One couple contacted Times Money after being duped out of more than £100,000 over the phone. This couple live in the Home Counties, run a successful property development business and have been investing their cash wisely for years. How did they fall victim to the boiler rooms? Financial fraudsters do not make money from the poor, the financially illiterate or the terminally naive. The boiler room bosses find their victims in the places you would least expect; on share registers and the subscription lists of financial publications.

The couple wish to remain anonymous because they are embarrassed by the scale of their losses and fearful of reprisals. Their horror story began when the husband received a call from a dealer for a company called Millennium Financial in February 2001. The wife recalls: “They told him that they could sell him some shares at a discounted price. We spoke to an English guy who sounded very respectable and some Americans who also sounded very professional.”

Millennium claimed to be a prestigious offshore banking firm with a “phenomenal 21-year track record”, but it was in fact a boiler room which started a fraudulent operation in Mexico, Spain and the US in March 2000.

Boiler rooms came to the public’s attention four years ago, with the 2000 film starring Ben Affleck and Vin Diesel. Boiler Room depicted “hyper-aggressive” salesmen trying to become overnight millionaires. But the couple duped by Millennium were not easily seduced. Before making the biggest single investment of their lives, the couple contacted the Financial Services Authority (FSA), the UK financial watchdog, to check if Millennium was a safe place to put their money. “All the FSA told us was that it did have some information on Millennium but it could not tell us what it was because of the Data Protection Act,” the wife says.

The Millennium dealers set about defrauding the couple with a “bait and switch” sales scheme. After persuading them to purchase stocks on the New York Stock Exchange, the couple were encouraged to sell the investments and use the proceeds to buy a stake in Key Card Communications, a small telephone card company based in the US, which was supposedly due to float on the stock market. A series of high-pressure sales calls followed in which the couple were duped into pouring more cash into the investment.

But the promised flotation never took place and by July 2001 the couple realised that they had been conned out of their cash. The same Millennium dealers who were so ready to talk suddenly became elusive. When the couple threatened to report the rogue company to the financial regulatory authorities they received threats. “We refused to be intimidated but when we called the FSA asking for help it turned us away. A man at the FSA told us that he could not help because the firm was based abroad.”

Dismayed by the watchdog’s lack of interest, the couple flew to Washington in January 2002 and reported the fraud to the Securities and Exchange Commission (SEC), the US financial watchdog, which had already been contacted by hundreds of other Millennium victims. The SEC launched an investigation, which resulted in a civil prosecution of the four people behind the fraud in March last year. But the US authorities have not been able to put all the dealers behind bars because they are not based in the US. The SEC found that the outfit had defrauded more than 700 investors in over 20 countries, raising more than £10 million.

The SEC has appointed an official receiver to arrange a distribution fund to provide compensation from assets seized from Millennium, but would not say when investors would receive compensation or how much. An SEC spokesman says: “We can investigate a crime and bring charges, but if people are operating from abroad there is nothing we can do to compel them from not committing the crime again.”

The couple fear that other people may already have been targeted by the former Millennium dealers and they claim that the FSA has failed in its duty to protect UK investors from boiler rooms. The FSA admits that it did not warn investors about Millennium until May 2002, but the watchdog says that it has been publishing guidance on its website since 2000, advising people not to deal with unlicensed financial companies.

An FSA spokeswoman says: “With these boiler rooms, the onus is really on the investor to check that the firm is registered. We cannot possibly be aware of all unlicensed firms when they are based outside the UK.”