Illegal Amazon or eBay of 'environmental' boiler room investment frauds fear in wake of Cop26
AN illegal "Amazon or eBay of boiler room investment frauds" could emerge to con ethical investors in the wake of Cop26, lawyers who prosecuted a previous multi-million pound scam fear.
Barristers have warned a wave of sophisticated frauds, looking to cash in on the "carbon credit" market, could be sparked by renewed interest created by the Edinburgh summit, as more businesses seek to become carbon neutral or offset emissions.
Carbon credits are a legitimate commodity that are generated by projects that reduce carbon emissions.
They can be purchased by businesses who want to offset their own emissions by one tonne per credit, and therefore have a value and can be traded in a similar way to stocks and shares.
However, they are not regulated by the Financial Conduct Authority (FCA) and projects are largely based overseas, so they have often been hijacked by investment fraudsters who target pensioners with high-pressure tactics to sell over-priced or even non-existent credits.
Barrister Andrew Evans was part of a team that successfully prosecuted Paul Seakens, 60, and Luke Ryan, 33, directors of Winchester-based Enviro Associates, in May.
They were sentenced to 13 years and six years imprisonment respectively for running a business for fraudulent purposes after fleecing around £36m from largely vulnerable pensions by selling investments in virtually worthless carbon credits.
Mr Evans fears a heightened interest in carbon credits post Cop26 could lead to a glut of new sophisticated environmental investment frauds, with scammers potentially joining forces to appear more legitimate.
He said some now get teams of "brokers" to offer fraudulent carbon credits to investors, before getting them to pay funds into a separate company that is FCA regulated, to fool people into thinking the investment is protected by the government protection scheme when it isn't.
He fears this could lead to a network of fraudsters selling a host of dodgy environmental investments such as carbon credits, precious metals or minerals.
He said: "A company using that system could become the Amazon or eBay of investment fraud, offering a marketplace for different brokers mis-selling a wide range of different commodities.
"We could see a system being used in the future to launder the proceeds of a second wave of carbon credit fraud or commodity based investment fraud."
Louis Redshaw, a carbon credits expert witness in the prosecution, added: "A network of companies could be colluding with an organisation to sell carbon offsets that don't exist, showing a path to what would appear to be a legitimate industry body.
"Because there is no tangible asset at the end of the pipe, it is that much easier to fool people by showing the market what looks like a legitimate company with a fancy website with a lovely database attached to it."