To help you navigate the high-risk yet enticing nature of investing, we’ve decided to run you through 10 landmark pension scams that grabbed the headlines and the attention of financial authorities from the Financial Ombudsman Service (FOS) to the Financial Conduct Authority (FCA).
Knowing a bit about these scams will help you protect yourself in the event that you get caught up in a similar scenario. So, without further ado: 10 of the biggest pension scams of the last decade.
1. Green Oil Plantations
Collecting approximately £25 million from investors, the Green Oil Plantations investment scheme was a classic case of pension mis-selling. The scheme was unregulated and without FCA protection, enabling rogue financial advisers to sell illicit investment opportunities to unwitting investors (many of whom were novice investors).
To summarise the scheme itself: investors were told that they were investing in a tree plantation in Australia (a worthy cause for investment, no?). After 1,131 investors put their retirement money into the scheme, the returns never materialised and Green Oil Plantations went into administration in 2013.
We have covered the Green Oil Plantations scheme in some detail. Click here to find out more. to find out more.
2. Ethical Forestry
Another mis-selling scheme using the environment, Ethical Forestry was an offshore investment scheme that coerced investors to fund a plot of trees planted in Costa Rica. With promises of high-yield return over a short period of time, the requirement was that SIPP investors would purchase 18 plots for £18,000.
Investors were told that, according to the company’s market research, those investments would return well over £100,000 over a 12-year period. Worth transferring from an occupational pension, it would seem. It’s easy to see how persuading the opportunity was at the time.
However, there were problems in the Ethical Forestry camp as a surprise round of redundancies took place at the company’s Bournemouth offices, with 28 members of staff being told they would be made redundant by Christmas. What followed was a string of liquidation proceedings, complaints, and investigation proceedings.
We have covered what happened with the Ethical Forestry investments elsewhere, so be sure to take a look.
3. Park First
It is estimated that around £230 million of investor’s money (the majority of which were pension funds) were lost in the Park First scheme, and at the time it was headline news. Park First Limited is an airport car parking provider who encouraged people to buy spaces at both Glasgow and Gatwick airports. Investors were promised returns of up to 12%, and the investments were sold to both individuals and corporations in the UK and abroad, directly and through SIPPs (self-invested personal pensions).
However, the returns never materialised as the FCA stopped Park First from marketing the scheme in 2016. The scheme collapsed, and it’s approximated that more than 4,500 investors have been affected (mostly pensioners). One of the main reasons for collapse was that Park First simply did not have the funds available to pay investors who chose the ‘buyback option’ through which the investors would sell back their investment.
4. Carbon Credits
A carbon credit is a permit which, when purchased, enables companies to emit more CO2 when they cannot meet their CO2 obligations. There have been countless cases where investors have been persuaded by financial advisers to invest in carbon credits so that they can sell their credits in the open market. This was often achieved through the transfer of their occupational pensions into SIPP products.
One such case which the financial services industry took notice of was Sami Raja’s, a carbon credit scammer sentenced to 8 years in prison on charges of conspiracy to defraud and money laundering. Two companies were involved in the £2.4 million fraud operation, although it’s believed that Raja was in charge. Between January 2012 and August 2013, Raja mis-sold carbon credits to 130 investors.
To add to the intrigue of the story, Raja is now ‘on the run’ in Dubai and is appealing his sentence. Learn more about carbon credits schemes here.
5. Essex scammers and £18 million in retirement money
On 11th December 2018, Essex police investigated two residential addresses in the area and six people were arrested and questioned for their involvement in suspected pension fraud. It was found that 370 investors were coerced into funding various investment schemes (the details of which are protected as the investigation is ongoing). £18 million was invested into just 8 pension schemes: these were investments of mammoth proportions.
The investigation into the scammers began after a number of legitimate schemes received requests from members to transfer savings into murkier schemes. The alarm was raised and the probe began.
6. Bulgarian scammer jailed for £41.6 million phishing scam
In 2019, Bulgarian phishing expert Svetoslav Donchev was extradited to the UK to face charges of online scamming fraud, where he pleaded guilty to five offences. Donchev, 37, created website scripts mimicking legitimate websites to assist criminals in tricking people out of an estimated £41.6 million.
The scheme worked like this: website scripts were designed by Donchev to look like the recognisable webpages of known and legitimate companies. However, the phony pages were hosted on the server of another cybercriminal who would then lure people with phishing emails posing as companies with information about a refund and how card details were needed to process the refund.
Simple, but enough to fool victims that didn’t see the signs.
7. French scammers who impersonated a government minister
Gilbert Chikli, 54, and Anthony Lasarevitsch, 35, impersonated a French government minister (sometimes even using a mask) and scammed €55m out of three victims.
The two scammers took on the identity of Jean-Yves Le Drian (France’s defence minister at the time) and within the space of one year between 2015 and 2016 proceeded to coerce politicians and executives to part with ‘financial aid’ to fund a ‘secret French operation’.
One of the more bizarre stories, and an example of the lengths scammers are prepared to go. The fake minister would appear in video conferences to make calls to (approximately) more than 150 targets. It was found that only three were successfully coerced.
8. Carbon credit scammers take £11.7 million from the public purse
Narinder Chada (62) and Gurmail Dosanjh (46) were sentenced to seven and eight years in prison back in 2015, found guilty of conspiracy to cheat the UK public out of £11.7 million after setting up a network of fake companies to sell carbon credits.
The pair bought the carbon credits at market value and sold them at a cheaper price while they charged clients VAT (which they then pocketed rather than passing onto the government). Alongside their sentences, Chada and Dosanjh have been disqualified from being company directors for 10 years each and ordered to return all remaining bills.
9. Lithuanian scammer who stole from Facebook and Google
Evaldas Rimasauskas (50) pleaded guilty to wire fraud in 2019 after assisting in a scheme that set up fake businesses and sent phishing emails to employees of Facebook and Google. Between 2013 and 2015, the companies were duped to the tune of $100 million dollars.
The scheme worked by creating convincing forged emails that looked like they were sent from known Google/Facebook clients. The employees at the two companies were duped by the emails and were involved in numerous transactions whereby money was sent directly to the bank account held by Rimasauskas. Between fake invoices and forged documents, the scam was fairly complex. Like many internet scammers, Rimasauskas thought he was safe conducting the scam from a whole other country. However, the US authorities soon caught up with him.
10. Fraudsters who conned the NHS
Ten conspirators were jailed in 2017 for fraud offences against NHS hospitals, councils and the UK government itself. Every case involved forged letters and emails, all pretending to be legitimate organisations pretending to have carried out works in the targeted premises.
The Guernsey government was a particularly badly hit target, losing £2.6 million. Closer to home, a £1.28 million payment to build a mental health unit at a hospital in Lincoln was made when an NHS trust employee failed to see that new bank details had been supplied.
The alarm was raised when a building firm saw a letter with its logo slightly out of place and a bogus reference number and the NHS Foundation Trust alerted the authorities.
Spot the signs of mis-sold SIPPs
With our help and the information above, you will be able to spot the signs of fraud and mis-selling so that you can protect yourself and your retirement money. For more information and resources, you can speak to our team here. You can also receive additional SIPP pension advice by visiting our SIPP claims page.
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