The term, 'Boiler Room,' arrived during the 1970s inside American political parties to describe the practise of using a central office connected to multiple phone-lines (manned by party-activists) to seduce prospective voters across the nation. Supporters of (Republican) President Richard Nixon, are known to have employed the same practise in reverse - i.e. they cold-called thousands of known swing-voters in the middle of night in key states, and pretended to be aggressively canvassing for the Democrats. The term 'Boiler Room fraud,' is thought to have been coined in the 1980s, to describe members of the American 'Mafia' who adopted similar, industrial cold-calling tactics to contact as many potential victims as possible.
'Boiler Room' has even been used as the title for a Hollywood movie
During the past two years, 14 Boiler Room gangs have secretly been targeted by a British-led coalition of law enforcement agencies, in what has been widely-described as 'an unprecedented international crackdown on fraud.'
Detectives have said that 'the aim of the two-year Operation RICO,' was to 'decimate' Boiler Room fraud in Europe.' Presumably, by 'decimate,' they meant 'destroy,' because 'decimate' is one of the most misused words in the English language. Originally, in the ancient Roman army, it meant to execute one in ten as a punishment when a Legion fought poorly or exhibited cowardice in the face of the enemy.
Britain's 'Operation RICO,' involved the Spanish police and various other international law enforcement agencies, including the US Secret Service.
This week, 84 arrests were made in Spain in raids by 300 officers including 40 officers from the UK. A further 20 persons were arrested in the UK, 2 in the USA and 4 in Serbia. A number of luxury vehicles and properties were seized.
Police have said that typical British 'Boiler Room' victims have lost from £2,000 to £500,000. However, the 'Financial Conduct Authority' has admitted that a least £200m is being taken from UK citizens in 'Boiler Room' frauds each year, and that the largest individual loss recorded by UK police, is a staggering £6 millions.
Those caught by 'Boiler Room' gangs are generally vulnerable, commercially-inexperienced individuals aged 40 and over, but many are in their 70s and 80s. Police admit that a significant number of destitute victims have already committed suicide.
The criminals cold-call their prey, using classic, coercive behaviour modification techniques - pretending affinity with potential victims - tricking them into parting with their money whilst giving them the illusion that they are always making free-choices. Victims are initially told of attractive returns of 10 to 20% per year. They are then pointed to fake commercial Websites and brochures and told that, if they hurry, they can still invest in secure bonds backed by famous legally-registered companies. Some victims have been paid 'dividends,' to lure them further into the trap.
One British woman, Joan Mayer (aged 78), courageously admits to being tricked (over a period of two and a half years) into handing over £23,000 in exchange for valueless fake carbon credits, and shares in anti-malaria products and rare earth metals. She was then coerced by another crook, posing as 'a salesman,' into borrowing £140,000 to buy valueless fake 'shares in a gold mine.'
According to the police, just as was depicted in the Hollywood movie (released in 2000), today's 'Boiler Room' gangs comprise a book-keeper, money launderer and lawyer, as well as a network of 'salespeople.' Classically, the cold-callers are trained to sound friendly and respectable and to recite a '100% positive' closed-logic script . In general, they are young men (and sometimes women), who speak good English and who generally pretend to be older than their years. A significant number of recently-arrested 'Boiler Room' salesmen, are apparently naive, and/or greedy, unemployed university graduates from Scandinavian countries, who have responded to what they were led to believe were authentic advertisements for commission-related, 'job/income opportunities.'
The only journalist I have spoken to about boiler room fraud told me that the UK police estimate that the 14 gangs recently arrested, were 'cold-calling on average several thousands of UK homes per day, and that their salespeople worked from morning till night, 7 days per week.' Apparently, these calls were were not aimed at random targets. The contact-details of potential victims, are known to have been harvested off the Internet using lawful and unlawful means. Sources of information have included electoral rolls and press announcements of deaths (these list details about the occupation of the deceased and their surviving relatives). Another source of information has been credit-rating agencies, banks and the stock market itself, because (for commercial purposes) information is held by financial institutions and stock-broking firms about buyers of shares. When public utilities were privatised back in the 1980s, millions of UK citizens bought a few shares. Apparently, with the right IT specialists and equipment, it is child's play to break into databases and compile lists of potential 'boiler room' fraud victims who have access to capital. The most-vulnerable profile seems to have been elderly or middle-aged, widowed, divorced or unmarried women without debts, and who have invested in a few safe shares in the past, and who are likely to trust psychologically-dominant men pretending affinity and presenting themselves as experienced stock brokers.
In brief, due to its scale, 'boiler room' fraud is a form of industrialised psychological, and economic, warfare, and the generals directing it, have almost unlimited resources available to them.
The first questions I have for anyone cold-calling me, are: