UK Scam News

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05-06-2008

Citizens Advice, the charity which helps people resolve their legal, money and other problems by providing free information and advice, is working with National Debtline and Advice UK on a major project looking at people’s experience of dealing with their own debt problems.

A significant number of people in debt decide to manage negotiations with creditors themselves. They will sometimes have sought initial guidance from an advice agency, but will take everything else forward on their own.

The credit industry largely advises people in difficulty to call them and discuss their problems, but evidence from Citizens Advice Bureaux (CAB) shows that they are not always treated sympathetically or positively.

Alex MacDermott, creditor liaison policy officer at Citizens Advice says:

“Last year nearly one million people in England and Wales sought free advice on debt related problems*. A major part of this work involves giving clients the information and support they need to take control of their debt problems. Unfortunately, we are seeing more and more clients coming back and telling us that their offers won’t be looked at unless they are endorsed by a third party such as their local CAB.”

Citizens Advice are keen to hear from anyone who has tried to deal with their own debt problems, whether the experience was good or bad, in preparation for a report due to be launched in  November this year.

To take part in a short survey on this subject please visit: www.adviceguide.org.uk and click on the ‘dealing with your debts’ logo. Respondents will be asked why they decided to act on their own behalf, what happened when they did and what changes they would like to see to improve the system.

The report is a major collaboration between three of the biggest providers of debt advice in England and Wales. It aims to make recommendations for changes in current practice, so that everyone can more easily access good quality advice and information, become debt free and get back on track with their finances.

Anyone facing debt related problems and seeking further advice can visit: www.adviceguide.org.uk or call into their local bureau for further support. The advice guide website contains a number of fact-sheets for dealing with different types of debt, including mortgage arrears, utilities arrears and how to deal with bailiffs.

* Total number of debt enquiries made to Citizens Advice, National Debtline and Advice UK in 2007.

Image via WikipediaVirendra Rastogi, Anand Jain and Gautam Majumdar have been sentenced today to a total of twenty five years and six months’ imprisonment for conspiracy to defraud in relation to their running of RBG Resources plc (”RBG”).

In relation to the same one count of conspiracy to defraud received sentences as follow:

Virendra Rastogi [Chairman - d.o.b. 02.02.1968] Nine years and six months’ imprisonment. Disqualified from acting as a company director for fifteen years

Anand Jain [Director - d.o.b. 08.05.65] Eight years and six months’ imprisonment. Disqualified as company director for ten years

Gautam Majumdar [Chief Executive Officer and Director - d.o.b. 17.10.51] Seven years and six months’ imprisonment. Disqualified as company director for ten years

This was a fraud that involved literally billions of dollars, and of the defendants HHJ Wadsworth in passing sentence said today “they created a very impressive front that fooled banks, the metal exchanges in both countries, (UK and USA), and well respected accountancy firms.” The judge also said, “they were involved in years of calculated dishonesty,” and that during the trial “they had shown no shadow of regret or remorse or repentance.”

Background Information

The Allied Deals/RBG Resources fraud was a truly global fraud that cost banks $700 million dollars worldwide but that was ultimately brought down by the pressing of a wrong button on a fax machine.

Between 1996 and 2002, Virendra Rastogi, Anand Jain and Gautam Majumdar, (together with Virendra’s brothers, Narendra who was based in the USA, Ravindra who was based in the UAE and Subhash who was based in Singapore) ran a web of in excess of 300 fake “customers” who were supposedly based in the USA, Hong Kong, Singapore, Dubai, India, France and Italy. The defendants used the supposedly independent customers to create “trades” that were then used as the collateral for cash advances from banks. Whilst the banks thought they were financing a very successful metal trading firm (one so lucrative that Virendra Rastogi appeared in the Sunday Times Rich List and had Jack Cunningham MP, Lord Holme, Lord Woolmer and Lord Gray as advisers) they were actually advancing money to a company that was propped up by dishonesty. The “customers” were actually Rastogi’s paid henchman based in addresses around the world who would falsify documentation and purport to banks and auditors to be independent traders. The truth was however far more audacious. The address of one of the customers was actually a cow shed in India. One SFO witness at trial indicated that another customer in the USA was actually just a laundrette in New Jersey and an investigator who went to locate one of the “customers” found a residential New Jersey housing estate with the house in question owned by an elderly lady who sold scrapbooks. A number of supposedly independent customers actually had the same address and when investigators phoned some of the companies the phones were actually answered by children.

Ultimately it was the complicated nature of the fraud, together with the controlling tendencies of Virendra Rastogi that led to the uncovering of the fraud. Mr Rastogi would require copies of the false customer documentation to be sent to the UK for checking by himself. One of his henchmen in Hong Kong, intending to fax a number of false letters from various “customers” to Rastogi for review, inadvertently pressed the wrong button on the fax machine and sent all the material to PricewaterhouseCoopers, who were RBG’s auditors in the UK. Although Rastogi tried to recover the documentation alleging that they were documents that had been sent in error, PwC refused to return them and resigned as RBG’s auditors. This resignation prompted concern amongst the banks. Realising that the banks investigation would reveal the extent of their dishonesty, the defendants and their accomplices went into a panicked attempt to cover up the fraud. Offices were rented, letter headed paper and business cards produced and individuals recruited to sit at desks and pretend to be employees. Investigators found hundreds of customer stamps amongst the fraudster’s papers at their Hong Kong business location, from which a ready inference could be drawn. Why would they own so many of their customer’s stamps unless they controlled them?

RBG Resources also employed a number of genuine metal traders, who were based at RBG’s London offices at 105 Piccadilly. These traders entered into real metal transactions. These traders were not aware that the business conducted by Virendra Rastogi, Anand Jain and Gautam Majumdar was founded on fraud. They were the honest veneer of a business that in many regards was (as described by SFO counsel Richard Latham QC) “rotten to the core”.

Paige Rumble, the lead SFO investigator on the case, said “This was a truly audacious and ruthlessly efficient fraud that ranged from the poorest areas of India to the corporate tower blocks of Manhattan. The RBG Resources empire was a family business founded and driven by fraud. The successful prosecution of this case required a huge and technical analysis by the SFO team that unravelled the truth behind the facade and demonstrated to the jury the full extent of the defendants’ dishonesty”.

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After 18 monrths of campaigning by UKScams.co.uk and others, we are pleased to report that Ofcom, the communications watchdog, has at last published a code of conduct to stop internet service providers (ISPs) from advertising “misleading” broadband speeds.

Ofcom says 32 ISPs – covering 90% of broadband customers – have signed up to the code.

They include giants such as AOL Broadband, O2 home broadband, BT Total and Virgin Media. The regulator will now launch a broadband speeds survey to identify actual speeds compared to advertised headline speeds.

ISPs have frequently come under fire from the us and the Adverting Standards Authority for “misleading” consumers, including a case involving Virgin Media’s press ads last August that stated its own offering was faster than BSkyB’s.

The terms of the new code include providing consumers with an accurate maximum speed at the point of sale, as well as giving customers the option to move to a lower speed package when estimates are inaccurate.

The regulator has also launched a programme of independent research to identify the actual speeds of broadband for consumers. The move follows research, which showed consumer satisfaction of ISPs has fallen over the last year.

Ofcom chief executive Ed Richards,told UKScams: “Broadband is a thriving market in the UK. We want to encourage real clarity for consumers about the actual broadband speeds they receive.”

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Citizens Advice Director of Policy Teresa Perchard said:

“We very much welcome today’s report published by the Competition Commission which confirms what we said in our ‘super-complaint’ that triggered the original investigation,* that PPI is over expensive and often unsuitable and that lenders are ripping off, rather than looking after their customers.

“While borrowers are trying to be responsible and seeking peace of mind by taking out PPI policies, many people are pushed into debt by the extra PPI costs.

“We therefore welcome the proposals in the report and call on the industry to address issues of cost and quality as a matter of urgency to ensure that PPI starts to protect people without further delay.”

In September 2005 Citizens Advice made a ‘super complaint’ to the Office of Fair Trading, calling on them to launch an investigation into the payment protection insurance (PPI) business, which at that time had an estimated 20 million policies in force and produced annual revenue in excess of £5 billion.

*Protection racket – CAB evidence on the cost and effectiveness of payment protection insurance the report on which the super complaint was based, is available on the Citizens Advice website: www.citizensadvice.org.uk/campaigns/protection_racket

Recent cases:

A couple took out a secured loan which included payment protection insurance. The CAB obtained a transcript of the phone call when the loan was taken out and at no point in the conversation did the person selling the loan mention that the loan was variable and the cost of the PPI was £21,000 on top of the loan. They were sent documents to sign stating that the loan was for £85,000 which they signed and sent back, and 4 days later the loan money was deposited into their account. They then received the loan agreement which stated that the insurance would be on top of the loan and this made the loan with this insurance £106,207.50 in total. When the client had to stop work because of ill-health and tried to claim on the PPI she was told that she could not claim for sickness, only her partner was covered. The loan company have refused to refund the PPI. The client has had to take a lower paid job because of illness, and now she and her partner may lose their home and still owe money when it is repossessed. The worry has added to the client’s health problems.

A married man of 47, a homeowner who is employed full-time, took out a secured consolidation loan for £60,000.00 with an additional loan for £15,000.00 for Payment Protection Insurance in case he lost his job, or suffered ill health. He didn’t realise that the PPI was only for 6 years, despite the term of the secured loan being 20 years. The CAB adviser comments that the PPI cover seems inappropriate, excessive and does not appear to meet cleint’s needs and some of the terms also appear to be unfair as he will not be covered for 14 years after his PPI expires, but he cannot arrange other cover or cancel the PPI as he would only receive 25% of the premium back if it is cancelled within 12 months of taking out the loan. The addition of the PPI premium has increased his indebtedness by £15,000 for little discernible benefit.