Posts on Sep 2018

Boiler room raid uncovered hidden documents and spy cameras

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Six jailed for £2.8m fraud following the City watchdog’s Operation Tidworth

By[nbsp_tc]Hannah Murphy

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They might be called “boiler room scams”, but one of the biggest examples of organized investment fraud in the UK took place inside an office building in east London. Back in March 2014, staff from the UK’s financial watchdog launched a search operation at the Docklands Business Centre. Several floors up, Jeannine Lewis, 50, was caught on CCTV sweeping up a stack of glossy brochures and standing on a table to remove a ceiling tile to store the documents in the roof. Minutes later, she did this again — though this time moving a large black computer system. According to the Financial Conduct Authority, Ms. Lewis was hiding evidence from authorities concerning a sprawling London-based boiler room scam that cost 170 unsuspecting victims a total of £2.8m. The FCA, which has now brought its second-largest criminal prosecution to date against Ms. Lewis and five others for the scam, had made an unannounced visit to the office, catching the defendants off guard. Ms. Lewis claimed at Southwark Crown Court that she had merely been adhering to her company’s clean desk policy. But the group has now been found guilty of charges including fraud, money laundering and perverting the course of justice. In a coup for a regulator keen to shake off accusations of being too “soft”, sentencing on Friday confirmed the defendants would be jailed for a total of nearly 29 years. Dubbed Operation Tidworth by the FCA, the case shines a harsh spotlight on the shady world of boiler rooms— unauthorized brokerages that use cold calling and other high-pressure sales tactics to push worthless or overpriced investments to members of the public. The court heard that the defendants set up five different boiler room operations between July 2010 and April 2014 to persuade people to invest in a company that owned land on the Portuguese island of Madeira. Investors were told the land — and therefore the company’s shares — would increase in value to give returns of as much as 228 percent, thanks to the proposed development of a prestigious golf course nearby. However, investors never saw their money again. Instead, it funded the lavish lifestyle of the group’s ringleader, former bouncer Michael Nascimento. According to prosecutors, the 41-year-old spent £23,000 on VIP Arsenal football club season tickets and £46,000 a year renting a six-bedroom property. Mr. Nascimento was portrayed by prosecutors as paranoid and controlling. Ironically, it was he who installed the CCTV cameras — that captured Ms. Lewis, his personal assistant, stowing away the documents and computer hardware — in order to secretly monitor his staff.

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On Friday, he was the last of the group to be sentenced, receiving 11 years. On the same day, he and his chief salesman Charanjit Sandhu, 28, were also sentenced in another case involving the mis-selling of £2.4m of carbon credits to 130 victims. Here, the court heard, the proceeds were used to buy items such as an Aston Martin and a Rolex. At an earlier hearing, the court found the defendants guilty of offenses of conspiracy to defraud, fraud, money laundering and perverting the course of justice, as well as breaches of markets legislation.

Charanjit Sandhu was sentenced to five and a half years’ imprisonment. Hugh Edwards, 36, and Stuart Rea, 50, who both recruited sales brokers, were sentenced to three years and nine months each. Jeannine Lewis, Mr. Nascimento’s personal assistant, received two and a half years while Ryan Parker, 25, described as the “office dogsbody”, was jailed for two years. Operation Tidworth has been presented as a win for the FCA, which has recently sought to flex its muscles as an investigator and prosecutor of financial crime. As part of its prosecution, the watchdog seized more than 100 computers, trawled through 4m documents and analyzed 65 bank accounts — both in the UK and overseas. In terms of the amount of evidence sifted through by investigators, the case comes second only to the sprawling insider dealer case named Operation Tabernula. Indeed, Mr. Nascimento and his associates went to great lengths to deceive their victims. In convincing investment brochures seized by the FCA, one of the boiler room companies boasted of being “one of the UK’s largest wealth advisory firms”. Documents were forged under the name of the Four Seasons and Hilton Hotels to con investors into thinking the hotel chains were interested in buying the Madeira development. Website content was copied from banks such as Commerzbank and Citibank. One investor was even flown with his wife to Madeira to meet Mr. Nascimento and Mr. Sandhu who were using fake names. The couple were shown land that was not the land they were said to be investing in. The investor, who lost about £923,000, told the court that he felt like he had been “a fool” and would have to “live with that for the rest of [his] life”.

Hannah Laming, a partner at law firm Peters & Peters with a focus on business crime, said: “There’s been a lot of focus on insider dealings and the headline fines that you get from banks. But I think it’s important for [the FCA] to focus on cases like this. The people who’ve lost the money — it’s their life savings.” Still, questions have been raised as to how the same perpetrators were able to continue to operate over a four-year period, reinventing themselves even after the FCA was made aware of the first iteration of a boiler room operation involving Mr. Nascimento in 2011.

Mark Steward, the FCA’s director of enforcement and market oversight, said this was because Mr. Nascimento used numerous tactics to avoid detection. “He deliberately hid his identity, used other people like the directors and signatories on the bank accounts, [and] avoided having his name on any documentation,” he said. Others urge more transparency around what happens when the public, or businesses, report these types of scams and fraud. One expert in the sector, who did not wish to be named, said that it was unclear how the FCA handled complaints. “It would be good to know what they do with these sorts of reports from the public and how they pursue them,” the expert said. Regulators will be hoping that the publicity surrounding the case will open the eyes and ears of more unsuspecting investors, and give them the confidence to hang up on any cold callers who are offering a seemingly hot deal.

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£10bn a year netted in increasingly sophisticated frauds

Boiler rooms operations, immortalized in films such as Leonardo DiCaprio’s The Wolf of Wall Street, have long been a bugbear for police and regulators. Often, vulnerable and elderly people are targeted. “Fraudsters will prey on an individual’s anxiety about the future,” said Mark Steward, the FCA’s director of enforcement and market oversight, citing as examples concerns about building an adequate pension or paying for a child’s education. But more experienced investors can also fall victim: the biggest individual loss recorded by the police stands at £6m. The scams tend to focus on “flavor of the month” investments, according to Detective Inspector Andy Thompson of City of London Police fraud squad. These have included land, diamonds, art, wine and, lately, cryptocurrencies, he said. Typically, salespeople known as “openers” call people on a list bought from marketing companies dubbed a “suckers list”. But it is so-called “closers” — those who set up the scam and tend to be the ones closing the deals — who are often the beneficiaries. During a recent raid on a boiler room scam, the police found framed photographs of Ferraris on the desks of closers, Det Insp Thompson said. This type of fraud is becoming increasingly sophisticated. Keith Brown, a professor of social work at Bournemouth University who is also involved in research into scams for the Chartered Trading Standards Institute, warned that most people were unaware of the scale of financial fraud in the UK, which he estimated at about £10bn worth a year. “A lot of the new data protections and [some] new cold-calling regulations are very important and very helpful,” he said, referencing rules that came into force this month, banning unsolicited nuisance calls. “[But] there’s a lot of money to be made and criminals have a lot of resources to develop new tactics.” Det Insp Thompson said many boiler rooms “sail close to legality”, often seeking out legitimate legal advice. Others move money offshore and create unnecessary layers of bureaucracy to frustrate the authorities. “It’s Darwinian,” he said. “You always catch the ones who are less sophisticated, but then they learn from that.”

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Copyright The Financial Times Limited 2018. All rights reserved.

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Couple find “spy camera” hidden in clock at Airbnb flat

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A couple claims[nbsp_tc]to have discovered a secret camera hidden in a digital clock in the Airbnb flat they were renting.

By Zoe Drewett

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Dougie Hamilton and his girlfriend say the camera – which was pointed towards their bed in the holiday apartment – was disguised as a clock but looked suspicious. The 34-year-old said he started investigating the clock after a day of exploring in Toronto, Canada.

He had recently watched a YouTube video on secret ‘spy’ cameras hidden in cuddly toys and buttons, Dougie said. But when he picked up the clock he managed to slide its face off quite easily and was horrified to find a tiny lens that may have been recording them.

On September 7, Dougie, from Glasgow, posted about his discovery on Facebook, writing: If you use Airbnb, then you’ll definitely want to read this and possibly stop using them.’

He explained: We booked a one night stay in a lovely apartment in the center of Toronto last night (September 6). We had a crazy busy day around the city and finally were able to get to the Airbnb and relax or so we thought. I was laying on the couch and this digital clock is facing into the living area and open plan bedroom Left with my thoughts, that video pops into my head, “imagine if it was the spy camera in the clock”.

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After removing the clock’s charger and discovering a lithium battery in the back of the device the front face of the clock cam off and revealed the camera. The couple have since alerted Airbnb and police in Canada, who are both investigating. Speaking to the Daily Record, Dougie said: (Airbnb) told us the property owner has six other properties and hundreds of reviews, so it looks like we’ve been lucky. We were only in the place for 20 minutes when I noticed the clock. It was connected to a wire like a phone charger which wasn’t quite right. I felt a bit weird even thinking it and I kept telling myself not to be daft. But there was just something.

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Dougie and his girlfriend – who asked not to be named – said they found the encounter ‘creepy’. A spokeswoman for Toronto police said: We received a call last Thursday regarding what appeared to be a video camera in a clock in an apartment. The investigation is continuing. Airbnb has also told Dougie its security team are looking into the claims and offered him a full refund. They said they would be canceling upcoming reservations for the owner’s properties, he added. A spokesperson for Airbnb said: We take privacy issues extremely seriously and have a zero tolerance policy for this behavior. We have removed the host from the platform while we investigate and are providing the guest with our full support.

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STALKER HELL Ex-boyfriend spied on lover by hiding secret cameras and listening devices in her home

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Wayne Bamford, 47, was told he faces a ‘significant custodial sentence’ because of the risks he faces to women

By Robin Perrie

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JEALOUS Wayne Bamford is facing jail after he placed covert listening devices in his ex-partner’s bedroom during a stalking campaign.

Bamford, 47, refused to accept their relationship was over after Joanna Dawson ended it and launched a “highly sophisticated” covert operation to keep tabs on her.

He was able to phone in to the devices which then provided a live feed so he could hear what was going on in her bedroom.

Over a period of 15 days he connected to the devices 1,600 times, a court heard.

But the surveillance op was foiled when mum-of-one Joanne sought advice from a spy shop after suspecting he might have bugged her home.

He was told he faces a “significant custodial sentence” because of the risks he faces to women.

His case was heard on the same day that Corrie Star Kym Marsh backed our Stop a Stalker campaign.

Kym, who has twice been targeted, urged readers to sign our petition backing an MP’s bid to increase police power to combat stalkers.

Bamford and Joanne began a relationship in May 2016 and started an accident management business together six months later.

But their relationship quickly turned sour and ended in January 2017.

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Prosecutor Anthony Moore told Bradford crown court that Joanne’s suspicions were raised when Bamford appeared to comment on her movements.

She became even more concerned when she contacted a locksmith to boost security and Bamford texted her saying: “There is no need to change your locks”.

She visited a spy shop for advice and was told her what to look for. She returned home and found a listening device in her bedroom.

Joanne told the court: “He played me a recording in my own house and told me he had paid someone to place a device on the outside of my house which I did not believe.

“I went to a spy shop in Leeds and asked them, ‘if I wanted to bug someone’s house what do you do?’ “He told me what to look for.” She later found a second device hidden behind a TV in her bedroom and Bamford, of Gildersome, near Leeds, was arrested.

Bamford admitted stalking causing serious alarm or distress but a trial of issue was held yesterday after the prosecution and defence could not agree on the basis of his guilty plea.

He claimed to have fitted only one of the listening devices and said she had fitted the other to keep tabs on another ex.

But the judge, Recorder Anthony Hawks, said: “I find the complainant entirely plausible.

“I find the defendant evasive and dishonest. I totally reject his account that the complainant was responsible.

“I’m very concerned about the risk you may present to people. You were prepared to engage in a highly sophisticated way to stalk that woman.

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Seoul to check public toilets daily for hidden cameras

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The South Korean capital, Seoul, has pledged to carry out daily checks in all public toilets for hidden cameras.

By BBC

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Secret cameras in toilets and changing rooms are a serious problem in South Korea – with more than 6,000 cases of “spy cam porn” reported last year.

The videos are often uploaded online without the knowledge of the victims.

Earlier this year, tens of thousands of women protested against hidden cameras, carrying signs with messages like “my life is not your porn”.

Activists say women live in constant fear of being photographed or filmed without their knowledge.

About 80% of the victims of spy camera porn are women.

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Seoul’s public toilets are currently only inspected for hidden cameras about once a month, Yonhap news agency reports.

However, staff who maintain the toilets will now also be required to check them for spy cameras daily.

Law enforcement officials have previously told the BBC that it is difficult to catch perpetrators – especially as they can install cameras, and take them down again within 15 minutes.

While more than 5,400 people were arrested for spy camera related crimes last year, fewer than 2% of those held were jailed.

Yonhap says that the 50 government employees tasked specifically with finding hidden cameras have not discovered any for two years.

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Why Do Ordinary People Commit Acts of Espionage?

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Political ideology and money serve as motivators for some people to commit acts of espionage, but they’re not the only factors involved.

By Jerad W. ALEXANDER

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In mid-July, 2018, Mariia Butina, a 29-year-old assistant to the Russian central bank and long-time Vladimir Putin ally Alexander Torshin, was arrested in Washington, D.C., on a charge of “conspiracy to act as an agent of a foreign government,” according to the U.S. Justice Department. Per the[nbsp_tc]affidavit, Butina was allegedly involved in an operation lead by officials within the Russian government to infiltrate the Republican party, including members of the Trump campaign, and the[nbsp_tc]National Rifle Association, for the purposes of aligning right-wing political interests with similar interests in Russia. Butina’s actions dovetailed with continued efforts by Russian operatives to commit cyber espionage to influence U.S. elections.

According to the affidavit, two American citizens provided Butina intelligence and guidance on her efforts in the United States.

[nbsp_tc][br_tc]MI5, the intelligence agency of the United Kingdom, defines[nbsp_tc]espionage[nbsp_tc]as “the process of obtaining information that is not normally publicly available, using human sources (agents) or technical means (like hacking into computer systems). It may also involve seeking to influence decision-makers and opinion-formers to benefit the interests of a foreign power.” As Butina and countless others throughout history, such as spies like Julius and Ethel Rosenberg, have discovered, espionage is a dangerous game, one that can lead to imprisonment or even death. What motivates people to commit acts of espionage is as important as the ramifications of their actions.

Naturally, simple ideology serves as a motivator to commit espionage, but it’s not the singular cause. According to a[nbsp_tc]Spring 2016 article[nbsp_tc]of The Intelligencer: Journal of U.S. Intelligence Studies, ideology “is adopted by an individual to the degree that it reflects the individual’s ego. In that sense, an ideology is like another motivation – money – in that it serves as a vehicle for the individual to express a personal value or belief; an ideology is chosen in order to confirm conscious or unconscious beliefs the individual has already internalized. In the case of espionage, a particular ideology may serve as either the actual motivation for a spy to breach the trust placed in them or simply as a means of rationalizing that behavior.”

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A Combination of Factors

[br_tc]Three concurrent elements need to exist within an individual to make them prone to acts of espionage — a personality dysfunction, personal crisis and opportunity.

According to Dr. Ursula Wilder, a clinical psychologist with the Central Intelligence Agency, four personality elements are essential to the entry into[nbsp_tc]espionage: psychopathy, narcissism, immaturity, and grandiosity.

“A psychopathic person is a person whose approach to reality is ruthless and cold,” she stated in an[nbsp_tc]interview[nbsp_tc]at the International Spy Museum in Washington, D.C. “They have no conscience, or they have very limited capacity to feel guilt. So, their whole approach to life is predatory. They’re excitement seeking. They love to con people. It’s a game. This is all they can do to connect with other human beings. So that kind of person will commit espionage either flat-out for self-interest or because it’s fun, or both.”

“The next is narcissism,” she explained. “A narcissistic person is fundamentally ego-centric. They can only experience the world with themselves at the center. They are very much needy for and will provoke circumstances that will permit them to be at the center of attention. They believe that what they need, want and desire is the truth. They will get greedy for attention. That kind of person will commit espionage as a grab for fame. Someone like that will commit espionage because it makes them feel big and important.”

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Regarding immaturity, Wilder explained an individual prone to commit acts of espionage (in comparison to a professional intelligence agent), either for or against their nation, is “an adult who can only function as an adolescent. These people live their lives in a blend of fact and fantasy. They do have a conscience, they can feel deep guilt afterwards, but fantasy is much more real to them than it is to adults who are grounded to reality, so to them committing espionage is a bit of a game, a fantasy, and online they have this illusion that if they do it online, if they just turn off the machine it goes away. They have a fantasy about the implications of their actions, and although on some level they might grasp the reality of it, it’s not real to them. The grandiosity applies to all three.”

An individual must be up against some form of personal crisis that produces distress. According to a paper released by the CIA titled “Why Spy?”, a survey of agency employees “identified emotional instability related to ambition, anger leading to a need for revenge, feelings of being unrecognized and unrewarded, and loneliness as the top vulnerabilities on the road to espionage. They ranked such problem behaviors as drug abuse and illicit sex as second, and various mental crises or stresses brought on by debt, work issues, or psychological factors such as depression as third.” Regarding opportunity, access matters. An individual must have access to sensitive information of some caliber that could be of use to a foreign power. All three combined — the personality, the crises, and the access — serve as fertile soil for acts of espionage.

It’s important to make the distinction between ordinary people who commit espionage and individuals who join intelligence services.

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“People who join the intel community spent years preparing themselves — school, applying, screening — there’s a huge amount of drive and ambition, identification, pride,” says Dr. David L. Charney, a psychiatrist with the National Office of Intelligence Reconciliation, known as NOIR, a nonprofit dedicated to educating the intelligence community on the management of insider threats. This would include people with access to sensitive information who flip, such as Edward Snowden or Reality Winner. “They’re not coming in to be spies; they join for loftier reasons. The question is what makes a person go bad. That’s when you have to get more psychological.”

According to Charney, at the core of espionage can be an intolerable sense of personal failure, and not necessarily a shifting ideology. “Going back to the ideological spies of the 1930s and ’40s, we run across people all the time who you know have personal demons that are driving them, but they wrapped their demons into the current issue of the day to give it a higher-minded packaging. Any time you try to understand you have to dig a little deeper.”

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