” at in-person meetings with victims around the world and outside of the USA  they used sham visits to the local U.S. embassy or consulate and fabricated U.S. government documents to make the victims believe the U.S. government was sponsoring the investment agreements.

The victims were then induced to pay tens of thousands, and often hundreds of thousands, of dollars to U.S.-based bank accounts on the belief that such payments were necessary to complete their investment agreements.

Money movers in the U.S. liquidated the proceeds through outgoing wire transfers to exporters, cash withdrawals and purchases of vehicles, including luxury brands such as Land Rover and Mercedes Benz, which were then shipped to Nigeria.

Recovery of Funds

The scheme resulted in losses of more than $7 million from victims in more than 20 countries.

To date, a house in Richmond, a Range Rover car and approximately $200,000 in cash have been seized.

Well done the FBI.

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Fake Website Gang Sentenced

Six people have been given jail sentences after defrauding the public out of more than £37m in one of the largest UK online crime cases brought to court.

The group set up and operated a number of “copycat websites”, which impersonated official government services to sell British passports, driving licences and other key documents at very high prices. The convictions and sentences followed one of the biggest investigations undertaken by the National Trading Standards eCrime Team.

Peter Hall, Claire Hall, Syed Bilal Zaidi, Collette Ferrow, Liam Hincks and Kerry Mill received sentences of varying lengths.

The criminals plan was to create copycat websites mimicking websites of government agencies that charge  for documents such as passports, car tax etc. and spend the time and money necessary to ensure their websites come top of Google searches for people looking at how to get or update their passport etc.

They used the company name Tadservices Limited between January 2011 and November 2014 and their fake websites mimicked those of 11 government agencies and departments.

Customers were conned into paying more than they needed for new or replacement passports, visas, birth and death certificates, driving licences, driving tests, car tax discs and the London congestion charge.

The criminals then expanded their operation to make copycat websites mimicking similar government websites of the American, Cambodian, Sri Lankan, Turkish and Vietnamese official visa sites where travellers could apply and pay for electronic visas.

The illegal profits funded a glamorous lifestyle for the defendants, with extravagant spending on expensive cars and luxury holidays.

“These convictions represent an important milestone in the fight against online fraud,” said Lord Harris, the chair of National Trading Standards. “This was a huge fraud and a very large number of people lost money as a result of the malicious actions of these criminals.”

Handing down sentence on Tuesday, Judge Sean Morris said: “The internet is now the most frequently used marketplace. It is full of busy people in a rush who don’t have time. There is a lot of money to be made by dishonest people out of the honest people who don’t have time to check that a site is an official government service.”

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