Business-Investment Fraud Alert

Alert message sent 07/06/2016 10:21:00

Information sent on behalf of Cheshire Constabulary

ARE YOUR INVESTMENTS BRANCHING OUT IN THE RIGHT DIRECTION?

The purpose of this alert is to raise awareness of how a pension review can lead to investments in forestry companies which cannot fulfil their high return promise.

ALERT

Summary

26% of victims who reported ‘Other Investment Fraud’ to Action Fraud over the past year were persuaded to transfer their pension monies from legitimate pension schemes into scam schemes with the promise of high returns in unregulated forestry investments. There is little direct evidence available to the pension member about the legitimacy of the investment or how much is actually being made and when.

How does it work?

Victims approaching retirement age have been cold called and encouraged to engage in a pension review. As part of the selling technique, the caller will advertise forestry investments as part of a new pension plan, persuading the victim to transfer their pension monies from a legitimate pension scheme to an alternative pension company and invest 25% of a pension fund which is tax free (exceptions apply1) into long term forestry projects in places such as Costa Rica, with promised high returns.

Once the victim has invested in forestry, teak, bamboo, forestry shares, tree plantations or Christmas trees, promotional material will be received by the victim via post or email, promoting the benefits of the scheme. The forestry firm will continue to cold call, encouraging the victim to:

o Setup up regular investment payments in order to receive a greater return

o Request an upfront fee (approximately 10% of the investment) for a security bond

o Request an advance fee for insurance to cover a temporary payment abroad to locations such as Hong Kong and Gibraltar

Limitations

Victims have encountered persistent cold calls, companies becoming insolvent and a lack of communication from the firm i.e. no email responses and phone calls ignored. Prior victims have found that they do not have easy access to their forestry investment, or have experienced a reduced return rate. The practicalities of the forestry investment are not explained thoroughly, for example the length of time taken for trees to mature is dependent upon many variables which would affect the return rate for investors.

Who is affected?

Over the past financial year there have been 38 Action Fraud reports on this subject, with 26% of these victims investing their pension funds into forestry investments. Victims have been predominately aged between 48 and 66 years old, nationwide.

Message sent by
Ian Harding (Police, PC, Chester LPU PC)

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