barton was not totally surprised when he received a mail from Halfon,
announcing he had acquired a large block of shares in a mining company B
called Gambia River Minerals. As the name seemed to indicate, it held mining
rights to gold and other precious metal deposits in Senegal. The company planned
to open a large mining complex in the south of the country where according to a
Senegalese Ministry of Mines’ report an ore body existed, containing viable
deposits of gold, silver, copper, lead and zinc, proven by geologists. The company
announced its intention to raise capital by a flotation on the London Stock
Exchange and was offering early investors preferential shares.
Barton checked the website of Gambia River Minerals and found downloadable
company reports including: geological surveys, maps, details of concessions and
letters from ministers. The site was well designed and convincing. A little more
research showed that Gambia River Minerals was the clone of an FSA authorized
company.
He remembered meeting one of Halfon’s partners in the Basque Country, David
Jameson, a Londoner, whom he had instantly recognised as a conman. It was
evident Halfon was running a well-organized boiler room scam, like so many
others found in the murky corners of financial markets and especially in the mining
and property businesses. What always surprised Barton was how gullible investors
fell for such scams; the answer was as always to do with cupidity, the lure of easy
gains.
Halfon’s mail gave the impression his company, BRIC Securities, was based in
the UK. In reality it was nothing more than a £100 off-the-shelf Gibraltar
company, though its letterhead announced a prestigious address on Aldersgate
Street in the City of London.
The director of the Senegalese company was listed as a certain David Kessler.
The name rang a bell. Kessler had been arrested on suspicion of fraud related to
online financial services for FOREX trading, stocks, futures and options. The
fraudster had narrowly escaped jail by absconding after being remanded on bail
pending further investigations, resurfacing some months later at an investor’s
conference in Dakar, where he met and teamed up with Halfon.
Kessler reported, ‘We are confident our concession will prove to be one of the
Senegal’s most important deposits of precious metals. Our plans are to start
production in 2013.’
Their objective was to raise twenty million pounds from investors by pressurized
selling, then using offshore structures to launder the funds. With Kessler’s
experience and know-how combined with Halfon’s cunning, they set-up a network
of offshore front companies in Gibraltar, Switzerland, Andorra, Hong Kong and
Dominica. Salesmen were hired and trained in pressurized selling techniques; their
plan was simple, if the story was repeated often enough they would end up snaring
enough naïve investors to finance Halfon’s crooked business plans.
As funds rolled in, the partners in crime diverted the funds to expanding their
business into Spain, where they could take advantage of endless opportunities
offered by an ever increasing number of distressed property firesales. They bought
homes and apartments at knockdown prices, transferred them to an offshoot of
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Malaga Palms, then resold them to Russian and other inexperienced punters via
websites and high pressure selling.
They worked in the knowledge that the FSA and overseas authorities would take
years to unravel the web. They dismissed any thought the EU fraud investigation
agency, Eurojust, could catch-on to their game; it was submerged under a mountain
of complaints from investors who had lost their money in the financial crisis.
They built a legitimate façade of brokers to peddle shares in the mining company,
used genuine companies to keep accounts. Real mining engineers were employed
to carry out surveys and prepare reports. There was talk of flotations, but in reality
Halfon and Kessler siphoned off the capital raised, announcing, from time to time,
rescheduling pending the receipt of suppliers tenders for machinery and production
plant.
From a legitimate call centre in Dakar, their skilled expat salesmen sold shares
issued by subsidiaries companies of Gambia River Minerals and Malaga Palms.
Their holding in Gibraltar banked investor capital, which was siphoned off to
various accounts in the Caribbean.
It was a classic boiler room style company with its unregulated offshore financial
structure using high-pressure sales techniques to sell shares in high-risk companies
at inflated prices.
In the UK, it was illegal for any person or firm to provide investment advice or to
arrange investments unless authorised by the FSA. Fraudulent offshore investment
firms such as Halfon’s Gambia River Minerals or Malaga Palms used cold-call
techniques to sell shares using UK listed telephone number to fool their victims.
Halfon had long privileged Gibraltar, a paradise for every kind of scam
imaginable, using it as a base for managing the funds that flowed into his diverse
business operations, benefiting from its advantageous financial services legislation.
He, as many others, used a European Union mechanism which permitted firms
authorized to provide financial services in one jurisdiction, to provide those same
services in another jurisdiction, without the need for authorisation in the second
jurisdiction. Thus, Halfon’s Gibraltar incorporated firms, were authorised to
provide banking, investment and insurance services throughout the EU, since
Gibraltar was part of the EU by virtue of the UK’s membership.