Cape Town -
Two Johannesburg businessmen have fallen prey to so-called international “boiler room” syndicates targeting South African companies.
The men, who cannot be identified, informed independent probing company IRS Forensic Investigations of the sophisticated method used by dubious consortiums in China to lure prospective companies here.
According to the two, people posing as “brokers” contact high net worth businessmen whose details they get from alumni and business networking websites.
It is believed the “brokers” are extremely well-spoken and appear knowledgeable about the stock market.
The term boiler room typically refers to an outbound call centre selling questionable investments by telephone.
“Investigating boiler rooms located in foreign countries is extremely difficult due to the jurisdiction issues and the complexity of the crimes,” said IRS Forensic Investigations president Chad Thomas.
“In the South African context, a case can be registered locally, and then referred to Interpol.”
He said they had been contacted three years ago by another businessman with a similar complaint.
Although complex in their execution, boiler rooms scams were no different from other advance fee scams such as online dating and the infamous 419 scams.
“We warn people to be wary of opportunities offering very high returns. That in itself should be the most important red flag,” Thomas said.
In May, website Insurance Gateway reported that boiler room fraudsters claiming to be from legitimate firms were scamming British expats living in South Africa.
ENSAfrica director and co-head of forensics Dave Loxton said the organisation was aware of boiler room syndicates.
“They might not be from China specifically, but in the past we have had a couple of clients phoning us and asking that we track down these rooms from as far afield as New York,” he said.
Loxton said boiler rooms were not as widespread as 419 scams.