INDIANA – Each year, thousands fall victim to boiler-room schemes. These schemes use high-pressure sales techniques to convince unsuspecting victims to invest in fictitious investments that appear to be real. Criminals hide behind fake investment firms and a network of shell companies to prey on unsuspecting victims worldwide.
This year, as part of International Fraud Awareness Week, which takes place Nov. 13 through Nov.19, IRS Criminal Investigation (IRS-CI) has issued the following tips to avoid becoming a boiler-room target. Don’t. Get. Boiled.
Tips include:
- Don’t complete online requests for personal information from websites asking if you are interested in investing. Fraudsters use that information to target potential victims.
- Don’t take a website at face value. A website shouldn’t be the only evidence that a cold-caller represents a legitimate investment company. Fraudsters clone real investment company websites or purport to be from real investment companies that don’t have websites.
- Double-check employment information. Just because a cold-caller uses the names of legitimate brokers listed on the internet doesn’t mean they are affiliated with those brokers.
- Do your own research. Fraudsters use online platforms to generate fictitious performance data for stocks that don’t really exist.
- If you find yourself a victim of one of these schemes, do not pay a fee or tax to the fraudsters to withdraw money. You will end up losing more money and then the fraudsters will end communications with you.
- Report fraud to law enforcement. Submit Form 3949-A, Information Referral, if you suspect an individual or a business is committing fraud.
“The sales techniques used by criminal networks behind boiler rooms have grown increasingly sophisticated. These schemes touch multiples countries and thousands of victims,” said IRS-CI Chief Jim Lee. “It’s heart-wrenching to watch people deplete their savings thinking they are investing in legitimate businesses or securities. This International Fraud Awareness Week, we don’t want additional victims to get boiled.”
In the fiscal year 2022, IRS-CI initiated 25 new boiler-room investigations. Thus far, the agency has obtained a 100% conviction rate on every case where court proceedings have concluded. Cases include:
A telemarketing scheme targeted elderly and retired individuals in the United Kingdom by selling them fraudulent stock and carbon credits resulting in $16 million in losses. Over a series of telephone calls, the telemarketers persuaded victims to invest money under false and misleading pretenses, including the promise of short-term, high-yield, no-risk returns. In reality, the investments were high-risk, illiquid, and in some instances, entirely fictitious. Many victims were persuaded to make additional investments under the false pretense that they would not be permitted to sell their holdings until they purchased more. The boiler room operators moved funds obtained from the scheme through U.S. bank accounts to overseas bank accounts in Cyprus, Switzerland, and the United Kingdom in the names of various shell companies. Two defendants – Christopher Wright and Steven Hooper – have been sentenced to 52 and 42 months in prison, respectively, for their roles in the scheme. A third defendant, Roger Ralston has pleaded guilty, and agreed to forfeit nearly $16 million and pay the same amount in restitution to the victims. He is awaiting sentencing.
Operation Furnace was an international investigation into boiler rooms in several Asian countries ranging from Turkey to Vietnam. One of the main targets, Robert Leonard Booth, operated a boiler room in Thailand that laundered funds through U.S. accounts. He was sentenced to 10 years in prison in August 2022. Beyond Booth, this operation resulted in 16 indictments in the United States and nine international arrests in Cyprus, Romania, Spain, and the United Kingdom. Eight subjects have pleaded guilty, and law enforcement has seized approximately $6 million. Booth was ordered to pay approximately $2 million in restitution to victims of the scheme.
IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money laundering, public corruption, healthcare fraud, identity theft, and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, boasting a nearly 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attached posts abroad.
