UK: Father and daughter face £35m fraud charges

A father and daughter team showed “callous disregard” for thousands of British victims in a £35m (€45.6m) fraud scam, US authorities said.

Around 15,000 Britons, mostly elderly citizens, were sold worthless shares in the so-called “boiler room” fraud scheme.

Paul Gunter, 58, and his 25-year-old daughter Zibiah were arrested by federal agents in Florida yesterday and have been charged with multiple counts of money laundering and mail, wire and securities fraud.

Robert Weber, the special agent in charge of the investigation for the US Immigration and Customs Enforcement (ICE) agency, said: “These two criminals demonstrated a callous disregard for the hard earned money of individuals who thought that they were legitimately investing in their futures.

“They will now have to account for their actions before a court of law.”

Mr Weber added: “ICE will continue working with its law enforcement partners here and abroad to hold criminals involved in stock fraud accountable for their actions.”

The pair duped British victims into investing $70m (€45m) in worthless shares of more than 50 dormant, publicly traded companies in the scam, which began in early 2005, US authorities said.

According to the criminal complaint, the Gunters and others “sold virtually worthless shares of stock in the companies to victim-investors in the United Kingdom through high pressure and misleading sales techniques”.

Det Chief Insp Robert Wishart, head of the money laundering unit at the City of London Police, said: “This is part of an ongoing investigation into a mass marketing crime scam known as boiler room fraud.”

He went on: “Thousands of British people have fallen victim to this crime – in this inquiry alone, we estimate that around 15,000 mostly elderly people have lost money.”

He said the operation was “a fine example of how international collaboration can bring to justice those who choose to perpetrate these crimes.

“Criminals may think that because they are laundering money through a number of foreign jurisdictions, they will not be caught,” he said.

“This action demonstrates how effective the law enforcement community can be in ensuring there is no hiding place for criminals or their money.”

US Attorney Robert O’Neill said: “I applaud the combined efforts of the law enforcement agencies that unraveled this stock scheme.

“The stock market must be protected by ferreting out those who prey on investors.”

John Joyce, the special agent in charge of the investigation for the US Secret Service in Tampa, said: “Cooperation between law enforcement at all levels has allowed us to focus our resources and respond quickly to uncover and prevent criminal activity such as this type of financial fraud.”

Paul Gunter, of Odessa, Florida, and Zibiah, of Oldsmar, Florida, caused the victims to wire their investment funds from the UK to bank accounts in the Middle District of Florida and elsewhere.

The father and daughter team then used these funds “to perpetuate the scheme and for their own personal enrichment”, authorities said.

The pair engaged in a securities fraud scheme in which they hijacked the identities of dormant, publicly-traded companies, since early spring 2005 and fraudulently caused the issuance of shares of stock in the companies to the Gunters and others, and entities controlled by them.

The investigation revealed the pair used around 54 publicly traded shell companies in this manner or in a similarly fraudulent manner and the victims wired more than $70m (€45m) to the Gunters and others.

In “boiler room” frauds, victims are cold-called by fake stockbrokers who use high-pressure sales techniques to persuade them to buy shares in worthless, nonexistent or near-bankrupt companies.

Such tactics may include claims that the fake company is preparing to unveil a major discovery that will send its shares soaring.

The “boiler room” refers to a rented space from which salespeople call hundreds of potential victims each day.

The targets are often obtained from shareholder registers at Companies House, according to reports.

The charges carry maximum penalties of five to 25 years in prison.

The money laundering charge also carries a fine of twice the total gain to the defendants, or twice the total loss to victims, whichever is larger.

ICE, the US Attorney’s Office in the Middle District of Florida, the US Secret Service and the City of London Police were all involved in the joint investigation.

Yesterday, the day she was arrested, Zibiah listed her mood as “happy” on her MySpace webpage and wrote: “CutiePie is going to have a great day!!!!!”