Land Banking and Boiler RoomsA father and daughter have been accused of tricking 15,000 mostly elderly British citizens out of more than $70m (£34m) by selling worthless shares.
Investigators allege Paul Gunter, 58, and daughter Zibiah, 25, from Florida, sold fake shares in 50 dormant firms...
... The BBC's Andy Gallacher, in Miami, says it is thought the Gunters hijacked the identities of the dormant, publicly traded companies and used high-pressure sales techniques to sell worthless shares to British investors.
The type of operation being reported here is often referred to as a boiler room. The BBC also carries this Q&A on the subject of boiler rooms.
So what is a boiler room exactly?
Typically it involves a few people sitting in an office somewhere abroad who call you on the phone and try to persuade you to buy shares in a company.
So how do the conmen do it?
Sheer persistence and a persuasive line in patter appear to be the key ingredients.
Many of the victims contacted by the FSA said they had been subjected to repeated calls from the boiler rooms until they gave in and finally agreed to hand over their money.
Persistence does pay off if you are a fraudster.
Substitute plots of land for shares in a company in this description of a boiler room and this may paint a familiar picture if you are one of the many people has been approached to buy an investment plot.
The advice give at the end of the BBC's boiler room Q&A may well be worth considering if you have been approached to buy land plots too.
What should I do if someone calls me offering cheap share investments?
Do not believe a word of it. Just put the phone down and then give the FSA a call at its contact centre on 0845 606 1234. The authorities are always keen to know of the latest scams.
1. John25/03/2008 11:59:06
i am some what surprised with the association of land banking along side boiler rooms, the news article mentions nothing about land and therefore this is a point of view and not fact. I have made money from land over the years and fail to see that whilst there maybe some companies who are not above board, if you do your homework, then this is easy to avoid.
Best wishes
2. Peter25/03/2008 14:14:47
Don’t you think that the title you have given to this article is misleading as there is no mention or connection with Land Banking.
I have personally bought plots “Green Belt” as I strongly believe that one day my plots will get planning.
This country needs cheaper houses and the only way to do it is by allowing people to build there own home.
3. PropertySCAM25/03/2008 16:38:57
John and Peter - we have a vast amount of correspondence from people who either have bought from or who have been subjected to high pressure sales tactics from land salesmen who operate in precisely the same manner as boiler rooms.
Are all land banking operations boiler rooms? Probably not, but many clearly are.
The message here is simple.
High pressure sales + too good to be true returns on investment = run away. Very fast.
And Peter - you have bought individual green belt plots of the type typically sold by land bankers? c. 0.1 acres for perhaps 10k? What has convinced you that your plots will get planning permission?
4. Steve James03/04/2008 16:24:47
I dont agree with this. I find land to be very low risk and have personally invested as large co( Wimpy etc) have been granted permission nearby.
5. PropertySCAM03/04/2008 16:40:33
Steve, were you subjected to hard sell tactics by someone selling small plots of green belt, or did you find your land investments some other way?
6. John 17/04/2008 15:25:16
have you taken the time to understand land investment? clearly not, whoilst there are companies out there that are not above board if they wrk aliongside a UK solicitor you would think they are OK would you not? logic says yes, how about reading the most recent link in the independent and seing what you think hey??? people have made money from land for years now and why cant we. do you buy stocks on your own or do you use a brroker? do you buy a property on your own or do you use an estate agent? surely just read the article.
http://www.independent.co.uk/news/uk/this-britain/fields-of-gold-investors-discover-lucrative-haven-in-britains-farmland-810376.html
thanks
7. PropertySCAM17/04/2008 16:37:03
John, you have missed an important point. The Independent article is about the sale of large tracts of agricultural land, sometimes for agriculture and sometimes as an investment. Prices are currently around the £6,000 per acre mark and climbing steadily. The article does not touch on the issue of companies buying these large tracts of land for £6,000 per acre and then selling small plots of around 1/10 acre (sometimes a little more, often a lot less) to small investors for up to £20,000 each - average markup is around 3000% !
We are not against speculation on land per se, we simply warn potential investors that the small plot of land they have been offered (often using very high pressure sales tactics) for £20,000 may only be worth a few hundred pounds, may never be saleable to anyone else on its own and will never be a candidate for planning permission on its own. FSA rules seem to rule out collective action so the subdivision and sale of these small plots tends if anything to conspire to rule out any future development potential.
If you want to invest in land then please do so, but do it without the help of plot selling middlemen.
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