Fraud Bureau prevents £2m exit of cash

The Garda Bureau of Fraud Investigations recently prevented £2 million (€2.74 million) leaving the jurisdiction, money they believed was being moved as part of a plan to defraud investors.

Chief Supt Felix McKenna, the recently appointed head of the fraud bureau, said they suspected that the people who had invested the £2 million were about to become the victims of fraudsters.

However, the fraud was prevented and no offence was committed. "People who are investing money should be very much aware as to the identities of the persons they are investing with, and whether they were licensed by the Central Bank."

Chief Supt McKenna said would-be investors should be particularly wary when dealing with investment intermediaries promising high returns.

The disappearance of Mr Tony Taylor three years ago led to calls for new laws to protect consumers, and while some steps have been taken to strengthen their position, the public still remains at risk from fraud.

The Irish Compensation Company Limited (ICCL) was established under the 1998 Investment Compensation Act to compensate eligible investors where funds are misappropriated. Under the provisions of the act, victims are entitled to €20,000 (£15,500) or 90 per cent of the losses, whichever is the lesser. The act covers all investment firms, stockbrokers, credit unions and investment or insurance intermediaries. More recently, the Irish Brokers' Association (IBA) took steps to provide additional compensation to investors who lose funds through broker misappropriation or mismanagement. Under the scheme, IBA members must have a bonding of £100,000 (€127,000) per broker, with a limit of £50,000 per client.

But while such measures provide some comfort to the victims of fraud, they do little to further its prevention, and cases of fraud continue to occur.

Most recently, Mr Patrick Foote of the Irish Mortgage and Finance Bureau in Limerick was convicted and sentenced to the maximum of seven years after he was found guilty of defrauding 20 investors of £203,000, ranging in amounts from £270 to £97,000.

To avoid being defrauded, those seeking investment advice are urged to check out the credentials of those offering the advice, making sure that they are properly qualified, properly regulated and have full indemnity insurance.

Consumers should also get everything in writing, ensure that they get all appropriate documentation and that cheques are written out to the investment fund rather than to an individual broker. They should also find out exactly what commissions, charges and fees are involved before handing over any cash.