Scam victim: How an 'adviser' tricked me out of £150,000

Jane - not her real name as she wishes to remain anonymous for professional reasons - thought she was dealing with a regulated adviser for several months before noticing that things didn't add up in March.

She invested £150,000 of her mother's cash, left by her late father as a means to provide for her in later life, through a firm she had found on the internet called Launton Wealth.

Launton Wealth had come up as a top result in her search for 'investments and bonds', Jane said. She had been looking for a low-cost option to invest in a safe or low-risk strategy yielding modest, sustained returns.

Jane had started to look for online options after turning down the help of a financial adviser, who the family had felt was too expensive for the sort of returns they were targeting.

 

Initial contact

The scam began after Jane sent an online request to Launton Wealth and was contacted a couple of days later by a man calling himself James Greening.

Greening, who purported to be a financial adviser at the firm, informed Jane of his and the firm's backgrounds before giving her a "sense of security" by urging her to perform proper due diligence on the company and to "aim low" in her investment options.

He guided her around the firm's website, showed her some media articles featuring the firm's investment managers and pointed her in the direction of apparently glowing customer reviews of the company on common online portals.

A later investigation by Professional Adviser found all of this information was fake: newspaper articles had been copy/pasted from Reuters and quotes artificially added; the 'news sites' hosting the articles were fake outlets giving a false London address; and the investment guides on the site had been plagiarised from professional sites around the world.

For instance, its 'Guide to Forex Markets 2015' was taken from Australian site Easy Forex. 'Guide to Global Real Estate 2015' had initially been written by E Todd Briddell of CenterSquare, a real estate subsidiary of BNY Mellon Asset Management. And the 'Guide to Investing in Gold 2015' was taken from the Northwest Territorial Mint based in the US.

The supposedly top-notch consumer feedback listed on freeindex, Yelp and Yell was also fake, although only some of the portals had detected this and left the comments unauthorised.

 

First investment

Jane said Greening appeared to be doing a comprehensive risk assessment on her mother's case, complete with attitude to risk and capacity for loss questionnaires, before offering his first product advice: Standard Chartered's 'Step-up Callable Perpetual Preferred Securities', which he described as yielding 4.275% per annum.

"It was very convincing," said Jane. "I had no doubts at all about the company at that point. It was a modest, low-risk investment. He explained everything about how the bond worked, how income is spread over the year, how the buy-in and buy- out worked, in real detail. And he sent me an email with all of this on that was really professional-looking."

What is more, before making her first investment Jane and her mother were encouraged to come to London for a face-to-face appointment with Greening. Once a date had been set, however, he appeared keen to push the meeting back saying he would be in the mother's hometown about five months down the line. Jane said she did not think this was suspicious at the time.

In November 2015 the first investment was made - £50,000 in the Standard Chartered bond plus commission, which Greening explained, would form his payment. Unbeknown to Jane, the FCA banned commission payments to regulated financial advisers at the end of 2012 when it told advisers they had to charge transparent fees for their work on retail investment products.

Greening never sent his victim any paperwork to sign. Instead, he set her up with her 'personal online space' on Launton Wealth's website where she would be able to see the detail of her investments live - for example, the date of purchase, the products' performance and dates the payments were due.

 

Complications

When Jane went to her mother's bank, Santander, to make her first payment, however, the bank had difficulties processing the transfer. Its staff had confused the digits of the receiving bank account, taking it a week to sort the problem before she could finally transfer the money. 

By the time it got to the second investment in January this year, Greening had ramped up his efforts to become a trusted adviser to his victim. He had kept up regular customer service contact and had looked to create a more personal working relationship with Jane. He had, for instance, told her about his parents and their villa in Spain - a common ground between them.

She was now ready for his next move: a more obscure £100,000 purchase of an own-brand high-yielding foreign exchange product. This product, he said, would pay out monthly. However, the payments never reached Jane's mother's account.

Greening told his victim Santander had given him the wrong IBAN number for the account to transfer the proceeds of the second investment, so it had bounced. Because of Santander's earlier mistakes Jane believed him and proceeded with her third investment - this time a proposition that, as she later admitted, "sounded too good to be true".

Greening had explained to Jane that, because her mother was now an existing customer, she was allowed to access other products he described as 'no risk'. He offered her a foreign exchange trading account, paying back as much as 12% a month.

"He explained the financial 'trading boys' would make a lot more money by investing well and we keep the 12% and they keep the rest," said Jane. "No commission, no fees and a standard 12% return, paid monthly."

She went to the bank to transfer the investment on 1 March. However, Santander struggled with the money transfer, telling her the account number did not look right. 

Jane then tried to telephone Greening but only succeeded in reaching a different receptionist to the one she was used to dealing with. She said the receptionist was evasive but told her Greening would ring her back, which he did about two hours later.

Though still blaming the bank for the transfer failings, Jane decided she would make no more payments until she had met him face-to-face. Greening told her his secretary would set up the meeting but she never heard from him again.

Realising her mistake, Jane said: "Perhaps some of the suspicion that I would have had about the company was masked by the fact Santander was making a lot of mistakes. You are starting to think it's Santander that has got a problem rather than the scammers, who seem so professional.

"If it looks too good to be true, it is. What aggrieved us is we had a financial adviser coming round to the house. Bear in mind, though, we had a significant amount of money and all we needed was something very low-risk that generated enough income to just live comfortably.

"The fact some financial adviser takes 2% commission [sic] and a 2% annual charge does put you off. We felt the adviser was going to make a lot of money out of our mum for very little return. That makes you go it alone. I say to people unless you really understand this business, speak to [someone] super-safe - don't be ambitious."

The Financial Conduct Authority (FCA) published a warning about Launton Wealth on its website on 22 March. The Launton Wealth website has since become unavailable.

 

Europe-wide scam

Launton Wealth was a scam purporting to be a firm of financial planners and wealth managers that was FCA-authorised through what it claimed was its parent company, Liechtenstein-regulated Finanz-Control Anstalt.

For its registered address it gave 201 Bishopsgate in London, which is actually home to a number of well-known investment managers, but never to Launton Wealth.

The firm was already on the radar of a number of European regulators months before the FCA took action on 22 March.

Under European Union rules, European firms can sell their products across the border as long as they are regulated in their host country and the FCA has recognised their 'passport'.

This means the FCA will have checked the firm's authenticity with the host regulator, which in theory provides the regulatory consumer protections. However, clients of such firms do not have recourse to the UK's Financial Ombudsman Service or Financial Services Compensation Scheme.

The Austrian regulator had already warned about the firm in January after it was found to have set up a German-language website to target consumers in the German-speaking world. It had given the same London address as its business location.