Trading Standards prosecutes Regus in clampdown on ‘boiler room’ investment scams
Regus Management UK Ltd, a leading serviced-office and mail forwarding company, has been fined £11,000 and ordered to pay £16,651 costs for offences committed under the Consumer Protection From Unfair Trading Regulations 2008 and the London Local Authorities Act 2007 at the City of London Magistrates Court [23/07/15].
The City of London Corporation Trading Standards brought the prosecution as part of its clampdown on ‘boiler room’ investment fraud in the Square Mile.
The case was triggered after a consumer was twice given false information in a phone call to Regus, which provides facilities to clients on two floors of London’s prestigious Tower 42, in November 2013.
The consumer asked Regus if a company, which she believed had defrauded her in an investment scam, was present in the building. Despite knowing that the firm only had a mail forwarding facility and not a physical presence, the Regus employee misled the caller, claiming that the company had an occupied team office on level seven. During the call, which the consumer managed to record, the Regus employee also falsely claimed that Regus had not received “any sort of complaints” in relation to the company.
This deception constituted a double breach of the Consumer Protection from Unfair Trading Regulations 2008. Regus had been contacted by the City of London Corporation’s Trading Standards team in July 2013, warning them that the company had the hallmarks of a typical ‘boiler room’ investment scam, involving the sale of worthless or non-existent commodities like diamonds and wine to vulnerable consumers across the UK.
Regus was also found guilty of four breaches of the London Local Authorities Act 2007, which requires mail forwarding businesses to hold detailed records on their client firms. These records are crucial for the investigation of any firms suspected of criminal activity. Without these details, fraudulent clients can’t be identified or traced, leaving them free to commit crime and inflict serious financial harm on consumers.
In July and August 2013, City of London Corporation’s Trading Standards contacted Regus, warning that records on one of its client firms suspected of investment fraud were incomplete, and that without full details, mail forwarding services could not be lawfully provided.
A follow up inspection was made in May 2014 and it was found that these matters had not been addressed, and the City of London Corporation commenced prosecution proceedings.
Jon Averns, the City of London Corporation’s head of trading standards, said:
“We need to work closely with serviced office providers like Regus to create a hostile environment for fraudsters who use their prestige addresses within the City as a base for their criminal operations. It is disappointing in this case that Regus failed to follow advice previously given by trading standards which has led to this prosecution. Working together we can help serviced office and mail forwarding providers ensure that they are not exploited by organised crime groups, and do not find themselves involved in criminal activity”.
“We are increasingly drawing intelligence from these providers who are operating as our eyes and ears. They need to act quickly and transparently if they have evidence that their facilities have been turned into a hub for suspected fraud. Working with the City of London Police, we are identifying fraudulent traders as early as possible in order to prevent consumers from across the UK being ripped off.”
Detective Inspector Teresa Russell, City of London Police’s Economic Crime Directorate, said:
“Serviced offices and mail-forwarding companies can find themselves duped by criminals who operate boiler-rooms and commit investment fraud. To ensure they are not found to be complicit with fraudsters who may be making use of legitimate facilities, it is vital serviced office and mail forwarding companies are aware of their obligations and remain alert and vigilant to the activities of their clients.”
The Regus case comes a week after a joint prosecution of Servcorp, another serviced office and mail forwarding provider, by the City of London Police and City Corporation Trading Standards under Operation Broadway. The company was ordered to pay out £21,000 in fines and £11,500 in costs after pleading guilty to seven offences under the London Local Authorities Act 2007.
Anyone who has been a victim of a boiler room fraud should report it through Action Fraud (online at www.actionfraud.police.uk), which will enable trading standards and the police to continue to tackle this type of crime.