Financial Conduct Authority
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FSA secures its first criminal conviction for boiler room fraud. Approved person also fined and prohibited from significant influence functions.

The Financial Services Authority (FSA) has secured a criminal conviction for boiler room fraud against David Roger Griffiths Mason, who has been sentenced to two years in prison and disqualified from being a director for six years.

Mason pleaded guilty to 13 counts of carrying on a regulated activity without authorisation; one count of making false or misleading statements, promises or forecasts; and three counts of money laundering. The case was heard at Southwark Crown Court.

The sentencing Judge, HHJ Rivlin QC said:

"I am satisfied that without your involvement this scheme could never have operated... I do believe the arrangements made by you were sophisticated... You caused distress, worry, frustration and in some cases serious disruption... You acted with blatant and I would say ruthless dishonesty which was thoroughly reprehensible."

In a related regulatory action, the FSA has also fined FSA approved person David Sinclair of Axiom Capital Limited (Axiom) £68,000 and prohibited him from holding any significant influence function (SIF) in the future. Sinclair unwittingly allowed Mason to use a bank account under his control to dissipate investor money to Mason and boiler room fraudsters. The FSA took no regulatory action against Axiom. Mr Sinclair, through Axiom, paid for all known investor losses and interest. The FSA has paid back these monies to each of the victims.

David Mason

Between November 2008 and May 2009 Mason coordinated the cold-calling and sale of shares in EduVest Plc (EduVest).  In total, 32 people invested £270,000 in the belief that EduVest would be listing on the PLUS stock exchange in the near future.

However share certificates were never issued, EduVest never listed on the PLUS market and investors’ funds were never used for EduVest business.

Victims were cold called and offered shares in EduVest by unauthorised overseas firms such as Hunter Rowe Financial, Bernam and Shore, Attlee Wurth Consulting Group, Investor Relations Corp (also known as IRC), Rothman Capital and Bishop Capital. None of these firms were authorised by the FSA nor by any other overseas regulators.


As well as setting up EduVest and arranging the deals for the boiler rooms, Mason also laundered the proceeds of the boiler room operation. Some funds were directed to the boiler rooms via accounts in Switzerland and the Seychelles as commission payments with the remainder sent to accounts controlled by Mason which he then kept.

Mason continued the deception by arranging for a letter to be sent from ‘David Branscombe’, a fictional employee at EduVest, to update investors on EduVest’s progress and give the impression of validity.

Commenting on the prosecution of Mason, Tracey McDermott, acting director of enforcement and financial crime at the FSA, said:

“This prosecution must be seen as part of the development of our strategy in the fight against the major menace to the public posed by boiler rooms. Mason was at the heart of a sophisticated boiler room scam and without his involvement the deals could not have been completed and the proceeds laundered.

“Like all boiler room fraudsters, Mason was dishonest and posed a very serious threat to honest investors.

“This sentence sends a clear message that the court takes boiler room offences seriously and will hand down significant sentences to those involved in them. We will continue to crack down on all types of unauthorised business, such as boiler rooms, and seek the severest penalties where possible.”

Mason’s conviction follows searches and arrests made by the FSA and City of London Police in November 2009.

David Sinclair

In late 2008, Mason approached Sinclair and asked him to help set up an investment vehicle, EduVest. EduVest had no real function and appeared to have been used purely for the purposes of a share fraud.

By failing to exercise due skill, care and diligence to check what EduVest was to be used for, Sinclair effectively allowed Mason to use a bank account under his control to transfer investors’ money to Mason and associated boiler room fraudsters.

Sinclair fully cooperated with the FSA and as he settled his case at an early stage he qualified for a 20% discount. Without this his penalty would have been £85,000. Axiom, financed by Sinclair, has voluntarily paid for all known investor losses and interest.

Commenting on Sinclair, Tracey McDermott added:

“Authorised firms, their employees and persons holding significant influence functions, are in the front line when it comes to combating financial crime. They must be vigilant for warning signs that their clients might be involved in illegal activities.

“Sinclair failed to exercise the due skill, care and diligence required of an individual holding a significant influence function so must shoulder some of the blame for investors’ money being paid to boiler rooms. This substantial fine and the SIF prohibition reflect the seriousness of his failings.

“While we recognise this was not a deliberate breach on Sinclair’s part, the sanctions imposed highlight just how important it is for individuals to make the appropriate checks when doing business with others.”

Mason’s prosecution and the penalties imposed on Sinclair mark an end to the FSA’s investigation which began in June 2009.

Boiler rooms

Share fraudsters usually contact people by telephone to con investors into buying non-tradable, overpriced or even non-existent shares. These fraudsters are unauthorised, normally overseas-based companies with fake UK addresses and phone lines routed abroad. In the vast majority of cases, investors lose all of their money.

If you are contacted out of the blue by somebody trying to sell you shares, you should:

  • Hang up the telephone if you receive an out-of-the-blue call offering shares;
  • Check the FSA Register to see if the person selling shares is authorised to do so;
  • Call the company back using the details on the FSA Register to verify its identity; and
  • Report any company that cold calls you to buy or sell shares to the FSA or the Police.

The FSA maintains a list of known unauthorised businesses on this website.. The list is updated regularly with details of businesses that are believed to be are involved in boiler room activities and could be dangerous to investors.

Notes to editors

  1. The Final Notice for David Sinclair can be found on this website.
  2. In February 2010 the FSA recovered £270,000 as a result of action taken against companies involved in share fraud activity. Mr Sinclair, through Axiom, paid the monies to the FSA which included all investor losses, interest and some of the FSA’s costs. The FSA can confirm that this action related to Mason and Eduvest.

  3. The FSA estimates the cost of boiler room fraud in the UK to be £200 million per year. The FSA receives around 3,500 calls a year from people who have been contacted by boiler rooms. Around 1,000 of these are victims of boiler rooms and they lose about £20k each. This produces a loss of £20 million that the FSA hears about, but it is estimated only 10% of victims report the crime.

  4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.

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