(December 18, 2012) A police raid of a suspected carbon credit fraud ring in the U.K. uncovers how easy it is to dupe private investors with green scams.
“Carbon credits are the latest in a growing list of products marketed by fraudsters as a surefire way to make maximum profits with minimal risks.” ~ Detective Inspector Matthew Bradford of the City of London Police. [Daily Mail]
Blogged by Probe International
Earlier this month, in coordinated raids of a suspected fraud network of investment firms in the City of London, Essex and Hertforshire, 10 men and one woman were arrested on suspicion of running a criminal operation to scam investors into buying worthless carbon credits.
The suspects, who have all been released on bail, are said to have conned investors out of tens of thousands of pounds for overpriced certificates linked to carbon offsetting initiatives that are virtually unresellable. A dupe that is quite easy to pull off, according to the U.K.’s Mirror Online because carbon credits are “trendy, green – and hard to understand,” something con artists are able to exploit to their advantage.
Investors’ news portal iNVEZZ reports:
“According to a police statement, the arrests are the latest development in a City of London Police investigation into a growing number of suspected carbon credit frauds, where U.K. investors buy the products in the belief that they can be traded to companies in a legitimate market, when the credits actually either do not exist or can only be traded voluntarily, where they have no natural market or set price and are open to abuse.”
The U.K.’s Financial Mail, which had also been investigating the fraud network, joined detectives as they surprised staff at the City of London headquarters of Hudson Forbes, a sham investment company linked to two others in the ring—Burlington Energy Markets and CT Carbon.
Sales scripts discovered by reporters on paperwork-strewn desks show how easy it is to dazzle private investors with made-up job titles—such as ‘Head of Emissions’—and opportunities that are only ever available ‘tomorrow’.
Tony Hetherington for the Financial Mail on Sunday writes:
“One [sales script] read: ‘The project we were last trading is fully sold! Clients who were fortunate enough to get holdings are going to see 20-25 per cent on a 9-15 month hold! But look, listen, don’t worry yourself that you missed that one. I have it on good authority from my Senior Trader that something is being released tomorrow . . . the one which is going to set this market alight.’
The salesman then tells the victim he has arranged for him to speak to the ‘Head of Emissions’, adding: ‘This is somebody you want fighting in your corner. He’s made a lot of wealthy clients a lot of money. He’s just got back from Geneva yesterday, so we’re actually in luck that he’s in the office today.’”
Hetherington reports, “The sales pitch clearly works. Whiteboards covering most of one wall of the office show how Hudson Forbes’ salesmen have performed. One deal raked in £16,850, another £20,000.”
The detective inspector in charge of the raid told Hetherington carbon credits represented fraudsters with “a surefire way to make maximum profits with minimal risks” and that scams succeed because “they exploit people’s misguided belief that environmental investments cannot fail.”
The Financial Mail on Sunday exposé is available in full here.
Categories: Carbon Credit Watch